So how do you collect the money that is owed you? Well you could go to an attorney and pay a retainer and $150 up to $500 an hour for them file the paper work for you and do their best to find the debtor. While most are very good litigation, they generally do very poorly at judgment enforcement.
You could also retain a collection agency, but the FDCPA (Fair Debt Collection Practices Act 805(c) gives a debtor the right to simply tell the collection agency to ‘cease and desist’, and they must do so. To avoid payment, the judgment debtor may change his out of residence. He may even move out of state! If he has assets, he may hide them in an attempt to make himself judgment proof, or immune to the enforcement of a judgment.
In most states, judgments are good for ten years and can be renewed for an additional ten years. During the life of the judgment, it accumulates interest and increases in size. So if you remember there are the steps to collecting this judgment. Since the court can only award you the judgment they can not anything automatically to collect it. It is your responsibility to collect your judgment. Any form mentioned may be obtained from the clerk of court.
1. The debtor may voluntarily agree to pay the judgment. Reason to avoid having any liens placed against their personal property. Having that happen will affect their credit rating.
2. If the debtor does not voluntarily agree to pay the judgment, you must then have the judgment filed and docketed
a. If the Clerk of Court has not already completed the judgment form, you must complete the Judgment – Small Claims form and file it with the Clerk of Court.
b. Pay the docketing fee to the Clerk of Court. (Oh yes another charge to get your money)
3. The following are additional options that you may consider to collect the judgment
a. Do nothing and wait. The debtor may end up paying you voluntarily because a docketed judgment is a lien for ten years. If the debtor wants to remove the judgment from the record or attempts to get a loan in the future, the debtor may be required to satisfy the judgment before such a loan will be approved.
b. Turn the matter over to a collection agency as I mentioned above and then all the debtor would do is tell them to ‘cease and desist’.
c. Garnish the wages of the debtor
d. Garnish the checking and savings accounts and other money owed to or held on behalf of the debtor.
e. Have a sheriff seize the property of the debtor and sell it on your behalf (called an “Execution”)
This is if you can find the debtor and they have not gone underground.
We use a technique call Skip Tracing to locate debtors.
Just think what if you were getting ready to partner with some one in a venture capital deal. Wouldn’
