In the debt collection industry, there are specialized collection agencies whose sole focus is collecting civil judgments. One of the first things they do upon taking a case is dig into the debtor’s assets. Some agencies will not even agree to take a case without a preliminary asset search. Why? Because assets determine the course judgment collection takes.

One could make the case that a debtor’s assets are the most critical factor in determining whether the judgment will ever be paid. A debtor lacking assets of any real value is much harder to collect from than another with a long list of valuable assets. So again, assets determine the course collection efforts take.

A Lack of Cash

While there are exceptions to the rule, it is generally accepted that judgment debtors do not have the cash on hand to pay what they owe. This is especially true in cases where the original dispute revolves around an unpaid debt. If the debtor had the cash on hand, the two parties never would have ended up in court to begin with.

Given that creditors are faced with a lack of cash on the debtor’s part, they need some other way to compel payment. That is where assets come in. Assets with tangible value represent a way to motivate debtors to come up with the cash. When such efforts fail, assets can be liquidated to pay the debt.

Exempt Assets Vary by State

If there is a downside to using assets as a collection tool, it is the fact that some assets are exempt by law. It is also important to note that laws vary among the states. For example, some states allow judgment creditors to go after both personal and real property. Other states do not allow creditors to touch real property. Still other states allow real property to be seized, but still give debtors the opportunity to claim a certain value of that property under a homestead exemption.

Creditors and judgment collection agencies need to work within the confines of state laws. Nonetheless, nearly every state allows the seizure and sale of at least some assets to recover money from an unpaid judgment. Asset seizure gives the creditor and collection agency a bit of an advantage if they can figure out what assets are available.

The Threat of Seizure

Salt Lake City’s Judgment Collectors once worked on a case involving a debtor who wasn’t bending over backwards to cooperate. During their asset search, they learned the debtor owned an airplane hangar in another jurisdiction. Letting the debtor know they had found the property changed things. With the threat of possible seizure hanging over his head, the debtor finally found a way to pay what he owed.

It is amazing what the threat of seizure can do in a judgment collection scenario. People don’t want to lose their valuable property. So once creditors and collection agencies discover they have property, they suddenly become more cooperative.

Liens Are Another Possibility

Creditors and collection agencies do not necessarily have to entertain the idea of asset seizure. In many states, they can also put liens on real property. A lien can be just as effective at motivating a debtor to pay. And if the debtor truly doesn’t have the money to make good, a lien at least prevents them from selling the attached property without satisfying the judgment.

Assets are everything in judgment collection. A debtor without cash is already hard to collect from. If he has no valuable assets, collection is that much harder. Therefore, assets tend to determine the course judgment collection takes.