Collecting Money Judgments

Quite often, people go into small claims suits thinking that, if they win, they’ll get money at the close of the case. If you’ve been to court and won, it might seem like the work is over. You’ve presented your case before a judge and the ruling came down in your favor. Unfortunately, it can be a complex process to make the other party pay up.

The following brief article concerns some of the terms and procedures that can be used when you’ve won a court case, especially a small claims case, and want to collect your judgment. Please be aware that the following is not intended to be legal advice and may not be applicable to your case. I recommend that any person with such a situation consult a lawyer.

However, by explaining the various terms and steps involved, I hope to make it easier for any creditor to communicate with his or her lawyer and take steps to receive what they are justly owed. By writing this, I’m not agreeing to be your lawyer or warrantying that this information is 100% correct. The following is a basic primer, only, for informational use.
Terms

When the judge makes the final decision in the case, that part of the decision detailing “who owes” is called the judgment. The person who is owed money is the judgment creditor and the person who lost at court and now owes the money is the judgment debtor. The enforcement officer is a peace officer or police officer who serves the papers and accounts for money collected and paid to the creditor.

In some municipalities, there is a constable or marshal appointed to handle the enforcement work. In other areas, especially rural counties, it is often the Sheriff’s Department which handles service of civil papers and enforcement of judgments.

Collection

The simplest way to collect a judgment is to ask the debtor to pay. Although the court will send a copy of the decision to the judgment debtor, you should also send a copy along with a letter stating your payment terms, if any.

For example, you might be willing to take weekly or monthly payments directly. If you do handle collection personally, keep careful and accurate records and always give a receipt. Once the debt is paid, you’ll be required to file a statement that the judgment has been satisfied. Speak to the court clerk about how to fill out this form when you’ve been paid.

Not surprisingly, judgment debtors often do not pay when asked. Even though he or she may have owed you money for some time, your new status as a “judgment creditor” gives you certain powers, backed up by the courts, to find out information about the judgment debtor and to collect the judgment. One of the key tools is the information subpoena. This document can be prepared by your lawyer or you can obtain one for a fee from the court.

Two copies of the document and a self-addressed stamped envelope should be mailed to the debtor, certified mail and return receipt requested. It’s important to send mail this way (although it costs more) because you will then have proof it was sent and received. The debtor will keep one copy and must return the other one to you within seven days, with all the necessary answers filled out.

If the information subpoena is not returned in this time, you can then take your postage receipt before the court as proof that you have mailed the document and it has not been returned. The court will give the debtor a new date to reply, and will hold him or her in contempt if the subpoena is not returned.

The information subpoena consists of numerous questions, answered under oath, about the personal property and possessions of the debtor. Using this form, you will be able to determine whether the debtor owns anything of value that can be seized and sold to pay the judgment. As well, you can find out if the debtor has any bank accounts that can be used to pay the judgment.

In addition to sending this to the debtor, an information subpoena with restraint can be sent to banks or other parties who may be in possession of the debtor’s property. These third parties are prevented from moving the debtor’s property by the restraint.

You should be aware that there are certain categories of income that cannot be touched by a creditor. Most government benefits, such as SSI or Social Security, are immune from seizure to pay a judgment. Attempting to collect an exempt asset can subject you to penalties under the law.

Ways to Collect

Once you know what property the judgment debtor owns, there are several ways to collect. An income execution is a document you prepare and take to the enforcement officer, who then serves a copy on the debtor. The debtor is then required to pay a certain amount (based on earnings) to the officer each week, which will be paid to you. If the debtor doesn’t pay, the officer can have the debtor’s employer take the money out and pay it over directly (garnish).

This method works only where the debtor is employed and making more than $154.50 per week (30 times the current Federal minimum wage), or else the earnings are exempt. As well, Social Security, welfare, workers’ comp and some other forms of income cannot be seized or garnished to satisfy a court judgment, as mentioned above.

If the information subpoena reveals the debtor has a bank account, you can then request that the enforcement officer seize the bank account and pay the money directly to you. The bank will charge a fee to the account’s owner, but an amount equal to the judgment (or the amount in the bank account, if less than the whole amount owed) will be turned over to the enforcement officer and then paid to you. Again, income from certain sources is exempt from being seized. A bank account containing only, for example, Social Security benefits can’t be touched.

It is also possible to attach personal property besides money, such as automobiles, appliances, weapons, etc. By filing attachment paperwork with the enforcement officer and paying the necessary fees, plus providing information on what the property is and where it can be found, the officer can seize the property and order it sold to pay the judgment. Beware, though, that some items (such as appliances and cars) may have existing liens that need to be paid first out of any sale.

If the debtor owns rental property, it is also possible to obtain a rent levy. Again, these papers must be filed with the Sheriff or Constable/Marshal and necessary fees paid. It costs approximately $30 for each rent levy and, as in all other cases, you are also responsible for paying the officer’s mileage to serve the papers. Once the levy is in place and served on the tenants and landlord, rents from the debtor’s tenants are to be paid to the Sheriff until the judgment is satisfied. At $35 and up per tenant, this is an expensive option that may not be suited for all judgments.

Lastly, it is possible to file the judgment with the county clerk in your county. Once the document is filed, it becomes a lien on any real property owned by the judgment creditor. Before this property can be sold, title will need to be cleared by paying off the judgment. In some cases, it may even be possible to cause a foreclosure sale of the property, much as with the sale of personal property mentioned above.

Finding & Heeding Legal Advice

Collection of a judgment can be a complicated area of law. While it is possible to proceed on your own, numerous attorneys specialize in debt collection. A private lawyer may be willing to take the case for a percentage of the recovery or on an hourly basis. The New York State Bar Referral Service (1-800-342-3661) can help you find a local attorney.

While the Fair Debt Collection Practices Act, a Federal law, doesn’t apply when you are collecting debts owed to you directly, please be aware there are specific rules and regulations that must be followed if you have a third party, either a lawyer or a collection agency, working to collect your debt. Even when collecting debts on your own, you should be careful not to engage in harassing or offensive behavior, such as multiple late night calls or calling the debtor’s family. Overzealous collection has resulted in criminal charges and judgments for the harassed debtor. For this reason, seeking legal advice is usually a key piece of any collection strategy.

The above was provided for informational purposes only and is not intended to be legal advice. It is strongly advised that a lawyer be retained to deal with any legal situation.

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