How to Collect on a Judgment
If you've obtained a judgment against a debtor, you have several ways to obtain the money that you are lawfully owed. Plenty of debtors will either refuse to pay their creditors or simply can't afford to pay the total amount owed when the judge signs the judgment. Let's take a look at some ways to collect.
It is possible to perform post-judgment discovery in which your attorney asks questions and requests documents or depositions from the defendant. This discovery process will clue you in to what sources of income the defendant has as well as the types of assets that he owns. When you know his sources of income, you can garnish his wages to collect your judgment. Certain states limit the amount of money that you can garnish from a debtor's wages (typically 25%) and some even exempt debtors from wage garnishments if they earn below a certain threshold. In order to garnish a debtors wages, you must coordinate a hearing with the court to prove that the debtor has a source of income, has a judgment entered against him and has failed to make the appropriate payments.
Bank Account Garnishments
Once you've obtained a judgment, you can also garnish the debtor's bank account. While there are a handful of banks that refuse to freeze debtor accounts, they are rare. Certain states like New York exempt the first $1,500 or so from garnishment so that the debtor isn't completely financially wiped out. Yet garnishing a bank account is a very effective means of collecting the debt owed on a judgment. It communicates that the money owed will be taken from the debtor's bank account until the full amount listed in the judgment is satisfied. When a creditor freezes a debtor's bank account, debtors often respond to either work out a payment plan or pay the entire balance owed.
Collecting From a Business
If you win a civil suit against a business, it is possible for the local Sheriff to collect the money owed right out of the business's cash register. If the money in the cash register doesn't cover the entire amount owed, you can seize the company's equipment, machinery and other assets. This is typically executed by law enforcement and other authorized personnel to not risk the safety of the creditor. If the business or individual that you are attempting to collect against does not have enough money or assets to cover the amount listed in the judgment, you can collect beyond the ten year mark by consistently renewing the judgment. This way, you'll have a means of collecting from a debtor who is currently destitute but might not be in the future.
Writ of Execution & Liens
A writ of execution directed at the defendant’s personal property should be applied when the defendant owes money or owns property that will satisfy the amount of money listed in the judgment. Once your writ is filed, the Sheriff has up to 90 days to serve it and then levy upon the writ. These executions can be applied to personal property or real estate. Personal property is non-real estate items like vehicles or home furnishings.
While most people creditors have heard about placing a lien on a defendant’s property, most don't realize that a judgment entered in favor of the plaintiff (that's you) automatically enters a lien on all of the defendant’s real property. Yet this is only the real property owned by the defendant within the county where the judgment is filed. If the real property is owned by both the defendant and his spouse and the judgment is not entered against both of them, no lien rights exist.
If the debtor resides in a state that is different from your own, you must record your judgment as a “foreign judgment” in the state where the debtor lives. It is most prudent to file this type of judgment with the specific county where the debtor resides or owns property. Once you've filed the foreign judgment with the county, you'll be empowered to pursue the debt as if the defendant resides in your home state.