Companies have been outsourcing their judgment and debt collections for decades. Today's economy has helped to create a new choice for judgment enforcers, collection agencies, and collection departments to also outsource some of their judgments for collection. My articles are my opinions, and not legal advice. I am a judgment broker, and am not a lawyer. If you ever need any legal advice or a strategy to use, please contact a lawyer.
To recover judgments, not just any collection agency will work. Most collection agencies will not be a good fit because most do not recover judgments or are too expensive, or do not use lawyers to recover judgments. There are important advantages to hiring collection lawyers to recover judgments, including they are welcomed in every court, know what they are doing, and tend to impress debtors to pay faster. An ideal collection company to outsource debts and judgments to, is one that has these five features:
1) Attorney-based, with lawyers in all 50 states.
2) Cheap, under 35% is preferred.
3) Large enough that you do not depend solely on one person, yet small enough to care about your business.
4) Licensed in all 50 states, and the ability to collect judgment debts in most countries is a bonus.
5) No upfront fees, and preferably no fees at all. Note that when a company is owned by attorneys, and uses them, state laws may require the creditors they represent to pay modest court filing fees, if they are required. This is unfortunate, however if the judgment owner was enforcing the judgment themselves they would have to pay the same court fees. Also, if any judgment enforcer was recovering the judgment, those fees would be deducted off the top, before any recoveries were split.
When a collection company has all five of those features, and has competitive rates (e.g.) 33.3%, it can make sense for a company or person to consider outsourcing some of their judgments or debts. Even when a collection agency or judgment enforcer (enforcer) has 50/50 contingency contracts with creditors, when an outsourced expert collection company charges 33.3% to recover, the math can make sense. There are at least two ways that possible recoveries can be split, one way is to pay the creditor 50%, and the enforcer keeps 16.6%, or the enforcer keeps 33.3% and splits the other 33.3% with the creditor. Another option is between those two, giving the original creditor the bigger share.
Outsourcing judgment and debt collection makes sense when an enforcer is too busy, or a judgment debtor moves out of state, or the judgment situation is too complex. It also makes sense for collection departments and companies that do not have enough staff to recover their own judgments or debts. Some collection companies have outsourced judgment collections when their main business is not judgments, or after a key judgment recovery employee leaves.
Individuals and businesses, with judgments that need to be recovered, will find that when they choose the right company to outsource to, they will save hassles, time, and money. The best part of outsourcing a judgment for collection is, usually one does not have to give up ownership. Not assigning a judgment adds a level of safety. Not changing the ownership of a judgment is also very convenient.
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