Winning a monetary award in a civil court case means being one step closer to justice. But justice is not fully served until the judgment is enforced. In a money judgment case, enforcement equals collecting the amount of the award plus any interest and additional court costs and fees.
In most states, judgment creditors (the winning parties) have four avenues for collection:
- Negotiating a lump sum payment or installment plan
- Garnishing the debtor’s wages and/or bank accounts
- Filing property liens against nonexempt assets
- Seeking writs of execution against nonexempt assets
Is there a best option among the choices? Should a judgment creditor take advantage of multiple options? These are questions that can only be answered after certain things are done. Below are four such things. Every judgment creditor should address them before moving forward with enforcement.
1. Consider Professional Help
A judgment creditor should consider bringing in professional help before collection efforts begin in earnest. An agency like Salt Lake City’s Judgment Collectors would be an excellent choice. Judgment Collectors and similar agencies are collection agencies specializing in money judgments. They have the skills, knowledge, and tools to accomplish what judgment creditors often find impossible to do on their own.
2. Research Debtor Assets
Researching debtor assets is the first step of enforcement. A judgment creditor wants to know about the debtor’s employment and income. He wants to know about debtor bank accounts, real estate holdings, personal property, and even certain types of securities.
Understanding a debtor’s financial position is crucial to determining which collection option to pursue. For example, a debtor with little to no assets of value will be harder to collect from. It might be in the creditor’s best interests to attempt negotiating a lump sum payment or installment plan.
3. Evaluate Exemptions
Research might reveal that a judgment debtor has plenty of assets. But how many of those assets are exempt from collection efforts? This is something a creditor needs to know. For all intents and purposes, exempt assets are worthless as debt collection tools.
Nearly every state exempts a debtor’s primary residence or a portion of its value. Some also exempt the debtor’s primary vehicle and any tools and equipment necessary to conduct trade.
Examples of nonexempt assets include:
- Vacation and rental property
- Collectibles, including classic cars
- Boats, planes, RVs, etc.
- Jewelry and clothing
Evaluation is necessary to understand a debtor’s true financial position. With plenty of nonexempt assets to work with, a creditor might be very comfortable filing judgment liens or asking for writs of execution.
4. Prioritize Claims
The last thing that needs to be done is claim prioritization. In other words, research may uncover other individuals or organizations with previous claims against the debtor. A good example would be a piece of rental property that already has a lien on it. Let’s say it is a construction lien.
Because it was the first lien filed against the property, it holds the first position. A judgment creditor filing a lien on the property would be put in the second position. When it’s time to settle up, the creditor in the first position gets paid first.
Creditors get paid in the same order they appear as lien holders. This matters to judgment creditors because the existence of other claimants might make a particular asset not worth pursuing.
Enforcing a money judgment is not a simple matter of writing a letter and then waiting for a check to arrive in the mail. Enforcement is often complicated, time consuming, and frustrating. It pays to know what you are getting into before actually suing.