Business owners commonly choose to pursue delinquent debt by suing the organization that is indebted, using the court to remedy the situation by seeking 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.
The problem lies in that the court fulfills its purpose in this sort of dispute by determining right and wrong and designating what the remedy should be as opposed to what it will be. Pursuing enforcement of collection judgments is often viewed by the system as a waste, requiring further resources be spent on the attempts at demanding payment from the indebted party. Because even monitoring the activity is a costly burden, courts often leave business owners to use their judgment award in pursuit of their own debt collection.
Collecting a judgment successfully can be painfully difficult. In fact, Brian Petrone, owner of a bail bonds and judgment enforcement agency in Venice, FL and Brunswick, NJ, states that eighty percent of awarded judgments are never collected.
After obtaining a judgment, and finding that the court doesn’t enforce payment, many businesses then seek out a commercial debt collection agency to collect their judgment. The conventional thinking is that a court-awarded judgment gives more weight and credibility to take to the collection agency. And given that, they should be able to successfully collect the debt.
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 individual owing money isn’t going to be inclined to pay at all once he discovers the court is not willing to enforce the judgment.
Rather than pursuing a judgment award first, hiring a commercial debt collection agency before these pursuits can yield much greater success in collecting the unpaid debt. Think of the court order as a last resource, not the first.
In most cases, commercial collection agencies are highly motivated to successfully resolve past due debts. This is because they typically work on a contingency basis, meaning they are paid if – and only if – they succeed in the pursuit of the unpaid sum. Business owners find commercial collection agencies also to be the least expensive option, charging the smallest contingency fees (20% and less).
Because commercial debt is different than consumer debt, a business debt collection agency usually have more tools and options at their disposal to help them recover more past due accounts. For instance, asset and private investigations can net much better results than simply sending demand letters and phone calls. Many past due accounts can be resolved relatively quickly using these tools.
Also, discover more important facts and resources on collection agencies, in addition to business debt collection solutions.