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The Ardueous Path To Collect on a Small Claims Judgment

Updated on July 20, 2010

There are two ways to try to collect on a small claims judgment: do the work yourself or hire someone else to collect on your behalf. The latter usually charge a percentage of whatever they recover. Even if you didn't use an attorney for the small claims suit, you can hire one to give you advice or do the collection for you. You can also hire a licensed collection agency.

If you want to try to collect on your own, the first step is to learn the laws that affect the methods you can use. My state, California, has this information posted on the Internet. You should check to see if your state has a similar online resource. Do not try to collect on the judgment until you understand the provisions of the laws in your state. You don't want to violate the debtor's rights and end up on the wrong end of the law. If necessary, go to the court house and ask the clerks how to find the information.

I am not an attorney and do not intend for this to be legal advice. This information is based on what I've learned while trying to collect court judgments. With those caveats in mind, here's what I've learned over the years:


Basic Knowledge I Need Before I Start

In California, I can't begin collection proceedings until the time to file an appeal has expired. The debtor has thirty days to appeal. Once that time has expired or the court has upheld my judgment, I can move toward collecting my money -- if it is collectible. If the debtor doesn't have assets or a job, my judgment isn't worth much. However, that could change over the years. In California, the original judgment is valid for ten years and can be renewed for another ten years. A person's circumstances can change dramatically during that time.

The courts will not collect on my behalf, but they will accept voluntary payments from the judgment debtor and provide me with tools to use in my efforts to collect. For instance, I've been able to call the debtor back into court to answer questions about what they own, where they have bank accounts and where they work. This is called a debtor's examination. I took a list of questions to court with me that covered just about every contingency, including their driver's license number, social security number, where they work, where their spouses work and if they own any businesses, stocks or other assets.

In California, the court has forms to file that will make a demand for information concerning their assets and forms for the debtor to list their assets. The court also has forms to place liens. Garnishments and seizures of property must be approved through the court and carried out by the marshal's or sheriff's office. Real estate liens need a certified copy of the court judgment.

I keep track of my costs because court costs can be added to the judgment. I'm able to add 10% interest too.  The court charges fees for issuing a writ of execution, issuing and recording an abstract of judgment, sheriff/marshal services, or costs incurred by a debtor's examination. I have to file a form asking for these fees to be recovered on my behalf.

The Easy Way

I've found the easiest way to get paid is to agree to payments. This is especially true if the sum is large. If I decide to accept payments, I try to get them approved by the court. That way, if the debtor doesn't make the payments as agreed, I have an extra tool to enforce payment.

If the debtor pays voluntarily, they can opt to pay me direct or pay the court and have the court pay me. If the debtor pays the court, the court will notify me using the last address they have. If I move and the court cannot find me within a reasonable period of time, the money will become the property of the court, so I make sure I keep my current address on file with them and notify them if I move. Before I try to collect money, I check with the court to be sure they aren't holding money for me.

Those are the only two ways I've had any luck with voluntary collection. Everything else takes time and effort.

The Hard Way

If I know where the debtor banks, that is the best option for collection. I can have the marshals serve the bank with a lien. That lien is only good for how much money is in the bank at that particular moment, so I might not get the full judgment. I can opt to serve another lien at a later date if the debtor doesn't close that account. Each time the marshal serves a lien, I must pay for that service. That too can become part of the funds I can collect, but I must pay it up front, so I'm careful in my decisions on how much money I want to spend in trying to collect.

If I know where the person works, I might be able garnish their wages. The court will ascertain how much money I can seize out of each paycheck, so I may have to settle for payments depending upon the amount of wages they earn each pay period and the amount of my judgment.

There are ways to check to see if I can seize money being received by a business they own. The county clerk might have a record of a fictitious business name on file. The agency that issues business licenses may be able to help locate a business they own. If there are other lawsuits against the debtor, those files might contain a list of businesses or assets.

State laws specify if I can seize other types of property too. There are two different types of property. Real property is affected by different laws than the laws that affect personal property, like a car.

Before I try to seize personal property, I need to be sure they own it free and clear. A car that has a loan attached is not subject to seizure because the holder of the loan is the actual owner. A car that is free from loans could be sold at auction. If the auction value is not liable to exceed the cost of seizure and auction, there isn't much use in going through the motions. I also check on state laws that might have exemptions for certain kinds of personal property. For example, I might not be able to seize a car that is worth less than a certain value or is the only car that belongs to the debtor.

I can place a lien on real property. I won't be able to force the sale of the property, but when the property is sold or refinanced, my lien will have to be satisfied before the transaction is completed. The county assessor's office can verify if they own real property and where that property is located.

In California, I can also try to seize the assets of the debtor's spouse or domestic partner. This keeps them from being able to hide assets in their spouse's name in order to thwart collection of my judgment.

Being Realistic

As you can see, it might take a lot of work and some extra money in order to collect on a judgment. I try to be realistic about it. Will the effort have a reasonable chance of returning good value, or will it be futile no matter how hard I try? Should I continue trying past a certain point, or is it becoming clear that the judgment is uncollectable at this time?

In your case, only you can decide if it is worth the hassle. Your state laws may vary from California's laws, and your options might be significantly different than mine. When I am in doubt, I check with an attorney to keep me on the right side of the law. I might also decide to let them do the collecting because their resources and experience are far greater than mine. I would advise you to check with the court and/or an attorney before you make any decisions concerning collection.

© 2010 Loretta Kemsley


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