Thursday, January 31, 2008

Collecting on Your Small Claims, J.P. or Municipal Court Judgment

This post was first published in 2007. The advice still holds true in 2008. Read on!

So you've taken your debtor to court, and obtained a civil judgment. Now what?

Too many judgment creditors enter the court room with the mistaken assumption that obtaining judgment solves everything. The courts will collect on their judgment for them, and of course, the debtor will pay!

Unfortunately, most judgment creditors have a rude "morning after" experience with their Small Claims / J.P. Court judgment. Debtors rarely cooperate, and creditors find out quickly that it is not the court's responsibility to collect the judgment for them.

So what's a Small Claims or J.P. Court civil judgment creditor to do?

Before You Go To Court...

It's best to start thinking in terms of your recovery before you step into court.

1) Get a valid address for your debtor
2) Start keeping a journal of interactions with debtor
3) Save all documentations, receipts, invoices, etc.
4) Save your cancelled checks, if you have any
5) Make note of any vehicles, boats, motor homes parked outside of residence
6) Find out a place of employment

After you obtain your judgment, you need to understand what your court WILL NOT do for you:
  • Actively take over your judgment and collect it for you
  • Perform research on your debtor
  • Give advice as to how to collect your judgment

What will your court do for you? Accept your filings, and advise on your county/city/state laws regarding your collection (and even then, it's best to research this for yourself).

A Little Explanation...

At this juncture, it will be helpful to understand what filings the courts can process for you, and what these filings do:

1) Abstract of Judgment - different than your judgment decree. This document is filed in your court's "Real Property" department. This filing will hold up the sale of non-exempt property until the judgment lien is released. Also, some courts will submit this information to various credit bureaus, although this practice is highly variable!

2) Writ of Execution - Depending on the court, an execution means several things. First, it is a questionnaire that implores the debtor to declare what assets he/she has available to satisfy the judgment (hint - they always say "nothing"). Second, it sends a law enforcement officer to the debtor's residence to inquire about, and/or seize property to enforce the judgment.

3) Writ of Garnishment - There are several types of garnishments that can be conducted. The most commonly used garnishments are wage garnishments and bank account garnishments. A garnishment "freezes and seizes". Wage garnishments, therefore, freeze and seize a portion of the debtor's paycheck (done on a repeating, regular basis), and bank account garnishments freeze and seize a bank account (usually performed just once per garnished account), both with the intention of obtaining monies to satisfy a judgment.

Collect Your Judgment!

It is rarely advisable, and is simply unnecessary, to seek out or use a judgment collector for Small Claims / J.P. cases. Armed with knowledge, investigative information and persistence, any Small Claims or J.P. Court judgment creditor can attempt collection of their own judgment.

Your typical next steps:

1) Know your county and state laws and restrictions regarding post-judgment recovery. If possible, ask for this in writing from your court. If that doesn't work, most state governments are online, and information may be available there.

2) Understand that these laws govern your next actions. Some states are more "debtor-friendly" than others, meaning there are more limitations on what you can do to satisfy the judgment. These limitations (or lack thereof) will govern your next steps.

3) Immediately file an Abstract of Judgment on your case.

4) If you know your debtor's employer, file for wage garnishment (in states that allow this).

5) If you've been smart and saved a cancelled check from your debtor, immediately file for a bank garnishment on this account. If the account is closed or empty, you will need to have an asset investigator conduct a bank account search to find another account. But you have nothing to lose by attempting to garnish the account listed on your cancelled check, except the few dollars you spent at the court for the filing fee.

6) Be aware that in order to process liens, garnishments and other filings in court, you must know beforehand what property, vehicles and financial accounts your debtor owns. Your local court WILL NOT research this for you, nor will they accept your filing without you detailing this information!


7) It is imperative that you find out your debtor's assets with a comprehensive asset search. It will be virtually impossible for you to find out every single asset your debtor owns by yourself. Some information is simply not accessible publicly, and you are limited geographically. Asset investigators have access to information not publicly available, and can search for assets on a nationwide basis.

Without this information, your lien, garnishment or writ of execution is pointless. It's like fishing without a hook, or hunting without bullets. Sure, it's action, but it has no substance of enforcement. It's a useless exercise.

Which brings us to the most common mistake made by creditors...

8) DO NOT ask for a writ of execution without knowing what, if anything, your debtor owns that can be seized or used as leverage!! To send a law enforcement officer on an execution, when he doesn't have any information on what he/she should be looking for and what property he/she should be seizing is a complete waste of time and money. It's like sending a hunter out without any bullets..

9) Be open to a settlement from your debtor. Keep in mind that your debtor will not settle unless forced to. Therefore, getting to the settlement phase usually requires all the actions listed above. Once at the negotiation table, be prepared to just that - negotiate and settle. Be realistic, know what the debtor is, or is not capable of, and be willing to make a reasonable compromise. Like it or not, obtaining a settlement for less than the amount on the judgment decree may be your best hope of getting any financial recourse whatsoever.

Get the settlement agreement in writing, and if the situation warrants and the court will allow it, use the services of an attorney for the process.

10) After a recovery or settlement is made, make sure to follow through with any filings that pertain to the satisfaction of judgment and release of liens.

Knowledge is Power

The more you know about your debtor, the court, and the judgment process, the more empowered you will be to make a successful recovery.

At this point, please take some time to visit our website and look over our asset search offerings for judgment creditors. Since we are a judgment recovery firm, our we know exactly the kind of information that's needed by our customers to make a recovery. See us at:

Asset Search:

About Us/ FAQ:

We are bonded, insured, members of the Better Business Bureau and law-compliant. We've been trained by the State Bar of Texas, and have a solid attorney client base who use us for asset search information. We also believe in giving consumers a fair deal, so our prices are very competitive. Unlike many on the web, we publish our pricing and will tell you right upfront exactly what information is included in our packages.

A Brief Disclaimer

First of all, this blog is not legal advice. We have been in business over 5 years collecting on judgments and researching judgment debtors. This blog simply shares the knowledge we've gained from our professional experience. For legal advice, always see an attorney.

We are also not recovery consultants. If you call our office, it needs to be in regards to placing an order, not gaining advice. That's what this blog is for!!

Second - we wish we could end this blog entry with the wonderful promise that by following our advice, 100% of all judgments will be recovered 100% of the time. That's just not possible.

We've mentioned debtor friendly states. If you reside in Texas, Florida, or other debtor friendly states, you have issues from the get-go. Here in Texas, you can't garnish wages. You cannot place liens on a primary residence that's homesteaded. The debtor must have a certain dollar value of "seizable" non-exempt assets before a property seizure can take place. So if your Texas debtor is a renter with little to no property ownership, your only recourse is bank account seizures, which may, or may not, yield much in terms of recovery.

Even in states that are creditor friendly, a lack of property ownership or financial accounts on the part of the debtor will make a recovery difficult.

Still, a creditor should understand exactly what his chances are. Having an asset search performed, even if it does not yield the information one hopes for, allows the creditor to understand his/her chances of recovery.

And what is true today will change in several years. Patience is a great virtue in judgment recovery. The statute of limitations in many states is 10 years or more. So if a case is unrecoverable today...wait. Over the course of several years, your debtor's situation (and your chances for recovery) may change, and the judgment should accrue interest. Coupled with the fact that most states allow you to renew your judgment indefinitely, this should give judgment debtors pause, and judgment creditors a lot of hope.

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