After you have been to court and you have been awarded a judgment, that may not be the end of it. In some cases, the debtor may still not be willing to pay what is owed. In that case, additional steps may need to be taken to ensure that the money is actually collected.
Things to be aware of when collecting on a judgment
There are several different rules that you will want to follow in order to ensure that you will successfully collect on what is owed.
General Rule #1 – Move Aggressively
- If the debtor has other judgments, the early bird gets the worm. Unless there’s a lien on a particular asset, the creditor who grabs it first is the one who gets paid.
- Whether the debtor has other judgments or not, there’s no substitute for being aggressive. You should assume that the debtor isn’t going to pay you just because you have a judgment. Therefore, you’re going to have to liberate your money in the debtor’s possession.
General Rule #2 – Use the Element of Surprise
- Formal discovery may produce good information, but it also tells the debtor that you’re actively collecting. By the time you get those bank statements, the money may be gone.
- Before sending the debtor an Information Subpoena, before serving that Order for discovery, independently find whatever assets you can and grab them. Let the debtor hear about your bank seizure from the bank, after the fact, not from you beforehand.
General Rule #3 – Seize Bank Accounts Before Other Assets
- Go for easy assets first. The easiest are bank accounts if you can find them. They’re already liquid, and after the Sheriff seizes them, all you need is a Court Order to have the money released to you.
- Other assets require a Sheriff’s sale, which involves more time, expense, and uncertain proceeds. So if banks accounts are available, save yourself the trouble of selling other assets.
General Rule #4 – Be Prepared to “Play the Long Game”
- New Jersey judgments are good for 20 years. There’s a reason for that.
- Maybe you’ll find assets to seize right away. If not, think in terms of a long-term strategy. It’s better to get paid late than never, and your chances of recovery go up if you’re prepared to “play the long game.”
- A long-term collection strategy requires patience and periodic diligence. Over the course of 20 years, the debtor may acquire assets or need to sell, acquire or refinance property. Record your judgment lien immediately, hope the debtor needs to pay it off at some point, and actively look for assets every few years.
General Rule #5 – Keep an Open Mind Toward Settlement
- Collecting money can take time. It can be uncertain. Unless you have the money in your hand, keep an open mind toward settlement.
- Weigh the risks and benefits of settlement. Negotiate from strength, gain as much leverage as you can, and make the best business decision you can under the circumstances.
Collecting judgments may not always be as easy as you think. Once you have been awarded the judgment in court, you may need to actually take measures that ensure that the debtor actually pays what is owed. It will probably be helpful and instrumental in achieving a favorable end result if you build a strategy from the beginning. Remember that you will have to do the collecting yourself. The Court will not handle that for you. The more you know about the situation and the debtor, the better off you will be. If you follow the suggested rules that are outlined here, you may find it easier to obtain the money that is owed.