Civil litigation resulting in a judgment is one way to seek relief from a bad debt. It is also a way to get satisfaction against an individual or business you feel has wronged you. But judgments are not all they are cracked up to be. In many cases, they end up being more trouble than they are worth.
For the record, court judgments are entered against defendants as a result of civil litigation. They are essentially recognition of a legal debt. Sometimes judgments are little more than court acknowledgment of existing debts. Other times, they are punitive in nature. In other words, they are entered as a way to punish defendants for wrongdoing.
No matter how you slice it, successfully obtaining a judgment against someone else does not settle things. In fact, it turns the page to a whole new chapter in debt collection. Judgments should be avoided whenever possible. Here are five reasons explaining why:
1. Creditor: Courts Don’t Enforce
From the creditor’s perspective, one of the chief reasons for avoiding judgments is the simple fact that courts do not enforce them. The creditor could spend a lot of time and money obtaining a judgment and still never get paid. So unless a debt is exceptionally large, it might make more financial sense to settle for less and get paid what the creditor can afford rather than going through the hassle of obtaining a judgment.
2. Creditor: Judgment Collection Takes Time
Also from the creditor’s perspective, judgment collection takes time. It also takes money and effort. Some companies attempt to collect judgments on their own. Others let their attorneys do the work. Still others hire specialized judgment collection agencies. Judgment Collectors, out of Salt Lake City, Utah, is an example of such a firm. Regardless of the choice, a creditor will pay for collection efforts in some form.
3. Debtor: Judgments Are Real Property
From the debtor’s perspective, one of the chief reasons for avoiding judgments is the fact that they are considered real property in the eyes of the law. What does that mean? It means judgments can be sold and traded like any other asset. An otherwise cooperative creditor could eventually get fed up and sell the judgment to a debt collection agency less willing to work with the debtor.
4. Debtor: Fees and Interest Apply
While there are some exceptions to the rule, most judgments are for amounts that go above and beyond what was originally owed. They often include a requirement to pay attorney’s fees and court costs. If the original debt allows for it, a judgment can also include interest. Simply put, allowing a debt to go to judgment only means paying more on it.
5. Debtor: Judgment Collection Can Be Unending
Finally, it is a good idea for debtors to never allow their debts to get as far as judgment for the simple fact that judgment collection can literally be unending. States typically have statutes of limitations on judgments ranging from 7 to 10 years. But judgments can always be renewed. So if you’re slow to pay, you can be dealing with a creditor or collection agency for decades. That is no way to live.
Both creditors and debtors have very good reasons to avoid court-ordered judgments. Judgments do serve a purpose and are sometimes the only option left on the table. But when there are other options available, it is better for both creditors and debtors to select one of them. Going to court should be the last resort for creditors. Debtors should never ignore their debts long enough to wind up in court.