Can You Collect Your Judgment?

Before you sue, make sure your opponent is solvent and has wages or assets you can get.

Even after you win a lawsuit, you still have to collect the money you were awarded: your judgment. And the court won't collect it for you -- when it comes to collecting what you're owed, you're on your own.

Collecting from solvent individuals or businesses isn't usually a problem, because most will routinely pay any judgments entered against them. If they don't, there are a number of legal ways to force them to pay.

Unfortunately, some people and businesses are either broke (lawyers say "judgment proof") or so adept at hiding their assets that collecting your winnings is likely to prove impossible.

Before you spend time and money suing a person or business, do a little legwork to determine if you'll be able to collect a judgment later. Here are some things to consider.

Is the Debtor's Property Protected?

Federal and state laws protect certain types of the debtor's property or equity up to a certain amount in other types of property.

Personal Property Exemptions

Most states protect much of a debtor's personal property, like clothing, some furniture, and household appliances. Many states also allow debtors to protect a certain amount of equity in artworks, jewelry and electronics. To find out what your state protects, see our Exemptions area.

Vehicle Exemptions

Most states allow debtors to protect some equity in their car, truck, van, motorcycle, or other vehicle. States also often allow debtors to protect motor vehicles that they use in their business. The equity is the difference between the market value of the car (what it's worth today in it's present condition) and the car loan amount. Unfortunately, many people have high car loans so there is little equity in the car.

To find out what type of car exemption your state has, visit our Motor Vehicle Exemption area.

Is the Debtor Likely to File for Bankruptcy?

If a person or a business files for Chapter 7 bankruptcy and lists you as a creditor, most likely the debt to you will be wiped out at the end of the bankuprtcy. There are a few exceptions, however, such as for child support, debts for personal injury caused by drunk driving, and a few others. (To learn which debts are not wiped out in Chapter 7, see Nondischargeable Debts in Chapter 7 Bankruptcy.)

If you have a security interest in the debtor's property, bankruptcy will wipe out the debtor's personal obligation to pay your debt, but you can still take back the property that serves as collateral. (To learn more, see Secured Debts in Chapter 7 Bankruptcy.)

Does the Debtor Have Regular Wages You Can Garnish?

One of the easiest ways to collect a judgment is to garnish the debtor's wages. In order for this to work, the debtor must have a job with a decent wage. The federal goverment limits the amount you can take, and so do the states. And certain types of income, like Social Secuirty, are off-limits. For more information, see Collect Your Court Judgment With a Wage Garnishment.

Does the Debtor Have Bank Accounts?

Bank accounts and stocks and bonds are other common collection sources. For more information, see Collect Your Court Judgment From Deposit Accounts.

Does the Debtor Own Real Estate?

Real estate other than the debtor's primary residence is another source for collection. You might be able to collect from the debtor's home too, but many states protect a certain amount of a debtor's equity in his or her residence. For more information, see Collect Your Court Judgment With a Real Estate Lien.

Does the Debtor Have Business Receipts?

If the judgment debtor is a business, you can often collect by ordering the sheriff or marshal to take the amount of the judgment right out of the debtor's cash register (this is called a "till tap"). Or, you might be able to forcde the sale of a valuable piece of equipment or machinery owned by the business.

But if the business is a fly-by-night outfit with no permanent address or obvious collection source, such as a cash register or owned fixtures or equipment, you may be out of luck (lots of businesses lease business equipment or take out a secured loan to purchase it).

Finally, in some states, if your lawsuit is against a contractor who has a current license, you may file the judgment with the state licensing board. If the contractor doesn't pay off the judgment or post a bond, he or she might lose the license.

Will the Debtor Have Income or Assets in the Future?

Even if the debtor is currently unemployed or has no assets, if you think it's likely that will change in the future, bringing a lawsuit might be a good idea. Laws in many states allow a judgment to be collected for ten to 20 years from the date it is entered, and you can usually apply to have this period extended.

To learn more about collecting your judgment, get Everybody's Guide to Small Claims Court, by Ralph Warner (Nolo).

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