Does a Collection Agency Collect Civil Money Judgments?

When a defendant loses a lawsuit, he may be ordered to pay damages to the plaintiff. These damages, referred to as a civil judgment, are like any other debt. The defendant is legally obligated to pay them, and, if he does not, the plaintiff may takes a number of steps to recover the money. This includes hiring a collection agency to incur payment of the funds.

Civil Judgments

When a judge or jury awards money to either a plaintiff or defendant in a civil lawsuit, the civil judgment becomes a legal debt obligation of the losing side in the case. The side awarded the money becomes, in effect, a creditor, with all the rights that are given to a creditor. Under U.S. law, creditors are allowed to transfer debt or have other people collect the debt on their behalf, such as collection agencies.

Collection Agencies

A collection agency will usually either purchase a civil judgment outright -- often for pennies on the dollar -- or they will be hired on commission, meaning they are compensated with a percentage of the money they collect from the defendant. Collection agencies are not legally barred from collecting civil judgments; however, they must abide by the ruling of the court and cannot add additional interest or fees to the judgment, or make the debtor pay before the money is legally due.

Use of Collection Agencies

While a collection agency can legally be hired by a person seeking payment of a civil judgment, it doesn't mean that the person will do so. Instead, the person may choose to attempt collection himself. Or, if the person refuses to pay, they may petition the judge who made the ruling to secure collection of the money through additional legal pressure.

Considerations

While a collection agency is empowered to collect civil judgments for a creditor, there may be several actions that he cannot legally take. For example, a collection agency may not be legally allowed to garnish the debtor's wages or seize his bank account, depending on the laws of the state. In addition, the collection agency must respect the statute of limitations and cannot collect the damages after the statute has expired.