Collecting on Judgement
Having obtained a judgment against a debtor, a creditor cannot be content to sit on their rights and fail to investigate the collectability of that judgment. A judgment creditor can issue an information subpoena to a defendant which is a set of court approved questions to determine location of bank accounts, ownership of real estate, automobiles, and other substantial assets that a judgment defendant must answer under oath, otherwise they can be held in contempt. A judgment creditor can also take the formal deposition of a defendant and ask questions that relate to any property owned by the judgment defendant. If a judgment creditor knows of the existence of a bank account or unencumbered asset without the discovery methods, it is free to obtain a writ of execution from the Sheriff and direct the court officer to levy on the specific asset.
In the case of bank levies, the writ of execution freezes the bank account of the debtor and a second step known as a turnover motion is necessary to obtain an order compelling the bank to turn over the amounts in the bank account. Until the turnover motion is adjudicated, there is an opportunity for the defendant to object. If an objection is filed, no funds will be released util the court holds a hearing and determines the validity of any objection. Collection on a judgment can be a drawn-out and frustrating process for creditors who must persevere and continue to leave no stone unturned as to possible assets owned by the judgment defendant. Creditors should monitor the financial circumstances of the individual defendants.
A judgment that is seemingly uncollectible at the outset may be pursued at a later date once an individual has become gainfully employed or accumulates assets from other sources. It is possible to levy upon the wages of a employed judgment defendant through a wage execution process, but generally only a small percentage of the salary will be available to be paid in satisfaction of the claim. Furthermore, only one wage execution may be in place on a debtor’s wages at any one particular time. For these reasons, this is often not an effective collection method. If a defendant owns real estate with equity and is the sole title owner, the real estate can be sold and will satisfy those creditors in the priority under the Uniform Commercial Code and the Real Estate Law. There are also particular difficulties when a judgment defendant attempts to sell real estate owned jointly by husband and wife who have additional protection under the law.
Finally, if a business is owed account receivable from a third party source, there is a legal procedure known as a garnishee to intercept the amount that may be due by filing an appropriate motion. This collection action can be effective since judgment defendants are very often unaware that creditors have a right to execute against accounts receivable.
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