A money judgment is a court ruling that a defendant owes a sum of money to a plaintiff. Rarely does the court provide collection assistance for the judgment creditor. Experience has it that most judgments expire uncollected and worthless, but it doesn't have to end up that way.
Collection requires the pro-active intervention of asset researchers, collection agencies, attorneys and private investigators. Often judgment creditors do not have the time or the resources to avail themselves of collection services. That is unfortunate because judgments on average have a life of 20 years!!! What's more, judgments accrue annual interest. Therefore, it pays to attempt collection in most, though perhaps not all, cases.
A plaintiff can take steps both prior to commencing a lawsuit and after judgment has been awarded that will greatly increase the odds of recovery.
PRE-JUDGEMENT MEASURES - When considering bringing action against an individual, a business or both, one potential to collect is relative to whether or not there are assets titled to the named defendants. A collector must ultimately see that bank accounts, payroll checks, real property or business inventory receipts match the name (and in some cases the tax id or social security number) of the potential judgment debtors.
It does little good to sue John or Mary Doe if they are "judgment proof". In other words, they have no assets in their names. Of course, you might sue in hope that John or Mary Doe will one day open a bank account or buy a house. However, the existence of a judgment against an entity makes it all the more unlikely that the entity will register future assets in his/her name. Paradoxically, in some cases, it makes sense to wait until the defendant acquires assets, keeping in mind the statute of limitations your state sets for bringing a lawsuit (in most cases six years).
For individual defendants, we suggest doing a nationwide real property search prior to filing a lawsuit. Even if the defendant currently has no liquid assets, a judgment in most states acts as a lien against the defendant's real property (many states require filing the judgment in the county where the property is located). This will often result in a future telephone call from the debtor’s attorney or a title company when the debtor seeks to sell the property. The title company will normally require that all judgments be satisfied and will seek to have you paid from the proceeds of the closing.
Businesses, with the exception of large corporations, are less likely to own real property. A bank search should be undertaken to see that the bank account title matches the name of the business. Every state permits businesses to operate under "dba's" or a fictitious name. A common business practice is to maintain deposit accounts in a "dba" for the very purpose of avoiding post judgment collections. Don't be surprised if a court prohibits collections against a bank account in the title of 'Jimmy Mack's Contracting' if your judgment reads against 'James Mack Home Improvements'.
Another tactic that often yields results is bringing a lawsuit against multiple defendants. You might decide to sue Jimmy Mack's contracting d/b/a James Mack Home Improvements and James P. Mack, the owner of the business. While it is questionable to name a party with whom you did not have direct transactional contact with to the suit, you might reasonably assume that a proprietor or company president is the responsible party for the actions of the business. If you are suing an individual and are aware that they are shielding assets behind a business, name that business. Defenses raised by any one defendant regarding being erroneously named will be addressed on the merits individually. In the meantime, you have gotten the attention of the defendant and will most likely have precluded a default judgment.
POST JUDGMENT - You might think that winning a default judgment (a judgment granted by the court because the defendant failed to appear) is the most favorable outcome. Not at all! Generally, you want to do everything in your power to get the defendant to file an answer and appear. This is because you can receive the royal-run-around trying to collect a default judgment.
Once you attempt to levy assets based on a default judgment, the judgment debtor can usually stop you in your tracks by requesting another court appearances date. The defendant can simultaneously motion to vacate the judgment and for the release of any restrained assets. Be aware too that despite this, the defendant might have no intention of appearing at the newly scheduled hearing. In fact, the defendant may be inclined to repeat this tactic several times using every excuse in the book from inclement weather to infirmity to a death in the family until the court grants a "final" date.
In the meantime, assets are being depleted or transferred as you, the hapless creditor, are being worn down spending time and money in your quest. The can become a war of attrition and the best remedy may be to impress upon the defendant that you know everything about them by suing every name they might be inclined to hide behind. Their inclination to settle or answer will be directly proportional to their inability to deceive you.
If you locate assets in a state, other than where your judgment was granted, that state will treat your judgment as a "foreign" judgment. If your judgment also happens to be a default judgment, most states will not recognize it at all. You will have to sue the defendant again in the state where the assets are located. (Federal judgments don’t apply; lawsuits in excess of $100,000 are often brought in Federal court for this reason).
The key to collecting a judgment is to locate assets that are in the judgment debtors names or assets that can be shown to have been fraudulently conveyed (given, sold, moved, re-titled) by the judgment debtor. You must also be sure of your facts before taking the case to court. If you find that you have sued in the wrong name or have sued the wrong people you will have to start again, which can be very time consuming and costly.
A licensed private investigator can be worth well more than any fees they charge to make sure that you have the proper names, businesses, alias's and assets BEFORE you end up in court. Papago Investigations and Consultants has been proving asset and background searches for over 20 years. If you have judgments you need to collect or need to take a matter to court, call Papago Investigations and let us help you. If you want to collect the debt yourself we can still assist with background and asset checks.
Facebook Badge
About Us
- Papago Investigations and Consultants
- D.W. Tschudy is the principle and founder of Papago Investigations (PICA) and Consultants of Arizona and California (PICCA). For more than 22 years PICA has been providing professional services in investigations, forensic science, forensic computer recovery, financial fraud investigations, forensic accounting, litigation support, polygraph, counterintelligence, electronic eavesdropping detection/wiretap detection, voice analysis, custom video surveillance systems and consulting services around the world. D.W. Tschudy’s credentials include retirement from law enforcement as supervisor of detectives, US patent holder for Conceal Carry and a published author in the field of investigations. Mr. Tschudy has certified expertise in the areas of felony crime investigations, fingerprints, evidence collection and protection, security evaluation and threat assessments, interviews and interrogations, financial crimes investigations, drug investigations, arson, fraud, and loss prevention. With offices in Scottsdale Arizona and Venice California, PICA and PICCA offers professional services in all areas of investigations throughout the United States and around the world.