Collecting Judgements
Business owners commonly decide to pursue delinquent debt by suing the organization that is indebted, using the court to remedy the situation by looking to be awarded a judgment. This is often seen as the first step in the collection of past due business debts, though what many business owners fail to realize is that, because most courts do not enforce the judgment and repayment, the court ruling means little.
With the judgment awarded and the difference between right and wrong decided, the court often sees its purpose fulfilled. They are more concerned with what should be remedied rather than enforcing what will be remedied, simply because the resources required to pursue payment from an indebted party, or even to keep track of the activity ensuing after a judgment award, is too much of a drain on the courts in terms of cash and time. Because they do not want the costly burden, business owners are left to their own resources.
With judgment in hand and a lack of assistance in enforcement by the courts, the next resource to collect on the judgment is often a commercial debt collection agency. The logical result in the minds of many business owners is that, with the weight and credibility of a court-awarded judgment, a collection agency can easily recover the indebted sum.
There are, however, many flaws in this logic. First, when a business takes a non-paying debtor to court in search of a judgment award, the business relationship between the two parties has significantly deteriorated, hardening the debtor against repayment. A Commercial debt collection agency is rarely interested in taking on these pursuits, knowing that the person owing money is not going to be inclined to pay at all once he discovers the court is not willing to enforce the judgment.
One way to secure a greater chance of collecting the unpaid debt is to contact a commercial debt collection agency BEFORE seeking a judgment award, rather than after. An agency should be the first optionnot the last.
Most commercial collection agencies work on a contingency-only basis. This means they get paid if, and only if, they successfully collect your past due debt. Obviously, this gives them great incentive to successfully resolve your past due debt. Commercial collection agencies also tend to charge the least in contingency fees, typically around 30%, or even less.
Consumer debt is not the same as commercial debt, so business debt collection agencies are privy to a completely different array of tools and resources to help recover delinquent debt. Using asset and private investigation, for example, can yield a better outcome than contact via demand letters and frequent phone calls. This allows for rectifying delinquent accounts much more quickly and efficiently.
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