Unlocking value from your dormant judgments (DJs) is a process of patience and diligence. At the point of expiration, any potential for voluntary payments has likely already passed, recoverable assets may not exist, and the sentiment of the consumer toward the creditor may have turned adversarial during the legal process. The risk and investment levels of post-judgment legal remedies are typically higher than their pre-suit counterparts due to these and more complex legal considerations associated with recovery in a DJ context. Especially in the case of dormant judgments, legal recovery is generally a “long-play” strategy; however, the investment of time and resources can be worthwhile when well-managed and strategically executed, and can further enhance the overall value of your portfolio. Since almost all consumers are either a current or future credit customer, clearance of dormant judgments through payment in full or settlement are frequently in everyone’s best interest.
Wins & Wanes of the Legal Cycle
After two years post-judgment, recovery increases less rapidly as involuntary post-judgment remedies (bank, tax, and wage garnishment) account for a majority of recoveries. Still, legal collection batches continue to produce incremental net liquidation 8-10+ years post-charge-off as judgments can be renewed on 5, 10- and 20-year cycles (state dependent). Some accounts will produce late-cycle liquidation through judgments that are issued with a lien against real property. (These liens need to be cleared to sell real estate, and will often drive the consumer to address account resolution for Satisfaction of Judgment and Release of Lien before the sale.) In the case of a dormant judgment, the window of opportunity has lapsed unless the judgment is revived. Therefore the attorneys representing the plaintiff must diligently adhere to the local, state and federal regulations as well as the client Service Level Agreement (SLA) to successfully renew the expired order.
Multi-Tiered Asset Scrubs
Determining which accounts are worth the work effort involved in reviving dormant judgments needs to be a data-driven process to efficiently allocate resources and effectively maximize returns. Too much up-front investment on the wrong accounts could adversely impact the ultimate value of your judgments and overall portfolio. A strong data waterfall should drive operational decisions, with an automated system that consistently searches and flags assets to aid in identifying opportunities for recovery. A multi-tiered approach is the key to identifying as many garnishable assets as possible. Verified assets can quickly lead to better individual account and portfolio performance.
Measured & Managed Performance for Dormant Judgements
Measuring account-level work effort and outcomes is also critical to ensuring return on investment of dormant judgment accounts selected for renewal and execution efforts. Key Performance Indicators (KPIs) should include a Dormant Judgment Exception metric. Exception reporting helps Performance Managers to identify and focus on particular areas that may require additional attention from a skip tracing, administrative, or legal work perspective to capitalize on areas of opportunity. Having a performance manager assigned to monitor and manage KPIs, Exceptions, and Service Level Agreements in coordination with firms could be likened to a coach guiding a quarterback based upon data gathered from previous plays. Without perspective outside the immediate arena, latent opportunities might be missed— not for lack of effort or ability, but for lack of the larger-scale view necessary to identify and communicate them. Third-party account management is an investment in ensuring large volumes of accounts are processed as efficiently as possible, ultimately improving returns and mitigating risk for the client. This is particularly true in the case of specialty asset classes such as dormant judgments.
Balanced Account Management
Managing dormant judgment accounts to produce compliantly profitable outcomes is a delicate balance of reducing waste in account work and maximizing performance. Harvest Strategy Group partners with creditors to provide refined data systems and account management expertise necessary to get the most out of pre- and post-judgment portfolios, including dormant judgments. Over the long lifecycle of a legal placement, managing Dormant Judgments helps to further drive upside from the program. Harvest requires its law firms to use a series of reporting codes that are indicative of account-level work effort and outcomes, and holds law firms accountable with service level agreements that require work effort and investment in asset searches throughout the legal life cycle.
Harvest’s Exception Reporting helps performance managers to get ahead and be proactive vs. reactive – with the objective of consistent asset searching on “dormant judgments” to identify opportunities for recovery. Harvest expects law firms to search for viable bank, wage, and tax assets, but supplements what law firms do through the use of skip and asset location services. While there is often overlap in the vendors used between Harvest and the firms in the network, doing our own scrubs increases our odds of finding an asset to execute upon. The high volume of accounts submitted as opposed to a smaller law firm sometimes translates into lower prices for these services.
About Harvest Strategy Group
Harvest Strategy Group provides single-point-of-contact, nationwide recovery management services for banks, finance companies, debt buyers, and credit unions. The company fosters an entrepreneurial environment and encourages its staff to challenge boundaries, think outside the box, and feel a sense of ownership and accountability for results. The Harvest team’s mission is to lead the accounts receivable management industry through strength in partnerships, exceptional service, and the delivery of superior results. To join the team, apply to Harvest Strategy Group online.
