I had a discussion recently with one of our Branch
Managers, and he told me that the legal process
frustrated him. He had been to Small Claims Court
several times and had received final judgments
against some debtors. But he hadn't collected any
money. "I might as well wallpaper my office with
these judgments," he said, iabecause they are
worthless!"
That's not quite true! We must remember that it is
not the court's job to collect our money for us. It is
up to us to collect these debts. There are numerous
options available to us after the court grants us a
summary judgment, also variously referred to as a
default judgment or final judgment.
First, we must be familiar with the legal procedures
in our State. In most States, judgments need to be
recorded in the county where the debtor has real
property - a home or land. This recorded
judgment creates a property lien against any real
property owned by the debtor in that county (this
lien is similar to, but not the same as the liens we
file according to our lien law statutes. Once you
have a iajudgment lienlg on the debtor's real estate,
there is a good chance you will get paid, eventually.
An excellent example of this occurred recently in my
Tampa, Florida branch. In 1991, we went to Small
Claims Court against a developer for an $1,800
unpaid debt. We obtained a default judgment when
the debtor failed to show up. Fast-forward to March
2000, when I got a call from an attorney who was
trying to sell a valuable piece of property owned by
the debtor. It seems that our judgment was holding
up a million-dollar deal. We negotiated and settled
on a payment of $2,500 (principal and interest) to
clear our judgment from the property so that the
sale could go through. This kind of recovery, after
all these years, is money from the gravely, to quote
one of my peers in credit management.
Two other options to collect judgments include
using a garnishment or a levy. A garnishment is a
legal order by which a third party must turn over
any assets of a judgment debtor to the creditor who
obtains the garnishment. If our debtor has wages
due him, you can have these wages seized (with
certain limitations). If we serve a writ of
garnishment on the debtor's bank, the bank must
freeze all assets of that debtor pending further legal
disposition. If the debtor is doing jobs for other
contractors, these monies due to him can also be
garnished.
A levy is defined as a legal method to seize
property or money for unpaid debts under a court
order. A levy usually involves motor vehicles, boats,
RVs and other personal property, including cash,
jewelry, furniture or other items of value. I recently
used this procedure successfully when I levied
against a debtor in Ft. Walton. Our Ft. Walton
attorney had obtained a $12,000 final judgment
against one of our customers who failed to pay for
our work last year. This customer had pretty much
ceased doing business but he did have three fairly
new pick-up trucks in his company's name. After
we researched ownership and equity, we had the
Sheriff pick up all three trucks and tow them to the
sheriff's impound yard. The debtor still refused to
pay our judgment in order to redeem his vehicles,
so the trucks were auctioned off and we realized a
net recovery of about $10,000. In addition, we are
continuing to pursue collection of the balance of the
debt by going after some real estate owned by the
debtor.
So, we can and do sometimes collect on these final
judgments. Of course, the debtor must have some
assets we can attach. But even when the customer
has apparently gone out of business, we may
discover some iohiddenly assets that can be pursued.
One way to find out about debtor's assets is to have
your attorney subpoena the debtor for an
examination of his records. Your attorney can advise
you further concerning this procedure, after you
have reviewed the particular case to determine if
this approach is worthwhile.
Well, do you have a file drawer containing "worthless" judgments? If so, look at them again.
You will be pleasantly surprised when you convert
some of your "wallpaper" into cash!
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