A Guide to Collecting Your Small Claims Court Judgment

Congratulations! You won a money judgment in small claims court. Now comes the hard part—turning that judgment into cold, hard cash. Most judgment debtors will eventually pay, though they might need occasional prodding from you (or better yet, your lawyer). Our concern is with those who can't or won't pay, forcing you to take informal and formal steps to collect what you're owed.

We break the collection process down into five steps. Note that these aren't hard-and-fast rules, but guidelines. No two collections are the same, and yours is likely to involve an occasional detour or require that you regroup and try a different approach.

We'll cover these five collection steps:

• Step 1: Assess the likelihood you can collect some or all of your judgment
• Step 2: Make sure you understand applicable collection laws
• Step 3: Sending a payment demand, and other initial collection strategies
• Step 4: When and how to use formal collection methods like garnishments and judgment liens, and
• Step 5: Handling special collection situations.

If you need help with any of these steps, or wonder how they might apply to your situation, your best bet will be to contact an experienced collections lawyer in your area.

Step 1: Assess the Likelihood You Can Collect

The collection process should begin with an honest assessment of the likelihood that you can collect some or all of your judgment. Among the problems you might encounter are:

• collecting a default judgment
• the judgment-proof debtor, and
• making and sticking to a collection budget.

Collecting a Default Judgment

A defendant (the party you're suing in small claims court) who doesn't show up for court is said to have "defaulted." The good news is that at your request, the court will award you a default judgment. Once that judgment becomes final, you can start trying to collect.

Now for the bad news. A no-show defendant probably blew off the court date because they can't or won't pay any judgment you might be awarded. Once you find them (if you find them), odds are they don't have any cash or property you can go after. In other words, the default judgment debtor is judgment proof.

Collecting From a Judgment-Proof Judgment Debtor

A judgment-proof judgment debtor is one who has no cash, no non-exempt real estate or other property you can seize and sell, and no bank or investment accounts you can levy. If they have a job, it probably pays so little that it makes no sense to try a wage garnishment.

What's the best strategy here? Probably to sit tight and wait. Your judgment will be alive for several years, so your best move will be to hang on and hope the judgment debtor's financial situation improves. Check periodically to see if they've come into some property—maybe by way of an inheritance or a turn of fortune—and if so, act quickly.

Make a Collection Budget—and Stick to It

Your small claims judgment is probably only worth a few thousand dollars. The last thing you want is to end up being "upside-down" in the judgment, meaning you've spent more trying to collect than what it's worth.

At the beginning of the process, create a budget. Depending on the circumstances, you might need to allocate funds for:

• locating the judgment debtor
• finding cash and assets you can use to collect
• court-related costs such as amounts you'll pay for writs of execution or garnishment, filing fees, court reporter expenses, and service fees
• attorneys' fees and expenses, and
• miscellaneous costs like copies, postage, and administrative expenses.

Most of these cost categories might run from the hundreds into several thousand dollars. A collection attorney can help you arrive at realistic estimates. The important thing is to settle on your expense ceiling—the most you're willing to pay before you reach the point that the payoff (the amount you're likely to recover) falls short of your outlays.

Last but not least, your time has value, too. As you set a budget, you might want to factor that element into the calculation. Your hourly wage is probably a good benchmark.

Step 2: Understand the Applicable Collection Laws

Federal and state consumer protection laws limit the actions collectors can take to recover debts. Most of these laws apply only to attorneys, collection agencies, and others who collect bills for a living. But in some states, collection restrictions will apply to you if you choose to collect your own small claims judgment.

Collection Behavior Guidelines

State consumer protection laws, where they exist, vary considerably. Even so, there are certain lines you can't cross. Speak with a local collections attorney to find out what's allowed and what isn't.

At a minimum, you'll want to follow these guidelines.

• No excessive calls or contact. Don't call, email, or text so often that you harass the judgment debtor. Harassment includes calling late in the evening or during overnight hours, and causing the judgment debtor's phone to ring continuously.
• Don't harass others. It's generally not a good idea to contact the judgment debtor's friends, relatives, or co-workers. In any case, don't threaten, intimidate or insult them, call the judgment debtor names, or disclose information about the judgment debtor's personal or financial affairs.
• Be cordial and professional. Be cordial and professional in all your dealings with others. Don't raise your voice or use profanity. Anger and emotion are likely to be met with the same, and won't get you any closer to your goal.
• Don't badmouth the judgment debtor. Making false statements of fact that injure the judgment debtor's reputation in the community is a good way to get sued for defamation. You might end up on the wrong end of a collection action yourself.
• Keep a record of your activities. Keep a written log of your collection activities—dates and times you called, with whom you spoke, and an overview of what was said. Your log should also include emails, texts, letters, and other contacts. If the judgment debtor later tries to argue that you harassed them, the log can help you defeat those claims.

When Can You Start Collection Efforts?

State laws differ on when you can start trying to collect a small claims judgment. Most states fall into one of two categories.

• After an appeal (or the time to appeal) ends. Nearly all states allow appeals from small claims court. If you're in one of those states, collection efforts might have to wait until: (1) the judgment debtor's time to appeal ends (typically between 10 and 30 days after the judgment was entered), if no appeal is taken, or (2) after the appeal ends, when the judgment debtor appeals. A few states let you try to collect while an appeal is ongoing.
• Any time after judgment is entered. In states where no appeal is allowed, or where you can try to collect while an appeal is pending, you can probably start collection activities as soon as your judgment is entered.

Penalties for improper collection activities can be costly, so be sure to check your state law for specifics.

How Long Do You Have to Collect?

Money judgments typically are good for between 5 and 20 years from the date of entry, longer in some states. In most places, you can keep a judgment alive (sometimes indefinitely) by timely renewing it. You're allowed to collect as long as your judgment stays alive and some portion of it remains uncollected.

Collecting Across State Lines

Suppose you got a small claims judgment in State A. When you try to collect, you learn that the judgment debtor has moved to State B. Can you collect your judgment in State B? Yes, but you'll first need to register or "domesticate" it there. That means you'll have to take your judgment to the main county court in the county where the judgment debtor lives, and ask the court to recognize it as valid and collectible.

Registration or domestication usually involves steps like these (check the rules of the court where you're trying to register):

• get a certified copy of your judgment
• prepare an affidavit stating your name, the judgment debtor's name and address, that you have a judgment, the amount of the judgment and how much remains unpaid, the name of the court that issued the judgment, and likely some additional information
• take the certified judgment copy and your affidavit to the main court for the county where the judgment debtor now lives and file them (for a nominal filing fee), and
• send copies of the judgment, your affidavit, and any court-required notice form to the judgment debtor.

Once your judgment is registered and the judgment debtor's time to challenge it (usually around 30 days) has passed, you're free to start collection activities following State B's collection laws.

Step 3: Payment Demand and Other Initial Collection Strategies

Generally speaking, the best collection strategy is the one that's the cheapest and most efficient. As a starting point, try to collect with a simple payment demand letter. Here's an example you can modify to fit your case.

Example Payment Demand Letter

Negotiate With the Judgment Debtor

Your payment demand letter didn't move the needle. Or the judgment debtor replied, saying they can't afford to pay. What's next? Maybe it's time to negotiate. Contact the judgment debtor (or have your attorney contact them) and see if you can make a deal.

Are you willing to accept a bit less than what you're owed to get payment now? Offer the judgment debtor a one-time opportunity: "I'll take [insert the percentage of the judgment you're willing to accept] now to resolve the debt once and for all. This offer is good until [insert the deadline here]. If you agree, you have until [insert payment date] to pay the agreed sum."

When a discount isn't to your liking, offer to accept installment payments over a period of months. Tack on a reasonable interest rate for starters, and offer to forego interest later in negotiations if it looks like you're nearing an agreement but need a little more incentive.

If you're able to reach a settlement, be sure to put it in writing. And be clear about what happens if the judgment debtor doesn't live up to their end of the bargain. For instance, if you've agreed to a discount for payment within a certain number of days, make sure to specify that the full, undiscounted amount is due again if they default on payment.

In an installment payment situation, the written agreement should specify that you can accelerate all future installments in the event of a default, making all payments immediately due. You might want to add provisions for attorneys' fees, case expenses, and collection costs, too.

Step 4: When and How to Use Formal Collection Methods

So, simple, low-key efforts haven't worked. If you're serious about collecting, you'll need to shift gears to more formal collection efforts. These can be effective, but:

• most will require you to use court forms, pay filing, process server, and other fees, and will involve authorities like the county sheriff, and
• a clever and determined judgment debtor can defeat these collection methods.

Formal Collection Methods

Plan these activities with care, and with an eye on your collection budget. Be sure you follow state law, and pay close attention to applicable state and local procedures.

• Judgment liens. Judgment liens are a relatively simple, low-cost way to collect, making them a good first formal collection step. Once you've got a judgment, record a lien with the designated county office, typically the court clerk, recorder, or register of deeds. After recording your lien, the easiest option—when you're not in a hurry to collect—is simply to wait for the judgment debtor to sell or refinance the property. They'll have to pay you (or make satisfactory arrangements) before the sale or refinancing can be completed. Keep in mind, though, that your state's homestead exemption might limit your ability to collect from proceeds of the judgment debtor's primary home. (Learn more about recording judgment liens in your state.)
• Wage garnishment. When you want to collect more quickly, consider a wage garnishment. In most states, you‘re allowed to garnish about 25% of a person's net wages. You'll get less if other creditors have beat you to the wage garnishment punch. If the judgment debtor is low income you'll get far less—maybe nothing at all. A few states prohibit wage garnishments. The court clerk's office can fill you in on the basics.
• Bank account levy. When you know where the judgment debtor banks, a bank account levy or garnishment can be another way to collect sooner rather than later. In a nutshell, the sheriff takes an order you provide (see below) to the bank and empties the account—subject to state exemptions and other possible exceptions. If you're lucky, this will work once. The debtor will close the account after you drain it, so you'll have to find other bank accounts to levy.
• Taking business property. The county sheriff, armed with a writ of execution you've obtained (see below), can collect funds right out of the judgment debtor's cash register. You also might be able to seize money in bank accounts, business fixtures and equipment, and inventory.
• Taking other property. Property a judgment debtor needs to work and live—furniture, vehicles, and tools of the trade—will be more difficult to get your hands on. State exemption laws put much of this property beyond the reach of creditors. And as a practical matter, they're only worth going after if they have enough value after exemptions and liens to justify the collection costs. You can collect from real estate as long as there's sufficient equity to: (1) pay off the mortgage, (2) if it's a primary residence, pay the judgment debtor the amount of their homestead exemption, (3) pay the sheriff's fees, which can be costly, and (4) leave enough money to make it worth your while.

Getting Court Orders You'll Need to Collect

Before you can levy on wages or other property, you must get the court's permission. That permission usually comes in the form of a writ of execution, writ of garnishment, or writ of attachment. In most states, you get these writs from the court clerk for a small fee. The fee is a recoverable cost, meaning you can add it to the amount the judgment debtor owes you.

Once the court issues your writ, take it to the sheriff in the county where the assets you want to seize are located. Be sure to contact the sheriff's office ahead of time for documentation you'll need to provide, as well as the sheriff's charges. Amounts you pay to the sheriff are also recoverable costs.

Finally, don't get a writ of execution until you've identified the property you want to take. And once you've got the writ, don't delay. A writ of execution expires if it isn't served within a certain number of days. If time runs out, you'll have to go back to the court clerk and get another writ.

Step 5: Handling Special Judgment Collection Situations

Here are some situations that usually call for different or extra steps. As with all collection activities, make sure you check state law (and if required, local law) to find out about required procedures.

When the Judgment Debtor Pays by Check

Make copies of any checks the judgment debtor sends you as partial payment. If they later fail to pay the balance due, you'll need to find a collection source for the unpaid portion. The judgment debtor's bank account is a great place to start. A copy of their check provides all the details you need: The bank's name, branch, and routing and account numbers.

What if the judgment debtor's check bounces? You might be able to:

• Sue in small claims court. As damages, you can get a judgment for the amount of the bounced check plus your court and collection costs.
• Referral to check diversion program. A check diversion program lets the judgment debtor avoid prosecution. But first, they'll have to make good on the check and satisfy other requirements. You might not be allowed to sue for damages if you enlist the prosecuting attorney's help, but you'll be spared the hassle of another lawsuit.

Collecting on an Installment Judgment

When the court orders your judgment to be paid in installments (equal payments spread out over time) and the judgment debtor misses one or more payments, you can collect the missed payments immediately. But here's the problem: You can't collect the rest of the judgment (the installments that haven't come due yet) unless the court first sets aside the installment payment provisions and makes the entire balance immediately due and payable.

To set aside an installment judgment, call the small claims clerk's office and ask if there's an approved court form you can use. If so, file the original form with the clerk, have a copy served on the debtor, and follow up with a proof of service form. If you can't locate a form, contact a local collections lawyer for help.

When your small claims judgment is against a government agency, most of the steps outlined above won't work. You'll need to follow special procedures to collect from any government entity—state government, counties, cities, school districts, public authorities, and any other political subdivisions.

As soon as you're awarded a judgment, contact the government or government agency that's on the hook to find out about its collection requirements. Typically, they involve steps like these:

1. Prepare a written declaration under penalty of perjury stating:

• that you have a court judgment
• the name of the government agency that owes the judgment
• that you want payment, and
• the amount of the judgment.

We've prepared a sample declaration (see below) containing all this information.

2. Get a certified copy of your judgment from the small claims court clerk.

3. Contact the agency that owes you money and find out the fee to collect the judgment.

4. Take or send the declaration, a certified copy of the judgment, and the fee to the office or individual the agency identifies as the correct place to send the documents.

5. You might have to deliver a notice to the judgment debtor (the same government agency) where you filed a payment request, even though doing so is redundant. To play it safe, mail photocopies of the declaration, the judgment, and a completed proof of service form to the government agency.

6. Keep the original proof of service and copies of the declaration and judgment in a safe place.

The government agency will notify its treasurer or controller, who will pay you or deposit the money with the court. Make sure the court has your current address on file. Otherwise, you might never get paid.

Sample Declaration

Next Steps

Collecting your judgment is a process, one that requires planning and preparation. It will take time and cost money. And along the way, you'll probably find yourself getting frustrated and angry. Step away, gather your thoughts, and return when your mind is clear. Your judgment will be good for several years, so there's no need to rush. Here are a few more tips for collecting your small claims judgment.

When might it make sense to hire an attorney or collection agency to handle the heavy lifting? When your judgment is for more than $5,000 to $10,000, getting help might prove cost effective. At the very least, it's probably a good idea to contact some local lawyers and agencies to see what services they offer, how much they charge, and to find out if they think they can help.

Some judgment debtors—those who are familiar with the collections cat-and-mouse game—have assets hidden away inside business entities and trusts. If you're thinking about going after those assets, you'll almost certainly need professional help and advice.

Finally, collecting a judgment (or any other debt) can be unpleasant, confrontational, and stress-provoking. It's not for everyone, and you simply might prefer not to get involved. That's a call only you can make, and it's completely understandable. Find help that's within your collection budget, and leave it to the pros.