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Ten Things to Think About: Collecting Judgments

Even when you "win" in court, the opposing party may not just pay you the amount of the judgment. You may have to take additional steps (and incur additional expenses) to collect the judgment.

Individuals and businesses that are solvent usually pay judgments that are entered against them. They do so because they want to avoid unpleasant "collection" activities and additional expense.
If an individual or business debtor is insolvent, however, or stubbornly refuses to pay a judgment, it can be quite difficult to collect a judgment.
In most states, you can conduct post-judgment discovery (depositions, interrogatories, requests for production of documents, etc.) to uncover a debtor's sources of income and assets.
If the person you hold a judgment against is an individual, you can garnish his or her wages to collect your judgment. Many states limit the amount you can garnish from a debtor's wages to 25 percent of the debtor's paycheck.
You can also garnish the bank account of an individual or business debtor.
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. Businesses may also have machinery, equipment, or other assets that you may be able to seize.
The time period for collecting judgments in many states is ten years. You can usually renew the judgment for another ten years. So even if the person that you have a judgment against does not have any income or assets today, he or she may have income or assets in the future.
If the person that you have a judgment against files a Chapter 7 bankruptcy, your ability to collect your judgment is cut-off just like everyone else. However, you may receive priority over lesser creditors in a bankruptcy action depending on the types of the other debts in existence at the time of the bankruptcy.
In most states, you will need to retain an attorney to assist you with your collection efforts. You can usually hire a collection attorney on an hourly basis, or pay the attorney a percentage of the amount collected.
To collect a judgment against a debtor (or the debtor's property) located in another state, you will need to record your judgment as a foreign judgment in that state.

DISCLAIMER: This site and any information contained herein are intended for informational purposes only and should not be construed as legal advice. Seek competent counsel for advice on any legal matter.

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