When you win a case in court, the jury or judge may award you money damages. In some situations the losing party against whom there is a judgment (the "Judgment Debtor") either refuses to follow the court order or cannot afford to pay the full amount of the judgment. If this happens, you may have to take additional steps and incur further expenses to collect the judgment. Here are some things to keep in mind when collecting money after a judgment:
1. Individuals and businesses that are financially stable usually pay judgments that are entered against them. They do so because they want to avoid unpleasant collection activities and further costs.
2. If a Judgment Debtor refuses to pay a judgment or is insolvent (meaning their debts are greater than their assets), you may find it quite difficult to collect a judgment.
3. In most states, you can conduct post-judgment supplemental proceedings (interrogatories, requests for production of documents, depositions, etc.) to uncover a Judgment Debtor's sources of income and assets.
4. When you hold a judgment against an individual, you can garnish their wages to collect your judgment. Many states limit the amount you can garnish from a debtor's wages to 25% of the Judgment Debtor's paycheck.
5. Similarly, you may also garnish the bank account of a Judgment Debtor.
6. If you hold a judgment against a company, you may be able to get the sheriff to seize the money in the company's cash register. Judgment Debtors may also have vehicles, machinery, equipment, or other assets that are available to seize.
7. The time period for collecting judgments in many states is ten years, but after that expires you can usually renew the judgment for another ten years. So, even if the Judgment Debtor does not have any income or assets today, income or assets may be accessible in the future.
8. If the Judgment Debtor files a Chapter 7 bankruptcy, your ability to collect is cut-off, like most other creditors.
9. You should hire a lawyer to assist you with your collection efforts. You can typically hire a collection lawyer on an hourly basis or pay the attorney a percentage of the amount collected.
10. To collect a judgment against a Judgment Debtor or their property located in another state, you will need to record your judgment as a foreign judgment in that state. A court cannot enforce a foreign judgment unless the Judgment Debtor has “sufficient contact” with the state. Usually, you will want to file the foreign judgment in the county where the debtor lives or where the property is located.
For help understanding your rights and starting collection procedures for your judgment, give us a call at 253.858.5434 to see how we can help.