Civil lawsuits through which monetary compensation is awarded produce what are known as money judgments. Enforcing such a lawsuit boils down to collecting the award. Here’s the thing: collecting isn’t as easy as it sounds. In fact, the majority of money judgments are never collected at all.
There are a number of reasons explaining why, some of which will be discussed in this post. The main takeaway for anyone currently engaged in a civil lawsuit for which a monetary award is being sought is this: make sure you are properly prepared for collection so that you’re ready to go once as soon as you can legally do so.
With that in mind, here are four things to understand about collecting monetary awards:
1. The Debtor May Lack Resources
My number one concern on any money judgment is the defendant’s financial resources. Also known as the judgment debtor, the plaintiff cannot pay with money he doesn’t have. So it’s up to the judgment creditor and his representatives to honestly assess resources. A lack of resources leaves the creditor with some decisions to make.
Resources potentially available for collection include:
- Income, including wages.
- Bank accounts and securities.
- Hard assets, like real estate.
All these resources could potentially be leveraged for payment. Of course, that is assuming the judgment debtor has such resources. If he doesn’t, extracting payment could be like getting blood from a stone.
2. Debtors Try to Hide Resources
Some judgment debtors genuinely lack the resources to pay. Others have the resources but go out of their way to hide them. For example, a plaintiff who knows he is likely to lose his case may have the foresight to transfer a piece of real estate to a family member with the hopes of making it inaccessible for collection purposes.
Hiding resources is sometimes as simple as not disclosing them. A debtor might not reveal his actual income. He might not disclose several savings accounts that he only uses as financial storage facilities.
3. Finding Resources Is Your Responsibility
As the judgment creditor, it is your responsibility to find the debtor’s resources. The court and its officers are not going to help. Unfortunately, not knowing how and where to look is one of the major reasons so many money judgments never get collected. The good news is that smart creditors know enough to turn to organizations like Judgment Collectors.
Judgment Collectors is a Salt Lake City, UT collection agency specializing exclusively in money judgments. They make it their business to know how and where to find creditor resources. Their team utilizes every available tool to track down non-exempt income and assets.
4. Some Assets Are Exempt
Mentioning of non-exempt income and assets implies that others are exempt. In some states, wage garnishment is not allowed. A debtor in one of those states would not have to worry about his income being leveraged to pay a money judgment.
Likewise, most states either exempt a judgment debtor’s entire primary residence or a portion thereof. Full exemption would mean that you cannot go after the debtor’s house to collect. A partial exemption would mean that a certain value of the house is protected. You could still go after the house, but you wouldn’t get full value for it.
Collecting a money judgment is often harder than winning it. I guess that’s why companies like Judgment Collectors do so well. They handle collections so that judgment creditors don’t have to. It’s amazing that more creditors don’t utilize paid collection services. If I were looking at collecting a money judgment, I would bring in the professionals.
