Can a Collection Agency Seize Property to Pay Off a Judgment?

House in chains. Concept - risks, lose property, seize, mortgage.

Being on the wrong end of a civil judgment is not a good thing. A judgment entered against you establishes liability. It establishes that your behaviour has harmed someone else. And in most cases, it establishes a legal debt you owe to the other party. Can the other party, or its collection agency, seize your property to pay off what you owe? That depends on how you look at it.

In a civil case resulting in a money judgment, collection of the debt is referred to as ‘enforcement’. Courts do not involve themselves in enforcement efforts except under special circumstances. Enforcement is left to plaintiffs, often referred to as ‘judgment creditors’.

Judgment creditors have certain legal tools they can utilize. One of those tools, at least in most states, is property seizure and sale. But under the letter of the law, neither the creditor nor its collection agency handles seizure and sale directly. Keep reading to learn how this works.

Contact the County Sheriff

Most states allow judgment creditors to go after certain types of property in order to satisfy outstanding judgments. The types of property they can go after differs from one state to the next. For example, the judgment collection specialists at Judgment Collectors in Salt Lake City says that Utah limits property seizure to real estate. When that real estate is the debtor’s primary residence, a certain value is protected under the state’s homestead exemption.

Other states allow creditors to go after both real estate and personal property. Personal property could include jewelry, collectibles, and even securities. Depending on how you look at it, garnishing wages and bank accounts could be considered going after a debtor’s property.

Regardless, states do not allow creditors and their collection agencies to directly seize and sell property. Instead, they are required to contact the county sheriff and furnish a copy of the seizure order. The sheriff’s office takes it from there. Deputies will contact the debtor, let that person know of the seizure, and then take possession of the property. Said property will then be sold at auction by the sheriff.

When Debtors Hide Assets

Judgment Collectors explains that the ability to seize and sell property is why so many judgment debtors try to hide their assets. In fairness, they are often encouraged to do so by their attorneys. The thinking is that creditors and their collection agencies cannot go after assets they don’t know exist.

Hiding assets only makes collection efforts harder. That is the point. Even if debtors are not aware themselves, their attorneys know that judgments come with statutes of limitation. Stonewalling and stalling is designed to keep stringing things along until the statute of limitations is reached.

Such tactics do not easily deter an experienced collection agency that specializes in judgments. Collection agencies are staffed by individuals who are experts in tracking down debtors and their assets. They use every tool available – like public records, skip tracing, and social media – to do what they do. The best of the best are very good at it.

Property Can Be Seized

Regardless of the details of individual state laws, the whole question of property seizure boils down to the fact that it happens. Seizing and selling a debtor’s property is typically an action of last resort. But if a debtor simply refuses to cooperate, he often leaves the creditor no other choice.

Can a creditor’s collection agency seize and sell your property to satisfy a judgment? Technically, no. The county sheriff handles seizure and sale. But at the end of the day, you are left with the same result.