A Collect Calling

Question: I've received some information on processing judicial judgments from home. Are these companies and their training legitimate? How difficult is this business to start and operate? How competitive is it? Is it lucrative?
Mark Shelly
Valencia, California

Answer: The fundamental work of a judgment recovery specialist is collecting money-doing the paperwork and legwork to seize bank accounts, garnish wages and place liens on or seize personal property. That's in addition to locating debtors who have moved, sometimes to escape paying off debts. And you have to personally contact debtors about paying the judgment you're handling. Sometimes a letter and a phone call produce results-some debtors, when vigorously pursued, will join the million-plus people and businesses filing bankruptcy each year.

We suggest you do three things:

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1. Go to local courthouses and ask the court clerks for their assessments;

2. Use search engines like google.com, altavista.com and deja.com to learn from others what the problems are and how they're solved, what the rates are, and what people in the industry discuss. Many companies offer training manuals, and there are member associations you can join;

3. Talk with people in the business-find them using the Yellow Pages or engines like switchboard.com.

Charge a percentage-usually 30 to 50 percent-of what you collect as a fee to your clients. Collecting judgments is hard work, so how well one does in a collections-type business depends on effort and persuasive skill.

Another option is to buy a business opportunity. If the vendor won't give you other buyers' names, or those you contact don't seem to be doing the work, consider that a warning. Check out the company with your local state regulatory office, the Better Business Bureau and the Federal Trade Commission's Consumer Response Center at (877) FTC-HELP or https://www.ftc.gov/ftc/complaint.htm-especially if it asks you to spend more than $150 or so for business opportunity manuals. In-depth research is always a good idea when buying a business opportunity.

Small-business experts Paul and Sarah Edwards' latest book is The Practical Dreamer's Handbook(Tarcher/Putnam Publishing Group). If you have a question regarding a start-up business issue, contact them at www.paulandsarah.com or send it in care of Entrepreneur.