If you've got a money judgment and want to collect, here's how to start.
(To learn more about bringing a lawsuit, both in small claims court and regular state court, see our Small Claims Court & Lawsuits area.)
1. Don't start too soon.
Don't be in a rush to ask for your money. Most states give a losing party the right to appeal, so it's usually a good idea to wait until the deadline for filing an appeal (usually 30 days or so) has passed. If you start bugging the other party sooner, you may just nudge him or her into filing an appeal. And generally, the other party doesn't have to pay a judgment while an appeal is pending.
2. Ask for your money.
A surprising number of debtors will pay their court judgment if you ask nicely. A business-like request for payment is often all it takes, especially if you mention that an unpaid judgment will probably show up on the debtor's credit report. Don't tell the debtor exactly how you plan to collect your judgment if he or she doesn't pay up, however -- this may just encourage the debtor to start hiding assets.
3. Suggest ways the debtor can raise cash to pay you.
Once you win a court judgment, you are legally entitled to your money. If the debtor claims he or she wants to pay but doesn't have the money, suggest some ways to raise cash -- for example, by borrowing money from a friend or relative, taking a cash advance on a credit card, or dipping into retirement accounts.
4. Start with easy-to-reach assets.
When you're planning a collection strategy, it makes sense to start by going after the low-hanging fruit. Wages, bank accounts, and money paid to a debtor's business are all relatively easy assets to grab -- and the procedures for doing so are simple and inexpensive. On the other hand, trying to force a sale of the debtor's vehicle, house, or personal property can be complicated, expensive, and time consuming.
5. Don't harass the debtor.
Although you are entitled to go after your money, you should not harass or threaten the debtor. Avoid practices like calling the debtor early in the morning or late at night, repeatedly visiting the debtor at work, or threatening to harm the debtor for failing to pay. Humiliating or intimidating a person who owes you money can be counterproductive, and it could even get you sued.
6. Consider settling for less.
You have the legal right to collect the full judgment you won, but that doesn't mean that you'll be able to do it. It can take a long time to collect a judgment, and you might have to spend a lot of energy tracking down the debtor's assets (or waiting for him or her to acquire some), taking them, and converting them to cash. In many cases, it makes more sense to settle for a bit less than the full claim, in exchange for having the whole thing over and done with.
7. Pay attention to timing.
In many circumstances, you'll want to move quickly, in order to maintain the element of surprise. For example, a debtor who knows that you plan to go after the money in his or her bank account is likely to close the account and move the cash -- before you ever get your hands on it. You'll also want to make sure to move at the right time -- for example, by going after the debtor's bank account right after he or she deposits a paycheck, not right after he or she pays off a mortgage.
8. Keep tabs on the debtor.
Until you've collected your judgment, you will have to keep tabs on the debtor. You'll want to know if he or she moves, gets a new job, buys an expensive vehicle, or inherits money, for example. Make a point of calling the debtor periodically -- and stay in touch with any mutual friends or business contacts who might have valuable information.
9. Consider hiring an expert, if necessary.
There are plenty of collection professionals out there, who will try to collect your judgment in exchange for a percentage of whatever they are able to get from the debtor. If you have had no success in collecting your judgment or you aren't willing to spend the time and effort necessary to get your money, hiring an expert might be a good idea. After all, it's better to get some of the money you're owed than none.
10. Know when to give up.
There are lots of way to collect a judgment -- but all of them take time and money. And even though you're entitled to recover many of the costs of collecting a judgment from the debtor, that won't do you much good if you can't even collect the original judgment. Remember the old saying, "Don't throw good money after bad"? If you're dealing with a debtor who is unwilling or unable to pay, you might eventually have to decide to cut your losses.