You have won your civil case and gotten a judgment. The time for all appeals and post-trial motions has ended. Enforcement of judgments is usually the last step. A judgment in your favor provides enforceable rights, usually the right to be paid by the judgment debtor and often providing non-monetary rights as well. In many cases, happily, this is the end of the road.
But what if the money owed is not paid by the judgment debtor? Legal procedures to enforce a judgment and collect are available in state and federal courts throughout the United States. Generally, if the judgment debtor has money or assets in the state where the judgment was entered, then you can use the procedures available in the court that entered the judgment.
What can be done, however, if money or assets of the judgment debtor are located in another state, not in the state where the court that entered the judgment is located? In this situation, recording the judgment in a court in the state where the assets are located is necessary. For example, suppose the judgment debtor has no assets in State A where the judgment was entered, but does have assets in State B. When a judgment from a state court in State A is recorded in a state court in State B, you can use the execution and garnishment procedures of State B to enforce and collect the amount due under the judgment. This is known as Domestication of a Judgement. Some states require creditors to essentially “start over” and file a whole new lawsuit in the new state in which they wish to domesticate their judgment. However, most states have adopted the Uniform Enforcement of Foreign Judgments Act (UEFJA). The UEFJA allows the creditor to obtain an effective judgment in a different state by just filing proof of their judgment, providing the last known address of the debtor and creditor, and paying the correct filing fees. This is quicker and more cost effective than filing a separate action. Most states, including the District of Columbia and the U.S. Virgin Islands have adopted the UEFJA. Only California, Indiana, Massachusetts, North Carolina and Vermont have not.
After the correct papers have been filed with the clerk of the court, the clerk will send notice to the debtor. The debtor will have a certain number of days (specified by the jurisdiction) to respond. If the debtor does not timely respond, the judgment will be entered and will be the same as any other judgment. If the debtor does respond in a timely manner, he may request a hearing to dispute the enforcement of the judgment or the timeliness of the enforcement. However, the debtor is normally restricted to “procedural” defenses. For example the debtor can show that the original court lacked jurisdiction or that the debtor was not properly served. Otherwise, the debtor cannot dispute the actual debt or judgment. The previous court has already made a decision on the merits of the case.
Methods of Collecting Judgments
Here are the most common ways judgment creditors collect their judgments from debtors.
1) Wage Attachments
The first item of your property most judgment creditors will go after is your paycheck, through a wage attachment (or wage garnishment). A wage attachment is a very effective technique for a judgment creditor if you receive a regular paycheck. Your employer takes a portion of your wages each pay period and sends that money to your creditor before you ever see it.
Federal law allows the judgment creditor to take up to 25% of your net earnings or the amount by which your weekly net earnings exceed 30 times the federal minimum wage (currently $7.25 an hour times 30, equals $217.50), whichever is less. Net earnings are your gross earnings less all legally mandated deductions, such as withheld income taxes and unemployment insurance.
How a Judgment Creditor Attaches Your Wages
To attach your wages, a judgment creditor obtains authorization from the court in a document usually called a writ. Under this authorization, the judgment creditor directs the sheriff to seize a portion of your wages. The sheriff in turn notifies your employer of the attachment, and your employer notifies you. Unless you object, your employer sends the amount withheld each pay period to the sheriff, who deducts his or her expenses and sends the balance to the judgment creditor.
2) Property Liens
One collection device commonly used by judgment creditors is the property lien. In about half the states, a judgment entered against you automatically creates a lien on the real property you own in the county where the judgment was obtained. In the rest of the states, the creditor must record the judgment with the county, and then the recorded judgment creates a lien on your real property. In a few states, the lien is on your real and personal property. Liens have a lifespan of a few to several years.
If a judgment creditor does not get a lien on personal property after the judgment is entered or recorded, the judgment creditor may be able to get a lien on your personal property by recording the judgment with the secretary of state. This usually applies only to property with title papers, such as a car or a business’s assets. If, for example, you tried to sell your car, the lien would appear, and you’d have to pay off the judgment creditor before selling.
Once the judgment creditor has a lien on your property, especially your real property, the creditor can safely anticipate payment. When you sell or refinance your property, title must be cleared — that is, all liens must be removed by paying the lienholder –before the deal can close.
3) Executing on the Lien
Instead of waiting for you to sell your property, the creditor can “execute” on the lien. That means having the sheriff seize your property — typically a house — and arrange for a public sale from which the creditor is paid out of the proceeds. However, if your property is exempt, the creditor cannot do this.
Even if your property is not exempt, many creditors don’t want to go through the expense and hassle of a public sale. This is especially true if the creditor won’t get much money through the sale. Any mortgage holder, government taxing authority, or other creditor who placed a lien on your property before the judgment creditor will be paid first. Then you get any homestead exemption to which you are entitled. Only then does the judgment creditor get his or her share.
4) Property Levies
A judgment creditor can get a “writ of execution” from the court and go after your personal property by instructing the sheriff or marshal to “levy” on it. “Levy” basically means that the officer takes the property (your baseball card collection, for example) or instructs the holder of the property (your bank, for example) to turn it over to the officer.
After taking your property, the sheriff or marshall sells it at public auction and applies the proceeds to your debt. In the case of a bank account, the amount taken from your account is applied to your debt.