Effective debt collection practices by commercial entities include the use of civil court cases brought against consumers and other businesses. Efiling of civil actions is the norm in California courts, as has been the case in recent years.
When the usual debt collection efforts have failed to result in payment, aggressive legal actions become essential for many businesses, especially to recover on high-dollar debts.
After a judgment is procured
Thirty days after a debtor has been served with a copy of the judgment, a debt collector can obtain a writ of execution and can then turn to various judgment enforcement methods, including:
Wage garnishment
The creditor may be able to intercept up to 25% of a working debtor’s wages, with some exceptions. The local sheriff’s office can provide instructions.
Bank account levies
After obtaining a writ of execution, a creditor can levy a debtor’s bank account and, in some cases, the debtor’s spouse’s bank accounts, with the help of the sheriff’s office.
Seizure of property
Putting a levy on a vehicle and/or a lien on real estate are the first steps to seizing these assets. Other types of tangible personal property may also be seized.
In extreme cases involving contempt of court by a debtor, incarceration is a possibility. A creditor should work with an attorney for information on how to communicate with a debtor about this threat.
Additional teeth in enforced collections
Up to 10% interest may be added to unpaid portions of a judgment, as well as additional collection costs, through a court procedure every time enforcement costs are incurred or when judgments are renewed. Collection costs may include fees paid to:
- A court for documents and hearings
- A sheriff for wage garnishment and bank account levies
- A registrar for filing a lien on real property
Judgments may be renewed after five years and must be renewed every 10 years to remain in force.
To maximize the likelihood of success, a collector should enlist a knowledgeable attorney to guide the enforcement of judgments.