What Is the FDCPA’s Impact on Judgment Creditors-Turned-Collectors?
Winning a money judgment in civil court gives a creditor the legal right to pursue an outstanding debt against the losing party. Regardless of what the monetary award covers, it represents a legal debt owned by the creditor and enforceable through collection efforts. But judgment creditors turned-debt-collectors are subject to the federal Fair Debt Collection Practices Act (FDCPA).
More About the FDCPA
The FDCPA was approved by Congress in late 1977 to help protect consumers against overly aggressive debt collectors. Lawmakers wanted to eliminate abusive collection strategies while simultaneously giving debtors a legal means for disputing and verifying debts attributed to them.
Legislation covers all debt collectors. Therefore, a judgment creditor choosing to collect in-house becomes a debt collector covered under the FDCPA. If a creditor chooses to assign an outstanding judgment to a collection agency like Judgment Collectors, that agency would then become the debt collector.
Judgments Constrained by Legal Limits
It’s worth noting that even though the FDCPA applies to judgment collectors, the legal nature of a money judgment dictates other constraints that almost make the FDCPA a non-factor.
For example, writs of execution are one of the most powerful tools judgment creditors have at their disposal. A writ of execution allows for personal property owned by the debtor to be seized and sold. But a creditor must go through the court to get a writ. The court procedure provides a built-in buffer to prevent creditor abuse.
The same goes for writs of garnishment, judgment liens, and the other tools judgment creditors have at their disposal. Creditors would be more likely to encounter FDCPA restrictions when agreeing to a voluntary payment plan for a lump sum payment.
The FDCPA’s General Constraints
It is worth briefly discussing the FDCPA’s constraints given that they still do apply to judgment collectors. Note that the law covers how debt collectors can communicate with and attempt to collect from debtors. Debt collectors are generally restricted in terms of:
- Harassment – They cannot harass debtors in any way, including making threats, making false representations, or utilizing unfair practices in their attempts to collect.
- Communication – Debt collectors are restricted in how and when they can communicate with debtors. For example, they cannot call before a certain time in the morning and after a certain time in the evening.
- Clear Notice – A debt collector cannot get around the requirement for clear notice of an outstanding debt and the debtor’s rights. Even judgment creditors must furnish appropriate documentation in a timely manner.
- Asset Seizure – Whether relying on garnishment, property liens, or writs of execution, judgment collectors must follow prescribed court procedures. They aren’t allowed to act independently of a court when using advanced collection strategies.
One could argue that the FDCPA goes too far by offering excess protection to debtors and simultaneously tying creditors’ hands. But one could also make the case that the protections are necessary because debt collectors would otherwise be abusive. You can decide for yourself whether either is the case.
Professional Help Is a Good Idea
Given the combination of court procedures and the FDCPA, trying to collect a money judgment in-house is not always a smart idea. Sometimes it is better to bring in a professional like Judgment Collectors. Another option is to leave collection to the same attorney who represented the creditor in court.
Regardless of who undertakes collection, the FDCPA applies. Judgment collectors must follow the rules, or they risk two things: their own legal jeopardy and never collecting a dime. No judgment creditor wants that after working so hard to win in court.
