How Creditors Enforce Judgments

Learn about the many ways creditors can collect on judgments.

Once a court enters a judgment against you, the creditor is then called a "judgment creditor," and you are called a "judgment debtor." Judgment creditors have many more collection techniques available to them than creditors trying to collect debts before getting a court judgment.

What property the creditor can take varies from state to state. Usually, the creditor can go after a portion of your net wages—typically up to 25%, more if the judgment is for child support—bank and other deposit accounts, and valuable personal property, such as cars and antiques. But creditors can't take all of your money and belongings. Every state has specific property it declares “exempt,” which means it's off-limits to your creditors, even judgment creditors. Just because you owe money, you shouldn't have to lose everything. You still need to eat, keep a roof over your head, clothe yourself, and provide for your family. If you have very few possessions, you might find that most of what you own is exempt.

Here are the most common ways judgment creditors collect their judgments from debtors.

Wage Attachments

Judgment creditors will usually first go after your paycheck through a wage attachment (or "wage garnishment"). A wage attachment is a very effective technique for a judgment creditor if you receive regular pay. Your employer takes a portion of your wages each pay period and sends that money to your creditor before you ever see it.

Federal law allows the judgment creditor to take up to 25% of your net earnings or the amount by which your weekly net earnings exceed 30 times the federal minimum wage, whichever is less. "Net earnings" are your gross earnings less all legally mandated deductions, such as withheld income taxes and unemployment insurance.

A few states offer greater protections for judgment debtors.

Higher Wage Attachment Limits for Some Types of Debts

For specific debts, you have to pay more. The wage attachment laws and limitations previously described in this section don't apply to:

Child support. Up to 50% of your wages may be taken to pay child support, more if you don't currently support another dependent or are behind in your payments. Your child's other parent usually doesn't have to sue you first.

Income taxes. If you ignore all IRS attempts to collect taxes you owe, the government can grab virtually all of your wages. The weekly garnishment amount (called a "levy") is based on the standard income tax deduction, plus the amount for each personal exemption you are entitled to on the income tax form, divided by 52 weeks. If you don't verify the standard deduction and how many dependents you would be entitled to claim on your tax return, the IRS bases the amount exempt from levy on the standard deduction for a married person filing separately, with only one personal deduction—a very low exempt amount. (26 U.S.C. § 6334(d).)

How a Judgment Creditor Attaches Your Wages

To attach your wages, a judgment creditor obtains authorization from the court in a document usually called a "writ." Under this authorization, the judgment creditor directs the sheriff to seize a portion of your wages. The sheriff, in turn, notifies your employer of the attachment, and your employer informs you. Unless you object, your employer sends the amount withheld each pay period to the sheriff, who deducts expenses and sends the balance to the judgment creditor.

Objecting to a Wage Attachment

You can object to the wage attachment by requesting a court hearing. In some states, the attachment can't begin until after the hearing unless you give up your right to a hearing. In most states, though, as long as you have the opportunity to have your objection promptly considered, the attachment can take effect immediately.

Property Liens

One collection device that judgment creditors commonly use is the property lien. In about half the states, a judgment entered against you automatically creates a lien on the real property you own in the county where the judgment was obtained. In the rest of the states, the creditor must record the judgment with the county, and then the recorded judgment creates a lien on your real property. In a few states, the lien is on your real and personal property. Liens have a lifespan of a few to several years. Sometimes, creditors can renew liens.

If a judgment creditor doesn't get a lien on personal property after the judgment is entered or recorded, the judgment creditor might be able to get a lien on your personal property by recording the judgment with the secretary of state. Judgment creditors usually record this kind of lien on property with title papers, such as a car or a business's assets. If, for example, you tried to sell your car, the lien would appear, and you'd have to pay off the judgment creditor before selling.

Once the judgment creditor has a lien on your property, especially your real property, the creditor can safely anticipate payment. When you sell or refinance your property, title must be cleared—that is, all liens must be removed—before the deal can close.

Executing on the Lien

Instead of waiting for you to sell your property, the creditor can “execute” on the lien. That means having the sheriff seize your property—typically a house—and arrange for a public sale from which the creditor is paid out of the proceeds. However, if your property is exempt, the creditor can't do this.

Even if your property isn't exempt, many creditors don't want to go through the expense and hassle of a public sale, especially if the creditor won't get much money from the sale. Any mortgage holder, government taxing authority, or other creditor who placed a lien on your property must be paid before the judgment creditor. Then you get any homestead exemption to which you're entitled. Only then does the judgment creditor get paid.

Example. Maddie lives in Wisconsin and owns a house worth $300,000. Child-Aid Medical Clinic obtained a judgment for $2,500 against Maddie for her daughter's emergency treatment and, consequently, got a lien on Maddie's house. Child-Aid considers seizing the house to sell it and get paid but realizes that it won't get any money because:

  • Maddie owes $225,000 on her first mortgage.
  • Maddie owes $23,000 on a home equity loan.
  • Maddie owes the IRS $17,000 on a tax lien.
  • Maddie's homestead exemption is $40,000.

These items total $305,000, more than the value of Maddie's house.

Make Sure the Creditor Followed State Rules When Recording the Lien

A creditor who places a judgment lien on your property must do so according to your state's rules for judgment liens. It's not unusual for creditors to make mistakes, which might make the lien unenforceable. You might have a defense against a creditor's attempt to execute on a lien because the lien is too old or because it wasn't properly handled. You'll need to consult with an experienced consumer attorney if you suspect that the lien was placed inappropriately or too long ago.

Property Levies

A judgment creditor can get a “writ of execution” from the court and go after your personal property by instructing the sheriff or marshal to “levy” on it. “Levy” basically means that the officer takes the property—your baseball card collection, for example—or instructs the holder of the property—your bank, for example—to turn it over to the officer.

After taking your property, the sheriff or marshal sells it at a public auction and applies the proceeds to your debt. In the case of a bank account, the amount taken from your account is applied to your debt.

Assignment Orders

An "assignment order" lets creditors go after property you own that can't be subjected to a levy, such as an anticipated tax refund, the loan value of unmatured life insurance, or an annuity policy.

Contempt Proceedings

Sometimes, a court-issued judgment will include a schedule for installments or periodic payments. In a few states, if a judgment doesn't include such a schedule, the judgment creditor can go back to the court and ask the judge to make an order requiring periodic payments on a debt.

If you violate a court order, the creditor can seek a contempt order. In a handful of states, if a judge issues an order requiring periodic payments on a debt and you miss any payments, the judge can hold you in contempt. You could be fined, sentenced to community service, or, in theory, at least, the judge could issue a warrant for your arrest, and you could be jailed.

As you might hope, arresting a debtor on this kind of warrant is usually a very low priority for law enforcement agencies. In most situations, the warrants become old and moldy without anyone being arrested. But the threat of arrest and jail can be a serious incentive for many judgment debtors to send payment ASAP.

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