How Long Does A Creditor Have To Collect A Civil Judgment?
by Arnab Dey Finance 14 April 2023
Civil litigation often results in judgments that include some sort of monetary award.
An award can cover a previously unpaid bill along with the creditor’s legal expenses. In something like a personal injury case, an award can include different types of damages. The question many creditors ask after winning is how long they have to collect the award.
The answer to that question varies from one state to the next. For the most part, civil litigation is a matter for the states to regulate. And as you might imagine, they regulate differently. The amount of time a creditor has to collect a civil judgment really boils down to the statute of limitations in the state in which the case originated.
Creditors Have Years
Despite statutes of limitation restricting the length of time creditors have to collect, creditors still have years to do what they need to do. On average, statutes of limitation run 7-10 years for domestic judgments. A few states have statutes of limitation of as little as 5 years while others are as long as 20 years.
There is also the matter of renewal. Nearly every state allows creditors to renew judgments prior to expiration. Renewing resets the clock, so to speak. However, there may be limits. Some states do not allow indefinite renewals. They limit the number to keep the total time a creditor has to collect within reason.
The statute of limitations on a domestic judgment is pretty easy to understand. Things get tricky when you are talking about out-of-state judgments. Why would that even matter? Because there may be caused for a creditor or collection agency to go after assets located in another state.
Judgment Collectors, Utah judgment collection specialists who operate in 11 states, says it’s not unusual for agencies to uncover assets located outside of the original jurisdiction. The assets could be located in another county. They could also be located across state lines.
In order to go after property in another state, a creditor or its collection agency must file the proper paperwork in the new jurisdiction. Some of the laws of that state will now apply to collection efforts within its borders. This can include a different statute of limitations.
Striking a Difficult Balance
It can seem to creditors that statutes of limitation on civil judgments are unfair. A statute of limitation limits their ability to collect, at least to some degree. But the reality is that limiting the amount of time a creditor has to collect is intended to strike some kind of balance between the two parties. It is a difficult balance to achieve.
On the one hand, it seems as though creditors should be able to go after debtors indefinitely, when those debtors have the means to pay but simply refuse to do so.
On the other hand, are debtors who really don’t have a realistic ability to pay. Despite a judgment being rendered against them, they do not deserve to be hounded for the rest of their lives. If they don’t have the money, they don’t have it.
Where does this leave creditors at the end of the day? It leaves them with the knowledge that they have only a limited time to collect. The longer they wait to get busy, the less likely they are to actually get paid.
As Judgment Collectors like to say, time is the enemy. That’s why they recommend enlisting the help of a professional collection agency from the very start. The sooner a collection agency gets to work, the greater the chances of success.