Bare Doctor Blog: Lubell & Rosen Law Firm

Let’s begin with collectors themselves.  Collecting a judgment can be a difficult, time-consuming, and sleazy process. That’s why attorneys turn the job over either to their collections departments (if they have one) or to third-party collection agencies. Most physicians and hospitals are familiar with such agencies because they use them regularly to recover unpaid receivables.

Collection agencies work on commission. The more they recover, the more they earn. It’s in an agency’s best interests, therefore, to use any and all tactics to intimidate you into voluntarily parting with your money (or to annoy or intimidate you into submission). Threatening letters, emergency faxes, persistent phone calls—these are just some of a collector’s old standbys.

Your case is just one of many any given agency handles. It’s also one they find attractive. That’s because the court has already rendered its judgment, and the “lawyering” is done. They don’t first have to hire their own attorneys or accumulate attorney fees on behalf of their clients. The court has ruled you owe money; theoretically, all they have to do is collect.

In reality, however, not all court-rendered debts are attractive to them. Some, in fact, are unattractive because they represent “old” debt. Collection agencies, you see, make their largest profits from “new” debt, namely, that which debtors fully intend to pay off even if they have not yet done so for whatever reasons. Debts that have gone unpaid for several years, however, are considered low-value debts and are less attractive.

Debts themselves have different values. They increase in value when they turn from unsecured debts into secured debts. Judgments rendered in court are unsecured debts, namely, debts without collateral. Debts with collateral are, obviously, more desirable. For example, the mortgage on your office building is a secured debt; the mortgage is secured by the property itself. Should you default on your mortgage, the bank may foreclose on the secured real estate. No matter how large an unsecured court judgment, the bank with the secured interest will always be first in line to get paid upon the property’s liquidation. If there is any money remaining, other judgment holders can try to collect on it.