You just won your case. The judgment order says the defendant owes you a tidy sum, but how do you collect it? Many creditors are under the mistaken impression that all they have to do is walk into court and pick up the cash. Unfortunately, it's not that easy, especially if you're dealing with an uncooperative debtor. The real challenge may lie ahead.
One of the best and fastest means to collect a judgment is through the garnishment procedures. A garnishment allows you to seize the assets of a judgment debtor. While wages and bank accounts are the most commonly garnished assets, any money owed from a third party to the debtor may be subject to garnishment. You could claim the debtor's accounts receivables, promissory notes, and proceeds from the sale of a business or real estate.
Few creditors take full advantage of this legal right. For example, did you know that a debtor's I.R.A. can be garnished? Most debtors who are hiding assets will not secret this and other exposed assets.
Unfortunately, there are limits to what can be garnished. Money payable by the federal government is not subject to garnishment, including the wages of federal employees or money owed to vendors. Furthermore, there are a whole series of specific exemptions which are available to the debtor. See the box below for a few of these exemptions.
Investigate Credit Worthiness
* Call other creditors of applicant
* Call industry contacts
* Check with landlords and credit references
* Obtain a Credit Bureau Report
* Review Dun & Bradstreet Reports
* Study court records for information about: Judgments, pending litigation, title to real estate, liens on realty, and UCC financing statements
* Hire an investigator or attorney Have your CPA review financial records
This article is advisory only and not meant to replace legal representation. If you need legal counsel, please contact Gross & Romanick.
