Value of an asset search

financial statement

As a creditor, you are trying to decide whether or not to file suit. You have considered the size of the claim and the attorney’s suit requirements, but are still on the fence. You are having a difficult time deciding if litigation is in your best interests. If only you had more information on the debtor’s assets, or inside information which might indicate whether or not the debt is truly collectible. In an effort to obtain such information, you ask us about an “asset search”. You are hopeful that the asset search will reveal information about assets or collectibility that will clearly steer you toward the right decision.

It sounds pretty good doesn’t it? One might think that an asset search would be the missing piece of the puzzle, so to speak. Armed with the results of an asset search and with everything else known about the debtor, it should then be easy to decide whether or not to sue, right? In reality, it often isn’t the case.

With regard to individuals, most asset searches do not really show specific assets to attach, such as vehicles, wages or bank accounts. Changes in banking regulations have made it much more difficult for asset search companies to find and verify bank accounts. Even if they are able to find an account today and verify that it has a sizable balance, there is no guarantee that the account will still be open and active by the time it takes to sue and get a judgment entered. Having a judgment entered by a court is usually necessary in most states before a bank garnishment, levy or attachment can be filed. Some courts are very slow moving and it could be many months after suit is filed before even a default judgment can be entered. By then, your debtor could be out of business and the bank account closed.


Regarding vehicles, even if you are lucky enough to find one, most will have liens on them and since autos depreciate quickly, there is usually not much difference between the value of the vehicle and the amount of the lien(s). In many states, it is also expensive to seize a vehicle and expose it to sale at auction. The bids received on a vehicle at a sheriff’s sale auction tend to be low, so the cost of going through this exercise will often be prohibitive. There is also the chance that the debtor will have disposed of the car during the time it takes to sue and get judgment.

With regard to wages, the asset search may show that your debtor is employed by a certain company. As with vehicles and bank accounts, a judgment is usually required before a wage attachment can be issued by the court. By the time that a judgment is entered, your debtor may have quit , been fired, or moved on to another job.

Some asset searches will reveal the existence of real estate ownership. However, they usually do not provide current information on what the property is worth at today’s prices, what liens may be on the property, or whether or not there is any equity. Without this information, you really can’t base your suit decision on whether or not your debtor is a property owner. Sometimes, asset search firms fail to identify all of the liens that are actually against a piece of property. They may be able to make an assumption regarding what equity there may be in the property, but this is usually never completely accurate. The value of the property, the extent of liens against it, and the amount of equity, if any, can greatly affect your ability to ever recover.

real estate

Asset searches can also be done on corporations. They will mainly report the existence of any real estate owned, whether creditors have filed suit/judgment, and which creditors have a secured interest in the debtor’s assets. They can also sometimes determine the existence of a bank account. As with individuals, this information is only somewhat useful. Many of the reports that show the corporation as the owner of real estate are inaccurate. In many cases, it will turn out that the property is actually owned by the principal of the company in his or her own personal name, rather than the corporation. The secured creditor information, just like the information regarding which creditors have sued and taken judgment, can often be reported inaccurately. This is sometimes due to old or out of date information. The bank account information for a corporation involves the same issues as for an individual, as explained previously.

It is CST Co’s experience that at best, an asset search only provides a snapshot view of a debtor’s financial situation. The information provided cannot always be taken at face value. Even if it is 100% accurate, it is only accurate for that specific point in time. It likely won’t be accurate in the time it takes to file suit and reduce your case to a judgment. By then, the bank account may be closed, the debtor could have quit the job, or other previously unforeseen creditors could have beaten you to the punch by filing suit and getting judgment entered. The big issue is timing. Information that may be accurate today is often no longer useful or accurate when you need it, which is after a judgment is entered.


There is also the cost component of the asset search to consider. Usually, you will spend between $75 and $300 (sometimes more) for an asset search that provides limited and possibly suspect information. In our opinion, a better use for that money would be to put it toward the cost of suing the debtor, if the circumstances warrant such action. If you put the money you are spending for asset searches toward the cost of suing your debtors, you will at least be doing something that has a chance of putting money back in your pocket. Even debtors that may appear to be uncollectible on paper ( i.e., a poor trade or credit report) , often find a way to pay after they are served with a summons and complaint. A lawsuit will at least put pressure on the debtor to pay; an asset search puts no pressure on the debtor to do anything.

Occasionally, some attorneys will suggest that an asset search be attempted after a judgment is obtained. If it is done after a judgment is entered, you will at least be able to act more quickly on whatever information is obtained, and immediately file an attachment for wages, or levy on a bank account or some other asset that might be found. If an asset search is going to be done at all, you may have more success doing it as a means of trying to collect on a judgment, rather than trying to use it as a predictor of whether or not the debtor may be collectible through suit.

In summary, it’s our belief that creditors who depend largely upon today’s asset search as a means of making a confident decision whether or not to sue, will often experience disappointment and have higher collection expenses, without getting anything tangible in return. If you are going to spend any money on the account at all, we believe it should be in the form of actual suit costs. While the results of any litigation can never be guaranteed, we do feel this is a better use of funds, as a lawsuit against a debtor has at least some chance of returning money to you while an asset search does not.

Of course, no two situations are ever exactly alike, and there are many variables to consider. If you need help deciding whether or not to proceed with an asset search, call one of the CST Co. collection professionals at 800-626-5873. We will be glad to discuss the matter with you and come to a conclusion that is in your best interests.

Every Step of the Way

CST Company provides services to help with the entire life cycle of a customer account. We provide credit reporting services, customer account monitoring, soft-call, pre-collection letter-writing, full-service collection, litigation services, and bankruptcy monitoring.

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