How to collect a judgment
Renew Your Judgment
When you win a civil case in Court, the judge may award you money damages. Still, in some situations, the losing party (the Debtor) will refuse to follow the court order and pay the Judgment. Consequently, most judgments go uncollected.
When planning a collection strategy to enforce your Judgment, it makes sense to start by going after the low-hanging fruit. Wages, bank accounts, and money paid to a debtor's business are relatively easy assets to get, and the procedures for doing so are easier and cheaper. On the other hand, trying to force a sale of the Debtor's house, property, or vehicle can be complicated, expensive, and time-consuming.
Wage Attachments / Information Subpoena
A Judgment Creditor may file an Income Execution or wage garnishment to obtain a percentage of the Debtor's earnings to apply to a Judgment. Thus, you will need to provide the Enforcement Officer or Sheriff with the necessary information, namely, the Debtor's employer, the employer's address etc.
The challenge is that a debtor who refuses to pay a judgment won't tell you where the money is, but you can take steps to find it. First, a creditor may request an Information subpoena from the Court to discover all the necessary information. An Information subpoena is a legal document that directs the Debtor to answer specific questions regarding the employment wages and assets.
A transcript of the Judgment must be filed before the enforcement officer will proceed to enforce a judgment.
The most common method for enforcing a money judgment is to levy or seize a Judgment Debtor's personal property by using a property execution.
After filing the transcript of Judgment as indicated above, you should provide the Enforcement officer, or Sheriff, with instructions identifying the property and its location, as well as the names and addresses of other people who must be served with the notice that the property is being seized.
Once assets are identified, the Enforcement officer can seize and sell them at an execution sale, applying the proceeds to the Judgment.
What property can be taken to Settle a Judgment?
Depending on your state, the Enforcement Officer or Sheriff may not seize all property belonging to the Debtor. Certain property may be exempt from seizure under the law. Each state outline's which property is exempt from a judgment. Property that is exempt means it is entirely off-limits for settling a judgment.
Your first concern should be that the judgment debtor will try to circumvent your ability to collect by transferring property or filing for bankruptcy. You can preserve your ability to satisfy the Judgment by getting a lien right.
Some states will automatically impose a lien on the judgment debtor's property once the Judgment is secured. However, most states require the judgment creditor to record the Judgment with the county to create a lien on the Debtor's property.
A Judgement Lien can give you the right to take possession of the Debtor's property. When the judgment debtor tries to sell the property, they will be unable to finish the sale while the title is clouded.
Freezes and Seizures of Your Bank Account
Bank account garnishment means that a collection agency or creditor can legally remove money from a bank account or credit union to repay outstanding debt.
To begin withdrawing funds from a debtor's account, the creditor or debt collection agency will need an order or writ of execution signed by a court official. The Internal Revenue Service (IRS) is the only creditor that can garnish money from bank accounts without a judgment.
A U.S. Department of Treasury rule requires banks to automatically protect certain federal benefits from being frozen or garnished if they are directly deposited into a bank account.
Renew Your Judgment
Judgments don't last forever. Instead, they usually have a shelf life of between 5 to 20 years, depending on the state. Sometimes you need more time to collect, however. If you do, renew the Judgment (and any recorded liens) before the Judgment expires. Financial situations change. Even if you can't collect now, the Debtor might get a great job, build equity in a house, or receive an inheritance. And, the longer it takes to collect, the more your Judgment will be worth because the accumulating interest adds up. So until you've collected your Judgment, keep tabs on the Debtor. It's not unusual to end up with a big payout years down the road.