The goal in judgment collections is to get as much money as possible, as quickly as possible.
The reason behind the “as much as possible” part is easy: clients want full recovery of the amounts owed.
The reasons behind the “as quickly as possible” are numerous. Maybe you’re competing with other creditors for the same pot of money. Maybe your debtor is getting ready to leave town (or spend all his money). Maybe you think a bankruptcy is on the horizon.
As a result, when deciding what collection tool to use first, always consider which tool gets you the most money the fastest. Judgment liens that immediately attach to any and all properties are a great start. Bank levies that seize all the money in a bank account aren’t bad.
When in a hurry, however, wage garnishments aren’t always your best bet. Here’s why: under Tennessee exemptions law, a wage garnishment is only effective against about 25% of a debtor’s wages (Tenn. Code Ann. 26-2-106). Plus, wage garnishments are applied in the order they are filed, meaning you can get stuck behind other creditors. Finally, a wage garnishment might be the last straw that pushes someone into Bankruptcy…meaning you probably get paid nothing.
Don’t get me wrong–knowing your debtor is working and earning regular income is a great sign of collections to come. But, in the grand scheme, getting just 25% of the earnings spread out over 6 months might not be your best first move.