A judgment is a court determination of a sum certain due to a party, usually a creditor, entered on the court records in the State of New Jersey by default or after a court determination after a plenary hearing. One important step that is at times overlooked by creditors is that in order to ensure that a judgment becomes a lien on all real estate owned by the judgment defendant in the State of New Jersey, it is necessary to docket the judgment by tendering a $35 fee to the Clerk of the Superior Court in Trenton, New Jersey. In the Special Civil Part where cases are filed for amounts in controversy below $15,000, a judgment must be docketed in the Superior Court to become a recognized lien. A judgment entitles a creditor to pursue assets owned by the judgment defendant by way of obtaining a writ of execution directed to the Sheriff of a county in which the assets are located directing the Sheriff to undertake certain enforcement actions and levy upon assets.
The issue that often arises with judgments is the priority of the claim as opposed to mortgage liens and other creditors who also hold judgments. With respect to other unsecured creditors who obtain judgments, the general rule is the first in time to execute and levy upon assets is rewarded by their diligence and can attach the asset and sell it in partial satisfaction of the claim. Mortgage liens against real estate are higher in priority than judgment liens. An issue that often arises with respect to judgment liens is the priority of that lien as against a bankruptcy trustee. In order to achieve a “perfected’ status against the bankruptcy trustee, the judgment creditor must make a good faith effort to locate, levy and execute upon personal property of the debtor before relying upon the filed lien against real estate.
A judgment occurs when the court makes a decision in a monetary lawsuit in favor of the plaintiff. The court awards the plaintiff a specific amount of money and a judgment against the defendant which gives the creditors the authority to collect on the judgment.
The plaintiff is the creditor, the person who is owed money by the defendant, the debtor. The first step in the judgment process is for the creditor to file a lawsuit against the debtor in an attempt to recover the entire amount of money owed to them. There is a statute of limitations period during which a collections action must be initiated to collect on a debt. The case can be dismissed if the collections action is not brought within the required time period. The debtor must be served with a summons and complaint. If they fail to respond to the complaint by the deadline, a motion for default judgment may be filed with the court. At that point, the creditor may proceed with enforcing the judgment. Should the debtor respond to the complaint, both parties conduct discovery and collect information for the trial. If they are unable to settle the dispute, the case may proceed with a trial. A judgement cannot be issued until the claim is resolved in court and a decision is made in favor of the plaintiff.
The process for collecting a money judgment can be complicated. An experienced judgment lawyer in Somerville, New Jersey can file a motion with the court on behalf of the creditor to initiate payment orders, wage garnishments, receiverships, levies, or contempt of court.
Can A Collection Agency Collect On A Judgment?
There are several different kinds of creditors including:
- Credit Card Issuers
- Financial Institutions
- Utility Companies
- Medical professionals
- Mortgage lenders
- Auto Dealers
If the original creditor is unable to collect from the debtor, they may turn the debt over to a collection agency that will attempt to collect on the judgment.
Do Judgments Expire In New Jersey
Judgments remain in effect for 20 years. They may be renewed for an additional 20 years by filing a motion in the Superior Court, Law Division, Civil Part. For a Special Civil Part Case that was assigned a DJ or J docket number, the Superior Court, Law Division, Special Civil Part.
How Hard Is It To Collect On A Judgment?
Once a judgment is obtained against the debtor, the law provides different ways to enforce the judgment. However, actually collecting on a judgment can be difficult. The first step is gathering information on the debtor’s assets and income.
As the creditor, if you do not know anything about where the debtor has a savings or checking account, any personal property they own, or where they work, you can use an Information Subpoena to obtain that information. When you receive the answers to the questions on the subpoena, you can make a request to the court to allow you to collect your judgment from the assets or income belonging to the debtor. This includes automobiles, bank accounts, wages, and other personal property.
Another option for collecting information on the debtor’s income or assets is bringing a motion for discovery that allows you to question the debtor about their assets and income in person, under oath.
A judgment attorney can explain the various methods for enforcing a judgment and guide you through the process for gathering information about assets and income, and which forms to use for a specific situation.
Collecting On A Money Judgment
There are several ways to collect the money that is owed you once you know that the debtor has income or assets. These include:
- Wage Execution
- Bank Levy
- Execution on Other Assets
- Execution against Real Estate
Wage execution can be used when the debtor works in New Jersey and earns a specific sum of money each week. You can make a request to the court for an order directing the debtor’s employer to withhold a set amount from their paycheck until the debt is paid in full. This is also known as a garnishment.
Levying a bank is frequently used by creditors to collect a debt. You petition the court for permission through a Motion for Turnover of Funds.
Another way to collect on a judgment is to look for other assets to satisfy the judgment. This may include office equipment, vehicles, and other personal property of the debtor. You have to apply to the court to get an order that allows the sheriff to enter the debtor’s property to seize the items.
The final method is asking the court for permission to sell the debtor’s real estate. This is a complicated and expensive process, and you might want to consider speaking to a judgment attorney about assisting you with the legal aspects of this method.
A common scenario in Chapter 7 cases arises when judgment creditors have not obtained a perfected status and their liens can be “avoided” by a Chapter 7 trustee who holds a superior status under 11 U.S.C. §544 of the Bankruptcy Code as a hypothetical lien creditor with a perfected lien. The priority of judgment liens must be evaluated against secured creditors claims under Article 9 of the Uniform Commercial Code who may have lent money to a debtor and obtained a lien on specific assets.
Searches are often performed in the New Jersey Division of Commercial Recording to determine if any secured creditors are ahead of the judgment creditor by properly filing what is known as a UCC-1 Financing Statement in the proper location, usually the place of incorporation of the business debtor or the location of the property. A judgment remains a lien for 20 years and upon application to the court within six months prior to the 20 year expiration date can be renewed.