Judgment Recovery Case Study: The “Eyes” Have It

Have you ever found yourself wondering what sort of issues bring people to court? There’s the usual run of the mill stuff… unpaid loans, property disputes, evictions – and all that. But every now and then a case comes along that just goes to show that sometimes there’s nothing mundane about civil disputes.

Consider the following case, where Janet Lawrence responded to an advertisement at a local tattoo parlor for a cosmetic procedure. Ms. Lawrence had long been thinking about permanent eyebrow application, which is generally done via tattoo. Initially, all went well and Ms. Lawrence was very satisfied with the results. A few days later told a different story, however, as an infection had set in. The consequences were, let us say… less than attractive. It also caused permanent disfigurement and scarring. According to Janet’s doctor, this type of infection was usually caused from exposure to dirty or poorly sterilized equipment.

After unsuccessfully seeking reimbursement from the tattoo parlor for the cost of the initial procedure and her medical bills, Ms. Lawrence took the tattoo parlor to court and was awarded a $2,400.00 judgment.

Some general statistics about this case: By the time it had been assigned to me, the judgment was 8 years old. In this state, judgments are enforceable for a period of 10 years, and can be renewed indefinitely. Interest was also accruing at the legal rate of 10%, so by this time the actual amount due was approximately $3,600 (and change), and accruing interest at the rate of $0.65 per day.

The first order of business was to find out if the tattoo parlor was still up and running. After a quick check with the city’s business licensing department, it was no surprise to learn that the business had gone under years ago. Not too shocking, considering their methods of operation left a lot to be desired. It wasn’t a total loss, though, because I was able to determine that the business was structured as a sole proprietorship – or ‘D/B/A’ – rather than an LLC, a corporation, or other separately structured entity.

A little background information will help you understand the critical differences when it comes to how businesses are structured. A sole proprietorship (D/B/A) is simply an individual person operating under an assumed business name – legally it’s just an extension of the person. This is important because it means that even if the business is not still operating, the individual person is still responsible for the debts incurred under the business name. The same is not true of an LLC or other incorporated entity. That type of business is considered a completely separate entity – like a whole other ‘person’ – in which case, the officer(s) of the LLC or corporation would not be responsible for the debts incurred by the business.

Why is this important? It means that even though the business failed, I can still enforce the judgment against the owner, Jake Morris. And that’s exactly what I proceeded to do. But wait – it gets better!

I started with my usual due diligence, which is generally always the same. If you missed that in last week’s case study, you can read about it here: http://www.recoverycourse.com/blog/?p=94

While researching the debtor, Jake Morris, I learned that he’d set up shop again a couple of years ago, across town in a new location. Again I checked on the business status, and yes – another sole proprietorship. This was excellent news, because it meant that now I could not only proceed with the seizure of any assets owned by Jake Morris, but also his new tattoo parlor.

There are many ways I could have gone with this case. I could have spent time and resources finding property, bank account(s), and other personal assets belonging to Morris, but rather than waste valuable time and expense, I decided to go right for the jugular: the new business.

Surely having had to cope with a lingering bad rap from his last tattoo parlor, I anticipated the fastest way to make Morris pay would be to use some heavy-duty legal intimidation. I could have seized business equipment or bank accounts – because technically they all were Jake Morris’ property – but instead I went for the most sure-fire way to make him pay.

After having the court issue a writ of execution, I delivered my specific instructions to the County Sheriff’s levying officer. The County Sheriff’s office has a civil department that is dedicated specifically to acting on the instructions of judgment creditors to seize assets.

On Friday (which I assumed would be one of the tattoo parlor’s busier days), soon after opening, a Sheriff’s Deputy strolled through the door in full uniform. He served Morris with a copy of his official paperwork, notifying him that anything in his cash register was being taken to satisfy the judgment. Then the Deputy proceeded to take up station behind the register, and prepared to remain there for the next eight hours, intercepting any payments that customers would be making that day. This is referred to as a ‘Keeper.’

Although I wasn’t there to personally witness, I’m told by the deputy that Morris had a check in hand for the full amount of the judgment in less than five minutes. Have a nice day, sir.

Next week I’ll send the third installment of this series; a case study involving a company that sued another company, and the details that led to not only a great resolution, but an ongoing business relationship that’s still active today.

As usual, I welcome any comments or questions.

Warm Regards,

Christina

Christina Smiley
Sierra Judgment Recovery
SJR Strategic Research

Please note: I am not an attorney, nor do I aspire to be one. If you need legal advice, please consult qualified legal counsel.

7 thoughts on “Judgment Recovery Case Study: The “Eyes” Have It

  1. That was cool! taking care of business that easy. It seems to me that it would be very important that you have good skiptracing tools to find these
    debtors. Looking forward to reviewing more cases, and leaning more on
    how they were located. Thank you!

  2. Hello Christina, I have recently started reading your case studies and am getting excited about getting back into the business. Because of my new job, I had to put the business on the “back burner” for awhile but still have more assignments than I know what to do with. I started this business many years back and have collected on many cases.

    By the way Thank You for giving us this awesome Oportunity!!! Your the best!!

    My Regards,
    Rudy Rivera

  3. wow this makes me want to get into this business even more. I can’t believe the outcome although the poor lady had to suffer I see hope she’s was happy with the ending result. now how much of the judgement were you able to keep for k your hard work? just curious? and what does the average case cost the judgement recovery specialist to open the judgement the court fees etc. I’m trying to figure out how much someone should have set aside to start up this type if business for the initial expenses. thanks in advance.

    • I was able to keep half of what I collected on this judgment, which was satisfied in full, including the accrued post-judgment interest. To answer your question about start up costs and expenses, I sent out a SJR Newsletter not long ago that included an article about judgment recovery start up costs. I’ve included a copy of that for you below:

      >> BEGIN Article

      Question of the Month:
      Judgment Recovery Start-Up Costs

      From: Christina Smiley
      Founder: Sierra Judgment Recovery

      One of the questions I am asked most often is what start-up costs are involved with getting a judgment recovery business off the ground. I know that it stands to reason that if one person is asking it, then ten more people are thinking about it.

      Any new business, regardless of what it is, will require an investment of some sort before putting out the welcome mat – there’s just no way around it. You’ve got to spend it to make it, but start up costs for a judgment recovery operation are surprisingly low.

      By comparison, consider that the average franchise requires thousands of dollars in investment capital. For example, a Subway restaurant will cost $12,500 cash just for the name, and an additional investment ranging from $92,050 to $222,800 – and that’s just to get the door open. You’d need to rent or buy a storefront, hire and train employees, buy equipment and inventory, and buy advertising just for starters. Talk about sticker shock!

      I’d love to be able to give you a specific, solid start up figure – but the truth is, there’s just no way to do it. Rather than just throw some generic figures out there, I spent some time poking around today to try and offer up a realistic cost outline.

      You’ll Need

      A Dedicated Business Telephone Line:
      A traditional business ‘land line’ averages $50/month, if you keep the bells and whistles to a minimum. A great low-cost alternative to that would be a VOIP (voice over internet protocol) program, like Vonage. VOIP works through your Internet connection. Vonage’s Small Business Basic plan includes local service, long distance, a fax line, call waiting, voicemail, caller ID and even call forwarding – all for $39.99/month.

      A Business License from your City or County:
      Annual license fees are around $25-$50, depending on where you are, and whether or not you have employees. The great majority of states only require a generic business license, although a very few states do require collection agency licensing.

      Locking File Storage:
      Sensitive data, like consumer credit reports, bank account information and social security numbers are required to be locked away from potentially prying eyes. You can use an existing desk drawer, if it locks; or you can pick up a locking file cabinet from Wal-Mart for $59. Even a garage sale find would work!

      Stationery (Letterhead, envelopes, business cards):
      Homemade stationery, on quality paper will do – so long as you keep it simple. The cost for a local printing company to print it will depend on the design and quantity. But you can usually order enough to get started for under $100. Try VistaPrint.com for free business cards – you’d just need to pay the shipping/handling cost.

      Post Office Box:
      Unless you plan on having a commercial location (most prefer to be home-based), you’ll need a post office box. If you rent a box from the US Postal Service, it starts at $10 for 6 months. Some people opt for a private mail box service, like MailBoxes Etc, which is about $50 for 6 months. And, don’t forget postage, at $0.44 per piece of mail.

      Asset Location Expenses:
      Locating judgment debtors and their assets (bank accounts, employment, property, etc.) is a key factor to your income. In addition to free resources, like public records, you’ll need access to non-public data as well. Credit report access account set-up averages a one-time $150 fee, and the cost per report is around $7, depending on what resource you decide to use. You’ll also want access to other types of information, like banking detail reports, property searches and people locates. You’ll typically spend a total of $10 – $12 for basic asset location reports for each case.

      Court Filing and Levying Fees:
      While there is typically no cost to research civil judgment files (they’re public record), or to file the document to assign the judgment, you will have court filing and levying fees when it’s time to seize assets through the court. Figure on spending $35-$50 per enforcement procedure. The cool thing about it is that your court filing and levying fees are added to the judgment and the judgment debtor has to pay for them. Any other expenses, like for asset location, are reimbursed to yourself off the top of what you collect.

      Seriously, that’s all I could think of!

      Obviously, the costs to locate assets and acting on that information will vary depending on how many judgments you’re working on at the time, but hopefully this information will help you realistically determine what you’ll need to get started. There’s a pretty nifty breakdown on costs vs. income on the main page my website, if you need some clarity on how much your bottom line will be: http://www.recoverycourse.com

      << END Article

      I hope that helps!

      Christina

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