Judgments are relatively easy to obtain. This has been the case for as long as I can remember. Most debtors don’t even fight and almost all of those who do lose. In the vast majority of cases Judgments are not the problem.
Until recently, Collecting on them has been a different story. All you get with the effort required to obtain a Judgment is a document that provides the legal equivalent of saying you win. It gives you the right to go after any assets the defendant has.
Therein lies the problem. Most of the time it is next to impossible to locate assets.
Many companies will not litigate unless there is verified employment or home ownership. These were the only high return scenarios. Without this information you could expect a Judgment to gather nothing more than dust.
Asset searches were costly and difficult, making them inappropriate for smaller claims of only a few thousand dollars. It was not difficult to spend more on searching for assets than actually getting paid.
The news for asset recovery is very good. Things have changed a lot and made litigation more cost effective. The change is due to constant improvements in computer technology. Big Data makes it possible to find what was previously hidden and to do it economically.
The new technology is based on a list, easily created entirely by a computer. The list is run through a search engine designed to search for employment, bank accounts or property ownership. The list can be thousands of names long and the system will process it quickly listing all ‘hits’ and only charging a small fee for what is located.
It has some spectacular advantages. In addition to being fast, easy and inexpensive it can be run frequently from virtually any computer capable of creating the list. You need to have large numbers of Judgments to check in order to get the service, but that is no problem in the debt collection industry.
Each time the list is run through the search engine a few jobs, properties or bank accounts are uncovered. It is a very small percentage, but the list can be run every few months. Judgments in New Jersey are good for 20 years and can be renewed for an additional 20 years. That’s a lot of time when you check for assets multiple times each year. Other states have their own limits, but they are always long enough to run a large number of asset searches on a given debtor.
It isn’t perfect. Some of the leads have disappeared by the time the Sheriff gets to them. People get fired, bank accounts get closed and property gets sold or repossessed.
In general a located asset becomes cash a bit more than half the time. Even here, however, the returns tend to be worth the expense. The debtor stays on the list and will be searched for the next asset located.
So, how should this change your decision making process on litigations? With easy, frequent and inexpensive asset searches that work over half the time generating more cash than in the past, litigating becomes a more favorable option.
Once solvent debtors have a good chance to become solvent again, even if it is years in the future. Since there is no cost associated for anything other than a hit. The program can run frequently and catch assets as soon as they become listed.
Large claims may be worth the expense of litigation even if the debtor has nothing but a good address. The dramatic increase in finding assets make these claims a reasonable expense of court costs.
In general, you should consider being more aggressive in litigation decisions. Don’t start suing everybody, but marginal has become lower risk. Take advantage of the ability to find assets cheaply to put more money into your bottom line.
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ABOUT EXECUTIVE CREDIT MANAGEMENT, INC.
Executive Credit Management is a full-service Debt Collection and Applicant Screening agency with over 20 years experience located in Central New Jersey. We provide excellent service in the following areas: Employment Screening, Business Screening, and Tenant Screening. Executive Credit Management belongs to a number of Skip Tracing databases and offers services to help locate and confirm the current address of missing debtors. Other services provided are: litigation evaluation on all lawsuit decisions, improvement of the quality of the applicant data, Lawsuit Monitoring, Handling of Debtor Disputes. Executive Credit Management features the best Call Monitoring System in the Debt Collection industry.