Can You Collect Your Judgment?

When it comes to collecting the amount owed in a money judgment, you're on your own.

Updated by , Attorney · University of the Pacific McGeorge School of Law

Even after you win a lawsuit, you still have to collect the money awarded in the judgment—the court won't do it for you. Financially sound individuals or businesses will routinely pay a judgment entered against them. However, not everyone will be as willing. If necessary, legal ways to force payment exist.

Receiving the Judgment

In most states, the small claims court clerk will mail out the case decision a few days to a few weeks after the judge hears your matter. The winner gets a money judgment and becomes the judgment creditor. The loser becomes the judgment debtor.

If you sued multiple people, the judgment should indicate who owes how much. Some defendants might not owe anything, or the judge might cap their liability at a maximum amount. However, a judgment against multiple parties will likely be jointly and severally liable, meaning that each defendant will be 100% responsible for paying the award. They'll have to work out reimbursement among themselves.

Example. Suppose that you receive a $1,000 judgment against two defendants. You can collect any amount, up to the $1,000 owed, from either of the two defendants. For instance, you could collect $800 from one and $200 from the other. If you receive a disproportionate amount from one defendant, that person is left with the task of evening things out. The defendant who paid the $800 could sue the other for $200.

Most judgments order the judgment debtor to pay the winner the total amount due in one lump sum. However, in most states, the judge can order the judgment debtor to pay the award in installments over time if requested. A judgment debtor who fails to ask for time payments in court at the time of trial might make this request after receiving the judgment. If the debtor fails to pay the installments, you can ask the judge to revise the award.

Locating Assets

Many courts require the losing party to complete a disclosure statement listing all assets, or risk a charge of contempt of court. The creditor can also request that the court order the judgment debtor to appear to answer asset-related questions (often called an order of examination or debtor's examination.

Failure to appear at the examination will usually result in the judge issuing a bench warrant for the person's arrest. If the debtor shows, the creditor will want to ask questions about all property, including:

  • cash
  • an inheritance or trust
  • safe deposit boxes and storage spaces
  • financial accounts, including checking, savings, and investment accounts
  • personal property, such as cars, boats, recreational vehicles, collections, artwork, and jewelry
  • real estate, wherever located, such as a residence, vacation home, timeshare, or office building, and
  • ownership interests in any businesses.

It's also important to learn whether any significant property transfers occurred in the past. A creditor who can demonstrate that the judgment debtor transferred the property for less than its fair market value in an attempt to avoid the debt might be able to reverse the transfer under a fraudulent transfer theory.

Seizing Property

Most people have lots of bills to pay, and making good on a small claims judgment might not be a high priority on the judgment debtor's list. In that case, you can use the money judgment to take the debtor's unprotected assets in satisfaction of the debt. But first, you'll need to locate assets you can seize.

Which Property Works Best?

You'll want to go after the property that is the easiest to attach, which is why most attorneys look for the "pile of money," or a hefty bank balance. Withdrawing funds from a financial account is relatively straightforward, as is taking a business's earnings for the day directly out of the cash register with the help of the local sheriff.

Garnishing wages requires little effort, as well. The employer must begin withdrawing funds from the judgment debtor's paycheck—usually 25%—after receiving the garnishment paperwork. The process is a bit slower than withdrawing funds from a checking or savings account, but it is effective as long as the judgment debtor remains employed.

It's also possible to satisfy a judgment with the judgment debtor's real estate, for instance, a home or business property, but it can be a headache. Not only is it expensive, but it's time intensive. Seizing personal property, such as vehicles and any property other than real estate, is usually the least productive (more below).

Most counties post the process required for all debt collection types on the website of the local sheriff.

Is the Debtor's Property Protected?

You won't have access to all of a debtor's assets. Federal and state laws ensure that a debtor can maintain a home and employment by protecting certain types of property or equity in an asset up to a certain amount.

  • Personal property exemptions. You'll find that much of a debtor's personal property (things other than real estate), like clothing, some furniture, and household appliances, will be protected. Many states also allow debtors to keep a certain amount of equity in retirement accounts, jewelry, and electronics.
  • Vehicle exemptions. A debtor will be able to protect some equity in their car, truck, van, motorcycle, or another vehicle, and an additional amount for motor vehicles used in their business. Equity is the difference between the fair market value of the car (what it's worth today in its present condition) and any car loan amount. Because many people have high car loans, there's often very little unprotected equity in the car.
  • Homestead exemptions. Most states allow a debtor to protect some equity in a home. As a result, you wouldn't be able to satisfy a money judgment from a residential property unless equity exists over and above any mortgage plus the amount the debtor can protect.

To find out what the debtor's state protects, see the Exemption by State area.

Will the Debtor File for Bankruptcy?

If a person or business files a Chapter 7 bankruptcy case, it's likely that your debt will get wiped out. A few exceptions exist, however. Nondischargeable debts, such as for child support, personal injury awards caused by drunk driving, and a few others, will remain the debtor's responsibility.

Some money judgments automatically give you a security interest (lien) in the debtor's property (or, you might need to record the judgment with the recorder's office). The debtor might have even agreed to give you a voluntarily lien in the original contract. Although bankruptcy will wipe out the debtor's personal obligation to pay the judgment, unless the debtor successfully challenges the lien, you'll still be able to take the encumbered property.

See Secured Debts in Chapter 7 Bankruptcy: An Overview for more.

Can You Collect?

You'll want to consider whether some of the common ways judgment creditors satisfy a judgment will work for you.

  • Does the debtor have a regular income? A simple way to collect a judgment is by deducting money out of the debtor's paycheck using a wage garnishment. The debtor must have a decent income because both the federal government and states cap the amount you can take, and certain types of income, like Social Security, are off-limits.
  • Does the debtor have a bank account? Collecting from deposit accounts, such as bank and investment accounts are another asset source worth considering.
  • Does the debtor own real estate? You can collect from real estate assets, including the debtor's home, too. Keep in mind that many states protect a certain amount of a debtor's equity by way of a homestead exemption.
  • Does the debtor have business receipts? You can order the sheriff or marshal to take the judgment amount directly out of a cash register (called a till tap) or bank account. Or, you might be able to force the sale of a valuable piece of equipment or machinery owned by the business.
  • Does the debtor have a professional license? in some states, you can file a judgment with the state licensing board. For instance, in California, a contractor must handle the debt by paying the award or filing for bankruptcy to prevent losing the license.
  • Will the debtor have income or assets in the future? Financial situations change regularly. If there's a chance that the debtor will come into money, it might make sense to bring the lawsuit.

You'll find in-depth information in Collecting From a Judgment Debtor: Wage Garnishment, Property Liens, and Bank Account Levies.

Renewing the Judgment

You can't sit on your judgment forever. You have a limited period in which to collect. However, you can extend the time by renewing the judgment before it lapses; otherwise, in most states, you'll lose your collection rights permanently. You'll find a judgment renewal chart in Don't Sue Unless You Can Collect the Judgment.

For more details about the process, get Everybody's Guide to Small Claims Court, by Cara O'Neill.