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How to Collect on a Judgment

How to Collect on a Judgment

When you sue a debtor getting a judgment in your favor is just one aspect of the fight. There are a variety of actions you could have to follow to recover the money you are owed.

  • If a judgment is handed down, the debtor has to either appeal the judgment or pay the debtor.
  • After a court ruling that a judgment debtor are required to file a disclosure report detailing their assets. A judge can require an individual to appear before a judge to be examined by a debtor.
  • You can seek to collect an outstanding judgment by making a lien, securing the debtor’s assets as well as renewing the judgment.
  • This post is intended for those who are looking to collect on a debt following the decision of a court.– If you are suing a customer who owes your business funds, the decision the court grants could seem to be final and legal. But in reality, that’s not the case not the situation. The judgment debtor has to pay the debt in accordance with the law, but judges have no authority to demand the payment. It is therefore crucial to be aware of the best method to recover the judgment in case your debtor doesn’t pay.

What happens when a verdict is reached?

When a judgment is rendered and the judge decides who wins the court case becomes judgment creditor, while the person who loses is the judgment creditor. When the court has handed down its decision and the clerk of the court sends an official decision to all parties involved. This decision will specify the amount the judgment debtor is owed by the creditor of the judgment. If you’ve been sued by multiple people the court’s decision will state the sum that you owe all parties. The parties then have to divide the obligation to pay between themselves.

A judgment may not be legally binding immediately after it is issued by the court. This is because the debtor is given 30 days (or lesser in some municipalities or states) to appeal. When the judge contests and loses, the obligation to pay can be put off until the new judgement is granted. [Read related article: How to draft a Debt Collection letter [Read more]

If no appeal is made, then the debtors of the judgment are legally bound to repay you. But the actual enforcement the obligation to pay is a different issue.

Assets and Judgment Debtors

When a judgment is handed down, the debtor is required to submit an accounting statement. In this document the debtor must list all their assets. If they do not complete this task the court will issue a contempt of court fine could be imposed.

A judge may also require the debtor to attend the court to undergo a debtor’s exam. Judgment creditors must attend the examination and the debtor is required to declare all assets in the following categories:

  • Cash
  • Savings and checking accounts
  • Investment accounts
  • Shares of business ownership
  • Trusts and inheritances
  • Safes, vaults, and other safe storage areas
  • Real estate
  • Personal property, such as jewelry, cars, and homes
  • Properties purchased at prices lower than the fair value, could be a sign of fraud designed to evade the debt

If a debtor who is a judgment defaulter fails to attend an examination scheduled the judge could make an arrest warrant.

What judgment debtor assets are you looking to pursue?

In a perfect world in the ideal world, a judgment against a debtor will immediately force them to pay the financial obligation they owe you in cash. However, some debtors might be unable to pay. In this instance you could be able to take over some assets. You can do so by:

  • The debtor’s wages are being repaid
  • Cash and assets direct from the businesses that the debtor owns
  • Possession of vehicles or real estate

The three approaches above are simpler than the third.

What is the time frame to enforce a judgement?

The judgments are valid for various lengths of time, based on the state where it was brought. Pennsylvania has the most streamlined time to enforce the judgment, which is four years. Approximately 12 states have the longest time for enforcement, which is 20 years. Check with the state court in your area or consult an attorney to find out the length of time you must make the ruling.

But, as we’ve mentioned before the judgment isn’t legal. If the debtor of the judgment refuses to pay, certain authorities are able to proceed in the enforcement process.

How do you collect the judgment

In order to collect a judgment follow these steps.

1. Perfect a real estate lien.

If your judgment debtor file an appeal, it is important to be prepared for the worst, the debtor may try to conceal their assets and which makes it more difficult to collect your judgment. You can prepare to avoid this by executing the real estate lien.

To complete a real estate lien, you have to register your judgment in your county’s recorder’s office. If you have a lien the debtor has to pay the judgment prior to being able to sell their home or business. In addition, a real estate lien can be valid even when the debtor files bankruptcy.

2. Contact us directly.

Sometimes, you don’t have to take possession of property. It could be that calling the debtor for the payment following a court ruling will suffice to force payment you’ve been begging for. Do not make threats to the debtor or explain how you intend to pay the judgment in the event that you aren’t able to collect it on time however, be firm in your assertion that the debtor is legally is owed money.

3. Make sure you choose the right assets to grab.

Payroll garnishments, business cash, or asset seizure are all viable options to recover the money your debtor owes. But, take into consideration these things when doing this:

  • The process of garnishing wages is simple but it is slow. It’s often straightforward to get a writ of garnishment, which requires that a percentage of the debtor’s earnings be garnished and transferred to you. However, the amount of garnishment is usually restricted to 25 percent of the wage of the debtor and make the full repayment of your debt a lengthy process. Furthermore, some debtors with low incomes are exempt from garnishment, as well as government benefits cannot be taken away.
  • The business asset seizure process requires the enforcement of. Only law enforcement authorities can take the cash or deposits in banks as well as other valuables. In addition, they could charge an amount in exchange for the services they provide. If, however, your debtor’s assets are of sufficient value to pay off their debts, taking these assets could be worth it.
  • Seizing personal assets is far more complex. If you’re going after the personal property of a debtor you’re likely to find equity which is the amount that is the difference between an item’s present value and the value as a loan. Certain states restrict judgment creditors from securing the equity of a certain amount from debtors. This means that vehicles, homes investments, electronic devices, and even jewelry are difficult to obtain.
  • Sometimes, you are able to make judgments to licensing authorities. If the judgment creditor is a remodeling or construction contractor, you may be in a position to file your judgment with the appropriate state licensing board. By doing this the debtor may get their license suspended if don’t adhere to the judgment. This option is only feasible in very certain situations.

Based on the above factors it is necessary to decide on the possibility of collection based on the importance that the debt is due. Should you seek wage garnishment and wait longer to pay your amount of debt? Do you want to collaborate with sheriffs and marshals on the collection of business assets? Do you think the potential for value of your personal assets of the debtor worth the effort to collect the amount you’re due?

4. Refresh your judgement.

As previously mentioned the fact that judgments aren’t forever. But, they can be renewed and could help in the case of debts that can take years to recover (which is, believe it or not, is not unheard of).

A judgment that is renewed is usually valid for the duration of the original judgment was in effect beginning with the date of renewal. Each state’s court system deals with judgment renewals in a different manner and it is recommended to speak with an attorney who handles debt collection to discuss the best way to handle the process.

5. Make a satisfaction of judgment notice

When the debts have been paid the judgment creditor then submits an “satisfaction with judgment” note to the court. The note informs the court they can end the case. If you also perfected an loan on the person who owes you previously mentioned the paperwork should be filed with the recorder’s offices mentioned above.

6. Hire a collection agency.

They are usually considered to be a step to take when standard communication with the non-paying client are unsuccessful, but before a lawsuit can be filed. Certain collection agencies specialize in the collection of indebtedness from those who challenge judgements.

It is also possible to hire freelance lenders as well. However they are not suitable for small businesses, debt collection agencies could be too costly to warrant their efforts, given the amount they could be able to recover. Certain agencies could be able to take as much as half collection fees as fee while others might have a higher percentage of 25 percent. In any situation, you’ll be paying quite some.

If you believe the collection agency is the best option to collect on a judgement, you can consult our recommendations on the most effective collections agencies to locate the best company for your needs.

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