An entire industry has grown up around the collection of debts. In fact, this industry had gone to such extremes in the past (such as calling a debtor from the emergency room of a local hospital, telling him a loved one is injured, and then demanding payment when the panicked debtor arrives at the hospital) that Congress found it necessary to pass the Fair Debt Collections Practices Act to constrain over-zealous debt collecting agencies. However, a debt collection “mill” is no substitute for an experienced collection attorney.
Today, the standard operating procedure for many debt collection agencies is simply to produce a never ending stream of correspondence and phone calls threatening harm to the debtor’s credit rating and impending lawsuits. Their theory is that the debtor will eventually agree to pay in order to stop the harassment. However, because of the large number of files these debt collection agencies handle, they rarely follow through with their threats to sue, and some debtors are so accustomed to these letters and calls that they simply ignore them.
The most effective approach is to follow any letter with a lawsuit if the debtor does not cooperate. This is something only a lawyer can do. It is useful even for an attorney to send one letter demanding payment, because a number of debtors, who understand that an attorney can file suit at any time, will actually pay when they receive a demand on an attorney’s letterhead. Although a few will pay after a letter, some are not persuaded until the Sheriff delivers a lawsuit to their door.
Debtors will sometimes contest a lawsuit, either representing themselves (“pro se”) or through an attorney. The ones who contest the suit can litigate the matter for six months to two years or longer. However, when a suit is not contested, a judgment by default can be entered against the debtor in as little as 30 days. Some debtors will pay only after a judgment is entered against them.
Once the judgment is entered, the full coercive powers of the state are at the creditor’s attorney’s disposal. Those forces are brought to bear by the filing of a writ of execution which directs the Sheriff (in state court) or the United States Marshal (in federal court) to seize the debtor’s property, even property that is in the hands of a third party, and to levy upon and sell the debtor’s real or personal property to satisfy the judgment debt. Any number of letters sent by a collection agency will never be as effective as having a uniformed officer of the court arrive upon the debtor’s doorstep to levy upon and/or seize the debtor’s property. A large percentage of debtors are persuaded to pay by a visit from the Sheriff and/or the seizure of their property. Still more will pay just hours before the Sheriff’s Sale to avoid losing their property. A few who are not so persuaded either have their seized property turned over to the creditor or sold at Sheriff’s Sale.
A few of the remaining debtors who have not been convinced to pay by this time will file for bankruptcy. An attorney can ensure that the creditor’s rights are protected, even in bankruptcy court. However, more likely than not, the debtor will, with the blessing of the bankruptcy laws, pay creditors only cents on the dollar.
Even in cases where a writ of execution is not used, collection can also be achieved through the “judgment lien.” Once there is a judgment entered in a county court, it becomes a lien upon all real property of the debtor in that county. If the debtor owns real property in another county, the judgment can be moved to that county where it becomes a lien upon that real property. However, the judgment lien is for the patient creditor � there is no payment until the debtor sells or tries to refinance the property.
No matter the outcome, an aggressive approach including filing a lawsuit without undue delay, will be more successful than mere harassing letters. Collections should be pursued by an attorney who understands the best tactics that will get you your money’s worth.
— Mike Malin