Collection Vs. Judgment
I have a couple of separate incidents where I am owed money for the breach of a lease contract, and for damages to property. My question is , how successful are collection agencies in actually getting the money? Is it more productive to go to court and get a judgment? I have heard getting a judgement, doesn't necessarily mean you get your money. Any suggestions?
A judgement in your favor, only gives you the right to pursue a collection process. If the other party owns property, you can get an Abstract of Judgement recorded in the County where the property is located. This clouds the title and the other person cannot refinance or sell without addressing your claim. You can also levy on his wages and bank accounts. Sometimes they pay up, sometimes you have to chase them for years. I have never used a collection agency, I think they get 1/2 of what they collect.
Sometimes the other party is "Judgement Proof" they have nothing and you will waste your time and money to persue your rights.
Get a judgement and file a lein. Even if they don't have any property to file on, file it. This will become a permanent part of their credit report. No one will finance them for a home and very few fill finance anything else until that lein is resolved. In Ohio, a lien stays in effect for 5 yrs and costs very little to renew($35-50 or so for another 5 years). You may not get them right away, but eventually, you WILL get them. They will have to pay up to make the lein go away.
Most creditors, when they see a lien filed and the people own no property, will assume it's a tax lien and won't touch them with a ten foot pole.
If you don't get any result in an acceptable period of time then you may want to go to a collection agency. If they cannot collect, it costs you nothing, but you hit their credit again. The documentation from the court will strengthen your position.
It is true that in some states (I assume, because Ohio is this way), a judgement just means that they've been court-ordered to pay you. That doesn't mean that they will. It's very hard to enforce.
Oh, and by the way, a lien can survive a bankruptcy!!!
Hope this helps. Happy hunting.
Ronnie Mussetter
the company I work for has used a collection agency to collect from a few renters that have skipped out on the property. They charge 15%-20% of the amount they get and they are very aggressive.
In FL a judgement is worth about as much as the paper it's printed on. In FL you can not go after a person's wages (excpet in child support cases) if they claim head of household status. Also, you can not go after their home or it's equity because of the Homestead rule.
But if they have nothing a judgement is the way to go. Eventually they will need you to clear the judgement.
The quality and collect-ability of any J depends on what the debtor owns & what he earns, and what he has to lose.
I've on occasion been successful in getting friendly agreement from a debtor whom I knew I'd never nail if I were trying to collect on a J against him, so I'd try that route first.
I got my car smashed several years ago in a parking lot, and it was a car on which I"d dropped the collision insurance to save premiums, as I was in the process of selling it.
The other driver was a kid with NO insurance, and it was obvious to me that any kind of state action, suspending his license, etc., would be a monumental waste of time, as the kid was going to continue to drive no matter what the State said.
So, I persuaded the kid to meet with me and give me a promissory note, payable over time, @ $100 per month, for my damages, for which I gave him a release of liability doc., so he wouldn't lose his license, etc....big deal! As I said, he was going to keep on driving anyway.
And to my shock and amazement, the kid paid me about 80% of those note payments before he left the area...a lot more than I would have guessed.
So you might try this and see what it does for you.
Have any of you ever issued 1099's to tenants that you couldn't collect on?