Collecting on Money Judgments-Overview

I often field many phone calls regarding collecting on a money judgment someone has received in a court action. In these incidents, the holder of the money judgment is called a creditor.  When I field these types of calls, it’s clear the person is frustrated. They have pursued a court action against another person or entity; have prevailed in court, but all they have to show for it is a court document that indicates a money judgment against the other party. It’s now up to the creditor to go and collect on the money judgment, which can be very difficult, if not impossible. As such, this article will help alleviate some confusion and provide some options to the person with a money judgment they are looking to pursue.

The first step I encourage all those who have a money judgment is to track down a list of the debtors assets. This would include bank accounts, vehicles, real estate, etc. A good and rather inexpensive way to accomplish this is to request an Order for Disclosure. It’s a document that is filed with court administration in the county where the judgment is docketed. It’s a one page document that is served on the debtor in which they are required to disclose all assets within 10 days. If they fail to complete the document or provide vague answers, you can request an Order to Show Cause hearing. These hearings require the debtor to appear in court and answer to a judge why they have failed to answer the disclosure form or why it is insufficient. If the debtor fails to appear at the hearing a judge can hold that person in contempt and fine and/or imprison that person.

Once you’ve received a list of assets from the debtor, the next thing to do is to determine what you’d like to garnish. Bank account garnishments are very quick and effective. The process requires serving a garnishment summons on the bank and the debtor’s bank account is frozen while the bank discloses how much is in the account. The nice thing about bank garnishments is that you can garnish up to the entire amount of your money judgment with one garnishment summons.

Another form of garnishment is a Non-Earnings Garnishment. These types of garnishments work when the debtor is self-employed. Under a Non-Earnings Garnishments, the Order for Disclosure form will request info on accounts receivable and give the identity and how much. The judgment creditor then can send the Non-Earnings Garnishment to the accounts receivable and intercept any payment that is due to the debtor in satisfaction of the money judgment.

The next form of collection is a court action called a replevin action. These proceedings are appropriate when the disclosure form indicates that the debtor has vehicles that the creditor can repossess in order to satisfy the debt. The unfortunate reality is that most vehicles are encumbered by a security interest with a bank that takes priority over a money judgment. As such, replevin actions mostly occur when the debtor has a vehicle that has already been paid off and is unencumbered.

Lastly, if the debtor has a steady job, an earnings garnishment is also an inexpensive and effective way to collect on a money judgment. However, if the debtor quits their job, the garnishment stops and then you have to investigate where the debtor’s new job is, if they get another one. The wage garnishment also has a considerable amount of exclusions and lasts for only 70 days and then it must be re-filed.

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