Monday, June 24, 2024

Will the End of the Eviction Moratorium Lead to More Judgments?


It looks like the eviction moratorium put in place by the CDC in 2020 is about ready to end. After a federal judge declared the moratorium illegal in early May 2021, chances are pretty good that the Biden administration will direct the CDC to rescind the order. Will that mean more judgments against renters too far behind on their rent?

We can argue as to whether or not the CDC had the authority to issue the original moratorium. Nonetheless, untold numbers of renters have been allowed to stay in their homes without paying rent since 2020. No doubt landlords will be ready to pursue evictions as soon as the moratorium is lifted.

State and local assistance programs are up against the clock in their attempts to help get renters caught up. They are also running out of money. Once landlords start evicting, successful actions will be accompanied by judgments requiring renters to pay what they owe in back rent.

Hiring Collection Agencies

Assuming people are evicted and slapped with judgments, there is no guarantee that their landlords will be paid. After all, you can’t get blood from a stone. One tool landlords have available to them is professional collection. It is a safe bet that some landlords will turn to specialized agencies that focus exclusively on judgments.

Judgment Collectors is one such agency. The Salt Lake City-based firm operates in six states including California, Arizona, and Utah. Their focus on judgments allows them to put all of their energy, experience, and resources into this one particular area. They have a number of proprietary tools for finding debtors, discovering assets, and so forth.

How can they go about collecting back rent? That depends on the individual consumer. Most states offer numerous remedies for collecting judgments.

How Judgments Are Collected

One of the most common tools for collecting on judgments is wage garnishment. Under a wage garnishment scenario, the collection agency or an attorney contacts the consumer’s employer and presents a copy of the judgment. The employer is then compelled by law to garnish a certain percentage of the employee’s wages until the debt has been satisfied.

Note that most states only allow a certain amount of an employee’s take-home pay to be garnished. As such, wage garnishment can be a long, drawn out process for satisfying a sizable debt. But there are other options as well.

Creditors can file liens against debtor property as a way to ensure payment. A lien against a piece of real estate would prevent the property from being sold until the judgment is satisfied. If the debtor wishes to sell, proceeds from the sale would go to satisfy the lien. Of course, this option is unlikely to be used against renters who cannot make their monthly payments. They are not likely to own real estate.

Some Will Go Unpaid

Regardless of what happens with the eviction moratorium and any subsequent judgments, there is a good chance that some of the back rent will remain unpaid forever. It’s common knowledge that the vast majority of judgments entered in U.S. court rooms are never paid in full. Unpaid rent should be no exception.

This is unfortunate for landlords who face the very real risk of bankruptcy as a result of going so long without rent. How many of them are behind on their own mortgages because they have long depended on rental payments to pay those mortgages? How many of them will face their own judgments even as their renters refuse to pay theirs? It is a sad situation all the way around.