Why Do Debt Collectors Put Time and Effort Into Property Searches?

You might not be aware of it, but debt collectors of all kinds have a habit of running property searches on their debtors. There are a number of reasons to do so. Needless to say, it is in their best interests to learn all they can about debtor assets. That means searching all sorts of records to find property a debtor owns.

Property and Standard Debt Collection

For the purposes of this post, I am going to separate what I refer to as ‘standard debt collection’ from judgment collection. A judgment is a specific kind of debt backed by a court ruling. Standard debt collection involves debts that have never gone to court. They include:

• Utility bills
• Medical bills
• Car payments
• Credit card payments

All these standard debts could wind up in court at some point, which is why debt collectors put time and effort into property searches. A property search could prove invaluable should a debt collector take a case to court and win a money judgment. More on that in a moment.

Even without going to court, a property search gives a debt collector a better picture of a debtor’s finances. The knowledge can help a debt collector better understand whether a debtor can truly afford to pay. If a debtor owns significant property but is cash poor, the property could still be utilized to make payment.

Property When Judgments Are Collected

Property takes on a whole new value when judgments are being collected. Why? Because most states allow judgment creditors or their agents to obtain writs of execution against certain types of nonexempt property. A writ of execution provides the authority to seize and sell a piece of property for debt payment.

Utah’s Judgment Collectors, a specialized collection agency based in Salt Lake City, explains that a writ of execution can normally be obtained against assets like vacation properties, rental properties, jewelry, collectibles, etc. In terms of real property, debt collectors are looking for anything that is not considered a debtor’s primary residence.

A collection agency in a standard debt collection scenario may ultimately take a debtor to court. If there is any chance of doing so, a property search could motivate the debt collector to go to court more quickly.

Property Equals Leverage

The bottom line for debt collectors is that property equals leverage. Take a case Judgment Collectors worked on some years ago. While working a judgment that a bank had long since given up on, the agency located property the bank did not know the debtor owned. To no one’s surprise, the debtor was willing to refinance that property to pay his judgment. Doing so was a far better alternative than having the property seized and sold.

Debt Collectors Have Plenty of Sources

By now, you might be wondering how and where debt collectors conduct property searches. No doubt they have plenty of sources to choose from. Property records are all public, so that is the starting point. But debt collectors also scour social media, run credit checks, and even purchase proprietary data from which they can glean relevant information. There is no shortage of sources that can point debt collectors to debtor assets.

Property is important in debt collection because it has value. Whether a debt collector utilizes property as a means of encouraging a debtor to pay or ends up seizing that property through a writ of execution, property is leverage for getting paid. If I owed significant debt subject to collection, I would protect my property by finding some other way to pay.