Do you want to start a judgment recovery business? If YES, here is a 19-step guide on how to start a judgment recovery business with no money or experience. The judgment recovery professional “takes assignment” on judgments before he or she enforces them.
That means that the judgment is actually transferred into the judgment recovery professional’s name, usually through the same method by which any considerable asset, such as real property, is lawfully transferred. From this point onward, the judgment recovery professional is the new creditor, and is thereby standing in the original creditor’s shoes.
As soon as the judgment recovery professional has “taken assignment,” he or she can then perform all the operations they are streamlined for: pulling credit reports, conducting investigations, bringing the debtor back into court for extensive examination, seizing property, putting liens on homes, garnishing wages, and so on.
If the debtor has assets, it is the job of the judgment recovery professional to locate these assets and seize them. If you are considering starting your judgment recovery business, it is very important that you analyze existing judgment recovery businesses in and outside of your area.
Also, you would be required to check the existing competition, as well as know their strength and weaknesses. Knowing their weaknesses would help you learn from their mistakes and in turn come up with a better and more preferred judgment recovery service devoid of the mistakes and weaknesses of others.
Steps to Starting a Judgment Recovery Business
1. Understand the Industry
The judgment recovery service is classified under the Debt Collection Agencies industry and this industry comprises of businesses that pursue payments on debts owed by individuals and businesses.
Most collection agencies operate as agents of creditors and render their services for a fee or percentage of the total amount owed. Other agencies purchase debt portfolios from creditors at a discount and then pursue outstanding balances for their own gain.
The Debt Collection Agencies industry under which judgment recovery falls under is in a mature stage of its growth. The industry is characterized by growth in line with the overall outlook of the economy, consolidation from the largest players in the industry and wholehearted market acceptance of industry services. The judgment recovery business will continue to be in high demand in the United States.
If you are close observer of happenings in this industry, you will notice that over the five years to 2018, revenue for the Debt Collection industry is expected to contract due to tightening regulations from the Consumer Financial Protection Bureau.
For the first two years of the period, consumers continued deleveraging as they had in the immediate wake of the recession.
From 2015 onward, although households began to readily assume debt, industry revenue continued to decline. This is partly attributed to more stringent supervision from the Consumer Financial Protection Bureau and lower debt recovery rates.
Regulation is expected to tighten further over the five years to 2023, and, as a result, industry revenue is projected to continue to decline.
Interesting Statistics About the Industry
The Debt Collection Agencies industry is indeed a large industry and pretty much active in most developed countries of the world most especially in the United States of America, United Kingdom, Australia and Canada et al.
Statistics has it that in the United States of America alone, there are about 8,941 registered and licensed Debt Collection Agencies cum Judgment Recovery Agencies businesses scattered all across the United States responsible for employing about 126,010 people and the industry rakes in a whooping sum of $12 billion annually.
The industry is projected to enjoy -2.4 percent annual growth within 2013 and 2018. The establishments with the lion share of the available market in this industry are Alorica and Encore Capital Group.
A recent report released by IBISWORLD shows that the Debt Collection industry remains fragmented, with the top four businesses expected to account for 25.2 percent of the industry in 2018. More than half of the industry comprises sole proprietors and partnerships due to the industry’s low barriers to entry.
Market share concentration is expected to continue increasing over the next five years as companies look to mergers and acquisitions for increased revenue.
The report further stated that acquisition activity is common in a mature marketplace, and IBISWorld projects that this trend will continue over the next five years as businesses focus on cutting costs and improving productivity. Companies will look to grow market share by acquiring smaller operators and their portfolios.
One thing is certain about starting a judgment recovery services business, if you are able to conduct your market research and feasibility studies, you are more likely not going to struggle to secure clients because there are always clients all across the United States who would need your services from to time.
Some of the factors that encourage entrepreneurs to start their own judgment recovery business is because the business has low level entry requirements.
Over and above, starting a judgment recovery business requires professionalism and good grasp of how the legal system and debt recovery works. With judgment recovery business, you can afford to partner with other smaller firms that are into debt collection related services and leverage on the industry to increase your revenue.
2. Conduct Market Research and Feasibility Studies
- Demographics and Psychographics
The demographic and psychographic composition of those who require judgment recovery cut across people, groups, associations, startups and corporate organizations that need professionals to help them enforce court judgment to recover debt owed to them.
So, if you are looking towards defining the demographics for your judgment recovery business, then you should make it all encompassing.
3. Decide What Niche to Concentrate On
It is important to state that judgment recovery business is a niche idea in the debt collection industry, and most judgment recovery agencies are known to carry out their core services alongside some or all of the under listed services;
- Account collection services
- Bill collection services
- Debt collection services
- Delinquent account collection services
- Tax collection services on a contract or fee basis
- Collection on debt portfolios
- Repossession services
- Credit reporting services
The Level of Competition in the Industry
The fact that the entry level into the judgment recovery industry is on the low side means that it is a business that is open to anyone that is willing to start the business. This means that the competition in the industry is tough. Please note that there are two levels of competition in this line of business.
First there are competitions amongst big players in this industry and there are competitions amongst small judgment recovery agencies.
The truth is that no matter the level of competition in an industry, if you brand and promote your products or services properly, you will always make headway in the industry. Just ensure you have what it takes to raise capital for your business, to reclaim debts from debtors and you know how to reach out to your target market
4. Know the Major Competitors in the Industry
In the debt recovery industry, there are bigger players who are the first port of call when it comes to collecting debts or enforcing court judgments in the United States of America. These are agencies that have grown over the years to become a force to reckon with.
They didn’t achieve these overnight it takes years of hard work and dedication. These are some of the leading judgement recovery agencies in the United States of America and also in the globe;
- Accounts Recovery Agency Inc.
- Advanced Business Consultants
- Associated Creditors Exchange
- Encore Capital Group
- Classified Collection Network Inc.
- Commercial Collection Consultants Inc.
- DSY Recovery Services LLC
- Fidelity Creditor Service Inc.
- Frederick J Hanna and Associates
- Gleason & Gleason, Inc.
- Innovative Debt Recovery Inc.
- National Asset Recovery Inc.
- Leib Recovery Solutions LLC
- Portfolio Recovery Associates
- Ross, Stuart & Dawson, Inc.
- Snyder Receivable Management LLC
- Vengroff, Williams & Associates Inc.
- William Claybourne & Associates
- Weltman Weinberg & Reis Co
When it comes to starting a judgment recovery business, you just have to get your feasibility studies and market research right before venturing into the business.
It is good to mention that even though it requires minimum capital to launch this business, it is important to state that the judgment recovery business is not for rookies; it is for professionals that have the experience and expertise to handle such business. But an aspiring entrepreneur can learn ropes on the job.
If have plans to start the business from your home on a small scale, you might not have need to carry out comprehensive economic and cost analysis, but if you have the intention of starting a standard judgment recovery agency, then you will be expected to hire the services of experts that will help you conduct comprehensive economic and cost analysis on the business.
If you get your economic and cost analysis right before launching the business, you may not have to stay long before you break even.
5. Decide Whether to Buy a Franchise or Start from Scratch
When compared to other businesses, judgment recovery is not an expensive business to start and the running cost is pretty low.
All you would need is just a computer, a website, email and a separate phone line. As a matter of fact, you can run the business from your home but you need a separate, secure work space with a locking file cabinet and a shredder. You will also need a fax machine or an internet fax solution.
From the above, it shows that the business can be started from the scratch as against buying a franchise. Of course you may decide to buy a franchise if you want to leverage on the success of an established brand to grow your business. Please note that most successful judgment recovery agencies around started from the scratch and they were able to build a solid business brand. It takes dedication, hard work and determination to achieve business success.
6. Know the Possible Threats and Challenges You Will Face
If you decide to start your own judgment recovery firm today, one of the major challenges you are likely going to face is the presence of well – established merchant judgment recovery firms and also debt collection agencies who are offering same services that you intend offering. The only way to avoid this challenge is to create your own market.
Other threats that you are likely going to face as a judgment recovery agency operating in the United States are unfavorable government policies, fraudulent people who may not want to pay back the loans collected or damages incurred, the arrival of a competitor within your location of operation and global economic downturn.
There is hardly anything you can do as regards these threats other than to be optimistic that things will continue to work for your good.
7. Choose the Most Suitable Legal Entity (LLC, C Corp, S Corp)
When considering starting a judgment recovery business, the legal entity you choose will go a long way to determine how big the business can grow.
You have the option of choosing a general partnership, or limited liability or even a sole proprietorship for your judgment recovery agency. Ordinarily, sole proprietorship should have been the ideal business structure for a small – scale judgment recovery agency especially if you are just starting out with a moderate startup capital and operating from your home.
But if your intention is to grow the business and have clients from all across the United States of America and other countries of the world, then choosing sole proprietorship and even general partnership is not an option for you. Limited Liability Company will cut it for you.
Setting up an LLC protects you from personal liability. If anything goes wrong in the business, it is only the money that you invested into the Limited Liability Company that will be at risk. Limited liability companies are simpler and more flexible to operate and you don’t need a board of directors, shareholder meetings and other managerial formalities.
These are some of the factors you should consider before choosing a legal entity for your judgment recovery and debt collection agency business; limitation of personal liability, ease of transferability, admission of new owners and investors’ expectation and of course taxes.
You can start this type of business as limited liability company (LLC) and in future convert it to a ‘C’ corporation or an ‘S’ corporation especially when you have the plans of going public.
If you upgrade your judgment recovery agency to a ‘C’ corporation or ‘S’ corporation, you will have the opportunity to grow the business so as to compete with major players in the industry; you will be able to generate capital from venture capital firms, you will enjoy separate tax structure, and you can easily transfer ownership of the company.
8. Choose a Catchy Business Name from the ideas Below
When it comes to choosing a name for your business, you should be creative because whatever name you choose for your business will go a long way to create a perception of what the business represents.
Before choosing a name for your judgment recovery agency, it won’t cost you anything to go online and check out the names of the leading brands. You can take a cue from them and here are some catchy names that you can choose from;
- Daniel and Co® Judgment Recovery & Debt Collection, LLP
- Xavi® Judgment Recovery Agency
- Ken & Ken Judgement Recovery, LLC
- Early Bird™ Debt Collection, Inc.
- Clear Waters® Debt Collections, LLC
- Team Excel Judgment Recovery Group
- G A P Judgment Recovery Agency, LLC
- Bright Mellow Debt Collection Agency
- Rest Assured Judgment Recovery, Inc.
- Alphonso Zoe® Judgment Recovery and Debt Collection, Inc.
- Sir Lukas® Judgment Recovery, Inc.
- Robin Sarah® Judgment Recovery and Debt Collection, Inc.
9. Discuss With an Agent to Know the Best Insurance Policies for You
You can’t operate a business without having some of the basic insurance policy covers that are required by the industry you want to operate from. So, it is important to create a budget for insurance and perhaps consult an insurance broker to guide you in choosing the best and most appropriate insurance policies for your judgment recovery business.
Here are some of the basic insurance covers that you should consider purchasing if you want to start your own judgment business in the United States of America;
- General insurance
- Risk Insurance
- Credit insurance
- Deposit insurance
- Financial reinsurance
- Lenders mortgage insurance
- Health insurance
- Liability insurance
- Workers compensation
- Overhead expense disability insurance
- Business owner’s policy group insurance
- Payment protection insurance
10. Protect your Intellectual Property With Trademark, Copyrights, Patents
If you are considering starting your own judgment recovery agency business, usually you may not have any need to file for intellectual property protection/trademark because the nature of the business makes it possible for you to successfully run it without challenging anybody in court for illegally making use of your company’s intellectual properties.
But if you just want to protect your company’s logo and other documents or software that are unique to you or even jingles and media production concepts, then you can go ahead to file for intellectual property protection. If you want to register your trademark, you are expected to begin the process by filing an application with the USPTO.
11. Get the Necessary Professional Certification
Even though you can start a judgment recovery agency in the United States of America without any professional certifications, but if you want to make an impact in the business, you should work towards acquiring all the needed certifications in the area.
The National Judgment Network (NJN) offers access to their training program with a lifetime membership fee. You can enroll so as to get the exposure and professionalism needed to run your agency.
12. Get the Necessary Legal Documents You Need to Operate
It is a fact that you cannot successfully run any business in the United States without the proper documentations. If you do, it won’t be too long before the long hand of the law catches up with you. These are some of the basic legal documents that you are expected to have in place if you want to legally run your own judgment recovery agency business in the United States of America;
- Certificate of Incorporation
- Business License and Certification
- Judgment Recovery Business Plan
- Non – disclosure Agreement
- Employment Agreement (offer letters)
- Operating Agreement for LLCs
- Insurance Policy
- Contract documents
- Company Bylaws
- Insurance Policy
- Memorandum of Understanding (MoU)
13. Raise the Needed Startup Capital
Please note that a judgment recovery agency is one of the least expensive businesses to start up. If you already have a computer, then the startup costs are little more than purchasing the best judgment recovery courses you can find, then setting up your office, and getting access to crucial databases where you can uncover judgments and locate assets of the judgment debtor.
Yes, the costs are minimal, but there are up-front costs and running cost for the business. Due to the fact that judgment recovery agency is a simple and relatively inexpensive business to start up, many people believe that they can go into the business with almost no cost at all.
This is a mistake; you will need to go through the registration process and of course get the required business license and insurance cover and all these cost money. If you don’t have the startup capital saved up somewhere, then here are some of the options you can explore when sourcing for startup capital for your business;
- Raising money from personal savings and sale of personal stocks and properties
- Raising money from investors and business partners
- Sell shares to interested investors
- Applying for loan from your bank
- Source for soft loans from your family members and your friends.
14. Choose a Suitable Location for your Business
Judgment recovery and most services based type of business requires that you see physically with your clients hence it must be located in good location; a location that is prone to both human and vehicular traffic and a location that is close to courts and business district if indeed you want to attend to loads of clients and
15. Hire Employees for your Technical and Manpower Needs
There is no special technology or equipment needed to run this type of business except for customized debt recovery software, social media management software applications and other financial related software apps. You will also need computers, internet facility, telephone, fax machine and office furniture (chairs, tables, and shelves).
When it comes to choosing between renting and leasing an office space, the size of the judgment recovery business you want to build, and your entire budget for the business should influence your choice. If you have enough capital to run a standard judgment recovery business, then you should consider leasing a facility for your office.
As regards the number of employees you are expected to kick start the business with, you would need to consider your finance before making the decision.
Averagely, you would need a Chief Executive Officer or President (you can occupy this role), an Admin and Human Resource Manager, Risk Manager, Accounting Officer, Business Development Executive/marketing Executive, Debt Collectors, and Customer Service Officer or Front Desk Officer.
Over and above, you would need a minimum of 8 to 12 key staff to effectively run a medium scale but standard judgment recovery business.
The Service Delivery Process of the Business
The service delivery process of a judgment recovery agency starts with writing a contract document outlining all necessary procedures to follow.
In the report, you are expected to talk about payment schedule, time period for the judgment recovery, liability and other legalities. If you are not a lawyer, it will pay you to have a lawyer to look the contract over to make sure you have covered everything so you don’t end up in court yourself.
The next step to follow is to visit your local courthouse and look through civil records for a list of ready clients. You can generally search the previous seven years, and sometimes longer. Older judgments have more interest tied to them, but finding someone with a five-year-old address may prove costlier, time-consuming and frustrating than it is worth.
Please note that in the United States of America, the details and specific methods available to enforce judgments depend on the State and County the debtor’s assets are in. The basic method is always the same, you start by buying (take assignment) of the judgment from the Original Judgment Creditor (OJC).
You can buy judgments outright, or buy them on the (far more common) future payment basis, where you pay (an average of 50 percent of what you recover) to the OJCs after you recover money from the judgment debtor.
Then you find the assets of the debtor, and then either persuade them, annoy them, or shock and awe them, to get or take their assets. After enough assets are received or taken to satisfy the judgment, you file a Satisfaction of Judgment with the court. Then (if you did not buy the judgment outright) you pay (e.g. 50 percent) to the OJC.
Please note that if you are not a lawyer or a collection agency, the only way you can enforce someone else’s judgment is if you legally full take ownership (assignment) of the judgment, by having the original judgment creditor assign (having their signature notarized) the judgment to you, the Judgment Enforcer.
This means you own it and in court or in any other legal context concerning the judgment, you can step “into the shoes” of the OJC.
It is important to point out that a major mistake nearly all judgment recovery and debt collection professionals make is to take almost every judgment that comes their way.
Over time, all judgment enforcers learn to screen judgments carefully, and not take any where the judgment debtor has no assets, or the debtor is too far away. Experienced judgment enforcers refer enforceable judgments to other enforcers or judgment companies.
Lastly, once you have a judgment debtor with assets, and the right to seize those assets, you can start the process of judgment recovery, it is your job to find and take those assets.
Some of the things you can do is look at the debtor’s credit reports, conduct investigations, bring the debtor and people that owe your debtor money back into court for extensive and repeated examinations, having the Sheriff seize property, putting liens on homes, garnishing wages, etc.
16. Write a Marketing Plan Packed With ideas & Strategies
As a judgment recovery agency, you would have to prove your worth before attracting clients to hire your services. So, if you have plans to start your own judgment recovery agency, it will pay you to learn the rope. So, when you are drafting your marketing plans and strategies for your agency, make sure that you create a compelling personal and company profile.
Aside from your qualifications and experience, it is important to clearly state what you have been able to achieve in time past as it relates to judgment recovery and the organizations you have worked. This will help boost your chances in the market place when sourcing for clients. Here are some of the platforms you can utilize to market your judgment recovery agency;
- Introduce your business by sending introductory letters alongside your brochure to all the corporate organizations, households, startups, small and medium scale businesses and courthouses in the city and state you want to operate.
- Advertise your business in relevant legal and finance magazines, radio and TV stations
- List your business on local directories / yellow pages
- Attend international financial cum legal expos, seminars, and business fairs et al
- Create different packages for different category of clients in order to work with their financial needs as it relates to commission rates
- Leverage on the internet to promote your business
- Join local chambers of commerce and industries around you with the main aim of networking and marketing your services; you are likely going to get referrals from such networks.
- Engage the services of marketing executives and business developers to carry out direct marketing
17. Develop Iron-clad Competitive Strategies to Help You Win
The judgment recovery business is a competitive industry, and you must come up with a unique and highly creative strategies to be able to outsmart your competitors in the industry. Part of what you need to do to stay competitive in the industry is to continue to help your client recover judgment in a fast and reliable method.
Another strategy that you can adopt is to ensure that your organization is well positioned; key members of your team are highly qualified and certified as it relates to their job roles.
18. Brainstorm Possible Ways to Retain Clients & Customers
When it comes to business, no matter the industry you choose to pitch your tent in, one of the easiest ways to increase customer retention and perhaps attract new customers is to produce results and satisfy your customers always. If your customers are satisfied with your services delivery, they can hardly source for alternative service providers.
Statistics has it that one of the major reasons why clients source for alternative service providers is when there is a drop in quality. Another reason is poor customer service. If you can continue to deliver consistent results as it relates to judgment recovery, then you won’t struggle to maintain loyal customers.
Part of what you need to do to achieve this is to track progress, results or outputs with the aim of improving on them quickly as the case demands. When it comes to managing your customers, and building a loyal clientele base, you should purchase a customized CRM software.
With a customized CRM system, you can easily stay in touch with your clients (you can carry out quick surveys, you can introduce new products and prices to them without any hitch, you can felicitate with them on their birthdays and other anniversaries, you can keep track of their progress, you can send bulk sms and customized e – mails and above all, you can easily receive compliant and feedback from them).
19. Develop Strategies to Boost Brand Awareness and Create a Corporate Identity
If you are in business and you are not deliberate about boosting you brand awareness and communicating your corporate identity, then you should be ready to take on whatever the society portrays your business to be. One of the secrets of larger corporations is that they spend fortunes to boost their brand and to continue to communicate their corporate identity the way they want people to perceive them to be.
If your intention of starting a judgment recovery and debt collection agency is to grow the business beyond the city where you are going to be operating from to become a national and international brand, then you must be ready to spend money on promotion and advertisement of your brand.
In promoting your brand and corporate identity, you should leverage on print, electronic and social media (the internet).
As a matter of fact, it is cost effective to use the internet and social media platforms to promote your brands, as it is pretty much effective and wide reaching. Below are the platforms you can leverage on to boost your brand and to promote and advertise your judgment recovery business;
- Place adverts on financial magazines and court related newspapers, radio and TV stations.
- Encourage the use of word of mouth publicity from your loyal customers
- Leverage on the internet and social media platforms like; YouTube, Instagram, Facebook, Twitter, LinkedIn, Snapchat, Google+ and other platforms to promote your business.
- Ensure that your position your banners and billboards in strategic positions all around your city
- Distribute your fliers and handbills in target areas in and around our neighborhood
- Advertise your business in your official website and employ strategies that will help you pull traffic to the site
- Brand all your official cars and ensure that all your staff members and management staff wear your branded shirt or cap at regular intervals.