Great job! You won your small claims court case. Unfortunately, winning a judgment against someone in small claims court doesn't mean you automatically collect on it. How do you collect the money someone owes you?
Once the court rules in your favor, it's best to arrange for the person you sued - now called the judgment debtor - to make payments, over time if needed. Agreement between you and the debtor is the easiest and least expensive collection method. Court-based collection procedures can be slow and costly, and may be your only option if you don't reach a voluntary agreement with the debtor.
In order to get paid as quickly as possible, find out the methods of collecting the judgment that apply to your situation while you're waiting to find out whether the judgment debtor is going file an appeal.
Court Order for Periodic Payments
In some states, you can ask the court to order the debtor to make specific regular payments on the debt. If the payments aren't made as scheduled, the debtor can be ordered back into court to explain it to the judge.
Ask the small claims court for instructions on how to record a judgment or lien against any real estate the debtor owns now or in the future. This will prevent the debtor from selling his property without first paying your judgment.
If the debtor moves to another location, you can have the judgment lien transferred to the debtor's new location.
The small claims court likely has a method for forcing the debtor to come back to court to answer your questions about his property, debts and earnings. Different courts call this a supplemental examination, debtor examination, interrogatories or disclosure hearing. You fill out paperwork with the court for an order to start this procedure.
Come prepared with a list of questions to ask the judgment debtor. Some useful information to get during the examination includes:
- A description of any real estate owned
- Spouse's name and employment
- Social security number
- Driver's license number
- Bank location and account numbers
- Current employment (employer name and address, when and how often paid, salary amount)
- Other income such as commissions, rental income, part-time employment, etc.
You can also question the debtor regarding property, such as stocks, interest in a business, and the type and location of vehicles owned. It's a good idea to round out the questioning with a general question such as "Do you have any property, personal effects, cash or other assets that you haven't yet mentioned? If so, explain."
If the debtor doesn't show up for the examination hearing, the court can issue a warrant for the debtor's arrest.
Writ of Attachment/Execution
A writ of attachment or writ of execution is a tool used to take debtor property, sell it and apply the sales proceeds to your judgment. Steps in the process are:
- Ask the court for the writ, which tells the sheriff to pick up the debtor's property and sell it
- Serve or deliver the writ to the debtor. You may have to use a process server and post a bond to protect the sheriff's office from being sued if any mistakes are made, such as taking someone else's property
- Pay costs such as storage while the sale is advertised
- Collect payment after the sheriff completes the sale (costs are taken out of sales proceeds before you're paid)
The process can be complex, so you may want to use a lawyer, especially if real estate is involved. Certain property - such as the debtor's home, a vehicle used for work transportation, welfare benefits and Social Security payments - can't be seized and sold.
Writ of Garnishment
A writ of garnishment is a court's order to withhold part of someone's wages to pay creditors. Ask the court for a garnishment order, which is served on the debtor's employer. The employer is allowed some time to start collection, and the law limits the amount and income type that can be withheld.
Bank Account Garnishment
Garnishing or levying a bank account is a court's order to withhold funds from a debtor's bank account to pay a judgment. The paperwork must be served directly on the bank. Certain accounts are exempt from garnishment, such as those held jointly with someone who has no responsibility to pay the judgment.
Some states, such as California, provide for a "till tap" to pay a judgment. When the debtor is a business, you can ask the court for an order directing the sheriff to go to the business and take money to pay your judgment from a cash register or receipts.
Driver Licensing Notification
Notify your state's motor vehicle department if your judgment resulted from a motor vehicle accident. If the debtor was driving without valid insurance, some states will suspend his or her driver's license.
Federal bankruptcy law forbids collection action on your small claims court judgment once the debtor files a bankruptcy case. There are consequences, such as contempt, if you try to collect and break bankruptcy law and court rules.
Satisfaction of Judgment
File a Satisfaction of Judgment with the small claims court once the judgment and collection costs are paid. This document stands in the court's records as official proof the judgment has been paid. Recording this document is needed to clear the judgment debtor's credit records.
Questions for Your Attorney
- How long do I have to wait before trying to force the debtor the pay the judgment?
- Can I collect interest on the unpaid part of the judgment?
- Can you help me get payment on the judgment even though the debtor filed bankruptcy?