Business The River Of Life

5 Common Reasons for Small Civil Judgments

We often hear about the multi-million-dollar judgments against companies who lose civil lawsuits. What we do not hear about are the much smaller judgments that courts enter every day. They may be worth only a few thousand dollars or less, yet they are every bit as important to the creditors involved.

For the purposes of this post, a small civil judgment is worth $50,000 or less. That includes attorney and other legal fees. Once you get above the $50,000 threshold, you are typically talking larger sums that include civil penalties and possible damages.

Judgment Collectors, a Salt Lake City firm that provides specialized judgment collection services in six states, says that small judgments make up the bulk of the cases in most states. They cite the following five reasons such judgments are entered:

1. Unpaid Rent

Civil courts are often the only remedy for landlords who cannot seem to get their tenants to pay the rent. Landlords can only wait so long, then they have no other choice but to begin eviction proceedings. In addition to eviction, landlords seek a judgment that allows them to collect back rent.

Given that most states allow judgment enforcement for 7 to 10 years, a landlord could be left trying to collect for quite a long time. That is where judgment collectors come in. They take on the responsibility of tracking down errant renters and getting them to pay.

2. Unpaid Car Loans

Used car dealers who self-finance turn to the courts when customers stop paying their loans. Because these are small-time operations, they don’t have the same resources as a national bank or local credit union. A court judgment is their best chance at recovering what is owed to them. Note that sometimes repossession and sale is the preferred recovery method.

3. Divorce Settlement

You may not know this, but a divorce is a legal proceeding that must be approved by a judge. Even in uncontested situations in which divorcing couples manage to part amicably, a court must still sign off on the divorce. Divorce courts routinely enter awards structured as maintenance payments or child support.

Unfortunately, it is far too common for both types of payments to go unpaid. Spouses can choose to not pay for a number of reasons. Maybe it’s genuine financial hardship; perhaps it’s spite. Regardless, a judgment collection agency will use every tool at its disposal to bring maintenance payments and child support up to date.

4. Unpaid Utility Bills

Local utilities are generally monopolies operating with state and local approval. In exchange for being allowed to operate as such, utilities are often forced to allow customers to go considerable lengths of time without paying. When push eventually does come to shove, utilities stop service and turn to the courts for judgment.

It is understandable that utilities would want to avoid judgments whenever possible. Why? Because these represent bad PR. Utilities cannot afford bad PR in the sense that they rely on state regulators for rate approval. They do not want to get on the regulator’s bad side.

5. Unpaid Mortgages

Finally, courts have no problem entering judgments against homeowners who don’t pay their mortgages. In most cases, this sort of judgment is satisfied by way of the property lien filed by the bank when the mortgage was originally funded. The bank seizes the property, sells it, and uses the proceeds to pay the mortgage.

There are lots of other reasons civil judgments are entered against defendants. It all boils down to paying legally incurred debts. The best way to avoid a judgment is to pay what you owe.