Show Me the Money

If you’re a plaintiff, winning a judgment at the end of a lawsuit is a victory. But don’t pat yourself on the back just yet. The next step is called executing the judgment — in other words, getting the money — and it can be the hardest part of the process.

A court order may specify that the “judgment debtor” pay up within a certain time period, say 30 to 60 days. If this doesn’t happen, the “judgment creditor” normally must follow up with tactics such as certified letters, emails and phone calls. This sometimes shakes the money out. But in the case of a stubborn or asset-poor debtor, more legwork may be needed.

There are many tools available to collect what is legitimately owed to you. Here are the most common:

Collection agencies. For a fee, you can hand the headache to an agency to get the debtor to pay up. This generally works best in small, uncomplicated situations.

Docketing a judgment. The process involves filing a copy of the judgment where the debtor owns property, creating a lien on those properties.

Liens. The debtor fills out a statement of assets against which the judgment can be collected. You can take this to court and ask for a writ of execution, which the sheriff typically serves on the debtor’s bank or other institution where the debtor owns personal property. This creates a lien on the assets, which can be seized to pay the judgment.

Garnishment. A writ is served on the debtor’s employer, who then holds back a portion of wages to pay the judgment. There are limits on the amount that can be withheld. In some cases, other income such as rent and commissions can be garnished.

Installment payments. Sometimes a debtor wants to pay but his or her financial situation makes it tough. You can work out a written installment plan, adding reasonable interest until the debt is paid in full.

Many of these collection remedies are contained in state law, and some states are more aggressive than others. An example: In some states, a debtor’s driving privileges can be suspended if he or she fails to pay a judgment arising from a car accident.

Keep in mind that some assets, such as a person’s home, are untouchable. State statutes may also exempt other property such as clothing, personal effects, and a certain amount of cash.

If the debtor is really stonewalling, your lawyer may have to take a deposition or send questions (“interrogatories”) to get the real story on assets and employment. The debtor will be asked to provide bank statements, tax returns, W-2s, deeds, and other evidence of his financial status.

To prevent a debtor from simply transferring property to someone else, or giving it away, many states have laws forbidding transfers of property subject to a judgment.

If and when you collect, the debtor may ask you for evidence that the judgment has been paid. This satisfaction of judgment should only be provided after actually receiving the money.

Many judgment creditors never have to resort to collection remedies. But if you do, patience and persistence will increase the chances of recovering what’s rightfully yours.