What is the Difference between a Judgment and a Collection?

A common misconception is that when you sue for damages or an outstanding/unpaid debt, you automatically recoup your money if the judgment is in your favor. The fact is, this isn’t always the case. There is a big difference between a judgment and a collection. A simple definition: judgment is winning the lawsuit and a collection is recouping the monies awarded. But lets take a closer look.

What is a judgment?

A judgment is the court’s decision or the official result of the lawsuit. It is a court order that declares one party (debtor) owes the other (creditor) a debt. A judgment against the debtor means they have a legal obligation to pay the amount they owe.

The party against which a monetary judgment has been entered (defendant) owes a judgment debt and is referred to as a judgment debtor. The party to whom the judgment debtor owes money (plaintiff) is referred to as the judgment creditor and has the right to collect the judgment debt.

Courts can pass judgment against a debtor in various legal actions, including breach of contract, personal injury lawsuits, and foreclosure actions.

What is a collection?

Suppose the judgment debtor fails to pay for the debt voluntarily. In that case, the judgment creditor can take legal action to collect the debt. Collection refers to the legal methods available to creditors to collect a debt.

The most common collection methods include:

• Wage garnishment: A process where the employer withholds a portion of the debtor’s wages and pays directly to the creditor.
• Seizure of monies through bank account levies A process where a creditor freezes the debtor’s bank account and takes funds from the account to satisfy the judgment.
• Seizure of personal property: A creditor can seize the debtor’s personal property, including a car, jewelry, or furniture, and sell them to satisfy the judgment.
• Putting a lien on real estate and personal property: A property lien is a legal claim against a debtor’s property that gives the creditor the right to take possession of the property or sell it to satisfy the judgment.

States have different collection procedures, and creditors must follow specific rules and guidelines when collecting a debt.

What is the difference between a judgment and a collection?

The main difference between a judgment and a collection is that judgments are court orders requiring a debtor to pay a debt. In contrast, collection refers to the legal methods available to the creditor to collect a debt. A judgment removes the element of choice from a debtor and allows collectors to force payments.

Another difference is that judgments can only be issued through the court. However, when it comes to the collection, creditors can choose to enforce the court’s decision through the help of the available legal channels or by seeking the services of a collection agency.

Should you hire a collection agency?

Collection agencies such as Creative Judgement Solutions Inc. have the relevant judgment collection experience. Also, they are familiar with the Fair Debt Collection Practices Act and have various ways to help you turn your judgment into cash, including selling and assigning it.

When you win a court judgment, the court does not collect your money; they have limited authority to compel payment. Thus, you must know what to do when a debtor fails to pay you.

Seeking professional help from judgment collection agencies can help you understand your options and quickly create a plan to liquidate your judgments, turning them into cash. Reach out to us so we can review your choices.