Judgment collection is a complex journey that requires an understanding of legal laws. Winning a lawsuit is only half the battle in the judgment collection journey. The real challenge lies in the collection process. Collecting on a money judgment presents several types of challenges for creditors. Fortunately, there are multiple methods of judgment collection. If one approach doesn’t work, you can try a different one. Whether you are a business or an individual, it’s important to understand different collection methods.
In this blog, we will walk through your most critical methods of judgment collection, helping you efficiently recover your money from delinquent debtors.
Options for Collecting a Money Judgment
Payment Plans
Usually, small claim cases are easier to collect because financially stable defendants typically pay the judgment to avoid extra losses. You could receive a lump sum amount at court or shortly after the hearing. However, if the debtor is unable to pay the entire money upfront, you can consider a payment plan. Small claims courts can arrange payment plans between both parties. The judgment form includes both total amounts and due dates, with a clause stating that the full amount becomes due if the debtor misses a payment.
Real Estate or Other Liens
If you are not in a hurry to collect the judgment, filing a real-estate lien against the debtor’s property can be a good option. There are multiple benefits of this method. Once you have the judgment, you can easily file the lien by going to the recorder’s office and completing the necessary paperwork. You need to wait for the property to sell. Depending on the state, the lien must be renewed every 10 years. However, renewal periods and rules vary state by jurisdiction.
There are also drawbacks to consider. The judge won’t be paid unless the property is sold or refinanced. Moreover, bankruptcy and other personal property exemptions can also prevent payment on the lien.
Wage Garnishment
Wage garnishment is another powerful method for judgment collection, but it can be challenging and complex. Moreover, laws governing garnishment vary from state to state, further complicating the efforts. Generally, states allow creditors to garnish up to 25% of a debtor’s wage. However, in certain cases, wage garnishment may be exempt. If the debtor’s income comes from non-wage sources such as Social Security, disability, or child support, garnishment can not occur. Also, if the debtor’s wages are below the poverty line, garnishment may be prohibited.
To initiate the garnishment, creditors can get a court order that directs the debtor employers to hold a certain percentage of the debtor’s wage and transfer it directly to the creditor until the debt is satisfied.
Bank Garnishment
A bank account levy also allows the creditor to seize the fund directly from the debtor’s bank account. Once the creditor gets a judgment in their favour, they can apply for a bank levy by obtaining a writ of execution order. This allows the bank to directly freeze the debtor’s bank account and remit the amounts to the creditor to satisfy the judgment amount. However, it’s important to remember there are some limitations and conditions surrounding bank levy. Many states exempt certain types of funds from seizure, such as social security benefits and disability payments.
Property Seizure
Property seizure is another effective method for collecting money judgment. Creditors can seize property such as a house or land, business equipment, or other valuable assets if a debtor is a company. However, in cases of individuals, the property seizure can be complex due to exemption laws that protect certain property. This is only successful when you know what kind of assets the debtor holds. If you opt for this method, it’s important to avoid self-help measures. Only the sheriff is legally authorized to seize and auction the property. Always seek professional help to avoid any kind of legal issue and ensure the process is handled efficiently.
Settlement or Negotiation
In some cases, opting for settlement or negotiation can be a wiser approach than pursuing aggressive collection methods. This approach is especially helpful when debtors are genuinely incapable of paying the full amount but may be willing to negotiate a reduced amount than the full amount owed. In such cases, creditors can agree to a lump sum settlement, if the debtor can not pay the full amount. This process typically involves a voluntary agreement, which signifies both creditors and debtors are willing to comply with the terms of repayment to avoid further legal action. Creditors can hire an experienced attorney or directly negotiate the settlement. Settling a judgment is a more practical solution than pursuing the collection, where the full amount of collection is not possible.
Conclusion
Judgment collection is indeed a challenging journey, but with the right approach, it can lead to success. Ultimately, successful collection depends on the debtor’s willingness to cooperate and the creditors’ persistence. The methods we have mentioned above can help you collect your money. You can explore all the methods to check what works best for your situation. However, the process can be time-consuming and may require assistance from an attorney. If you want a professional attorney who may assist you in the collection process, connect with Public Loss Adjusters. We have the expertise and resources to collect your money and help you ensure peace of mind.
