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Judgment Recovery
Judgment Recovery: How to Obtain Your Money
You (the plaintiff) brought a small claims or civil suit against a debtor (the defendant) and were awarded a money judgment. You, as the judgment creditor (winner) have a right to judgment recovery from the judgment debtor (loser).
But, the judgment is merely a piece of paper filed in the courthouse. It is delivered to both your and the debtor. But the court completed it's job after deciding your case. It takes no enforcement action.
How do you enforce the judgment to ensure the judgment recovery is "satisfied"?
The first thing to do is to discuss payment with the debtor. Money judgment recovery payments are sometimes made on the day of the court hearing or over a period of time.
If you do not receive the money that you are owed, the court and court officials can assist you in several ways to complete the judgment recovery.
Judgment Recovery Through Wage Garnishment
Wage garnishment is often the easiest way to get a debtor to pay.
A wage garnishment allows you to collect your judgment by garnishing the defendant's wages or other sources such as income tax refunds. You must identify the debtor's place of employment and send a notice to the debtor requesting garnishment of wages. If the debtor agrees (or disagrees and the court so orders) a notice of wage execution is delivered to the employer by the court officer. The employer will withhold the specified amount and send it to the court officer who will then send it to you.
What you need to do is to locate the debtor and find their place of employment. If the debtor has skipped town this is often difficult to do. But, there are ways to find debtors.
Judgment Recovery Through Seizure of Bank Assets
You must determine where the debtor's savings or checking accounts are located and the account numbers, if possible. The court official can levy or freeze these accounts. Once frozen, you must then file a motion with the court for the funds to be turned over to you. Once this motion is granted, the court officer will deliver the order to the bank and the funds can be released to you.
If you are unable to locate the debtor's bank, you can obtain an information subpoena from the court that contains questions about the debtor's assets. You can then serve (deliver) the information subpoena to the debtor. The debtor must answer and return the information subpoena.
Judgment Recovery Through Public Sale
An "execution" allows a court officer to seize property belonging to the defendant which can be sold to pay your judgment. You are responsible for identifying the debtors personal property that can be used to help fulfill your judgment recovery. Court officials can seize these items and offer them at a public sale. Items such as office equipment (computers) and automobiles are typical items court officials can seize.
You can also file a petition with the court indicating the amount the debtor owes you and request the court to issue an order for discovery of assets. This order can be issued to anyone who has knowledge regarding the assets of the debtor.
A word of caution about this option is in order. If your debtor has limited resources, seizing their property can be the cause of them declaring bankruptcy. This means that your judgment may well become worthless. So, consider this option carefully.
Interest on a Judgment Until Recovery is Complete
When you receive a money judgment you are normally entitled to add interest to the unpaid balance until the recovery is complete. The interest rate is typically set by the state legislature or the state's department of treasury. For example, in Michigan the interest rate defined by the Department of Treasury is "calculated from the date of filing the complaint at a rate of interest which is equal to 1% plus the average interest rate paid at auctions of 5-year United States treasury notes during the 6 months immediately preceding July 1 and January 1, as certified by the state treasurer, and compounded annually."
So, your unsatisfied judgment is probably becoming more valuable as it ages.
Problems With Completing Judgment Recovery
Debtors often try to evade attempts to collect judgments. There are standard tactics debtors use to elude collection such as:
- Hiding assets and bank accounts
- Fraudulent conveyance of assets
- Moving to another state
- Moving to another area within the same state
- Changing their name
Because most judgment creditors lack knowledge in tracking down the debtor, locating assets, and knowing how to collect, it is estimated that 80% of all judgments go uncollected. Most people understand that hiring an attorney at $100 to $200 an hour will quickly eat up their judgment award, so they do nothing.
Judgment Recovery Specialists
If you go to a "judgment recovery specialist", they will often offer you one of two options for helping you. These options are based on the idea that your judgment is worth something and is a negotiable legal document. The debtor owes the holder of the judgment the amount of the judgment.
First, they often offer to take 50% of anything they recover. This is a "contingency offer" and if they are unable to recover anything, you get nothing. They essentially buy your judgment on the contingency of recovering something. Second, they will offer only pennies on the dollar to buy outright your judgment. You will sell your right to recover from the debtor for, sometimes, 10% of the judgment amount.
In both of these cases, you receive only a portion of your judgment amount.
And, another thing. Some judgment recovery specialists have only recently taken a course in judgment recovery. They have learned how to use the justice system to pressure debtors into paying. They have access to resources that allow them to perform skip tracing, asset discovery, view credit reports, and other sources of information. And they know the legal forms necessary to enforce a judgment and are willing for you to pay them to do this.
Do It Yourself Judgment Recovery
You can, however, do everything necessary to collect your judgment award if you are willing to learn. There are judgment recovery courses in the $100 to $200 range, complete with online resources, that will teach you everything you need to know. Do a search for "judgment recovery" to find a number of sites offering these courses. Though they often advertise that you can make money helping others, you can also simply use the knowledge to recover your own money judgment.
I joined the National Judgment Network, an educational group with training in judgment recovery, all the resources needed to locate and discover financial information about debtors, and how to use the legal system to enforce judgments. They provide everything you will need to know about the process. I highly recommend them as a low cost, high value provider of quality information that can help you recover your money judgment.
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