If you’ve won a court judgment, congratulations! But the hard truth is that securing a judgment is only part of the process. Collecting the money you’re owed can be challenging, especially if the losing party is reluctant to pay. Whether you’re dealing with an individual or a business, navigating the collection process requires strategy, patience, and knowledge of your legal rights.
This blog will walk you through 5 actionable tips for collecting a judgment, offering practical advice on how to maximize your chances of successfully recovering what you’re owed.
Tip #1: Protect Your Rights with a Lien
When someone loses a legal case, they might be tempted to hide assets or transfer property to avoid payment. One of the best steps you can take is to attach a lien to the debtor’s property. A lien provides you with a legal claim over some of their assets, ensuring they can’t sell or transfer key property without paying you first.
For example, filing a lien on real estate is a common strategy if the debtor owns property. This gives you a formal claim in public records, preventing the debtor from circumventing the judgment. Acting quickly to perfect your lien rights protects your ability to collect what’s owed to you, even if the debtor files for bankruptcy later.
Tip #2: Locate the Debtor’s Assets
If the debtor is uncooperative, finding their assets becomes a critical step in the collection process. A court-ordered debtor’s examination can help you uncover details about their financial state, such as bank account balances, wages, or valuable property. During this process, the debtor must answer questions under oath about their assets’ location and availability.
If the debtor’s examination doesn’t reveal enough, consider hiring an experienced asset search firm or investigator. These professionals can trace hidden assets that might otherwise remain out of reach, helping you enforce your rights effectively.
Tip #3: Settle Strategically
Sometimes it’s better to negotiate for a reduced amount rather than pursuing the entire judgment through complex collection methods. Offering the debtor an installment plan or a one-time lump-sum discount can provide an incentive for quicker payments.
Keep your communication professional and avoid any language that could be interpreted as threatening. The goal is to encourage cooperation while avoiding the time and expense of prolonged enforcement actions. Just remember to document all agreements clearly to prevent future disputes.
Tip #4: Tap into Easily Reachable Assets
An efficient approach to collecting your judgment is to go after assets that are easy to access. Wage garnishment and levying bank accounts are two common routes to quickly recover funds.
Both processes involve court orders, so make sure you follow the required legal steps. Wage garnishment allows you to collect a portion of the debtor’s paycheck directly from their employer, while a bank levy enables you to claim funds directly from their bank accounts. These methods often result in faster payouts compared to pursuing property sales or other asset liquidation methods.
Tip #5: Stay Persistent and Renew Your Judgment
Judgments don’t last forever. Depending on the state, judgments may expire after a certain period (usually 5 to 20 years). However, many states allow you to renew your judgment before it expires, preserving your collection rights.
Even if a debtor is unable to pay now, financial circumstances change over time. Whether they get a new job, inherit assets, or sell property in the future, staying persistent ensures you’re in a position to recover your money when opportunities arise.
Frequently Asked Questions About Judgment Collections
What happens if the debtor files for bankruptcy before I collect my judgment?
If the debtor files for bankruptcy, your ability to collect a judgment might become more challenging. However, if you’ve attached a lien to their property, your claim may still be enforceable depending on its priority in bankruptcy proceedings. It’s essential to consult with a legal professional to understand your rights in this scenario.
Can I collect a judgment if the debtor lives in a different state?
Yes, you can still collect a judgment if the debtor resides in another state. However, you’ll need to “domesticate” your judgment in the state where the debtor lives. This process involves legally transferring your judgment from the original court to the appropriate court in the debtor’s jurisdiction. An experienced legal team can guide you through this cross-state collection process effectively.
At Roach & Lin, P.C., we specialize in legal support for mortgage loan servicers seeking to enforce judgments. For reliable legal guidance tailored to your case, contact us online or call us at (516) 938-3100 today.
