Receiving a money judgment in your favor can be a huge relief, especially after a long and stressful lawsuit. As the prevailing party in the lawsuit you now have the fancy new title of judgment creditor, but if the other side does not voluntarily pay, all you have is a piece of paper that says you are entitled to payment. This is because unfortunately, a favorable judgment does not by itself guarantee that you will actually receive all the amounts that were awarded. The good news is that as judgment creditor, you have several available options to help you collect all the amounts that were awarded to you, including contractual or statutory post-judgment interest.

Judgment Lien on Real Estate

The easiest tool which judgment creditors have to collect does not actually require the judgment creditor to do anything. In Nebraska, as in most other states, a district court judgment immediately operates as a lien against all the judgment debtor’s real estate in the county where judgment was rendered. This alone can encourage many judgment debtors to pay all the amounts due under the judgment. If the debtor sells the property on his own, the creditor has the right to any proceeds from the sale. If the judgment is rendered in county court, or the judgment debtor’s real estate is located in another county, the judgment creditor has the option to register the judgment in the appropriate district court in order to place the lien on the debtor’s real estate.

Executing on Judgments

If the judgment debtor never sells his real estate and the judgment lien does not encourage the judgment debtor to pay the amounts owed, a judgment creditor can escalate its efforts by executing on the judgment. This means that the court can order the local county sheriff to seize and sell the debtor’s real property or even some personal property and sell them at a local auction. Any proceeds from that auction will then be paid to the judgment creditor against the amounts due under the judgment. There are exemptions, however. For example, a judgment creditor may not be able to execute on a judgment debtor’s home if there is less than $60,000 in equity in the home and the debtor claims a homestead exemption. Some personal property may also be protected from execution, including personal possessions, household furnishings up to $3,000, and vehicles up to $5,000.

Another consideration in the case of real estate is that executing on the property would likely require the eventual eviction of the occupants of the property, many times the judgment creditor does not wish to take this drastic measure to collect on the debt, especially if the amounts owed are a relatively nominal amount. As such, the next best option is probably garnishment.

Garnishment

Garnishment is a legal procedure that can be used to collect a debt through the collection of property of the debtor that is held by someone other than the debtor.  There are two types of garnishments, wage garnishment and account garnishment. Wage garnishment is a process where the court orders the judgment debtor’s employer (the garnishee) to pay a portion of the debtor’s regular wages to the court where the court in turn pays the judgment creditor until all the judgment award is paid in full. A garnishment can also be on the debtor’s bank account; in those cases the court can order the debtor’s bank to turn over the funds in the debtor’s bank account to pay down the amounts owed.

Garnishment is good option if the judgment debtor does not own any real estate, the real estate or other non-exempt property is unknown to the judgment creditor, or if the judgment creditor prefers a more targeted method of collecting on the judgment award. The biggest drawbacks of garnishment is that it can be the most complicated and time consuming method of collecting on judgments, and it also requires knowledge of where the debtor works or does its banking. Often times though, the judgment creditor has this information but does not even know it. For example, if the judgment debtor has made previous payments to the judgment creditor, the judgment creditor may have copies of canceled checks that has the judgment debtor’s banking information.

Debtors Exams

If you know very little about the debtor or their assets the law provides a valuable tool that you can use to learn about all of the debtor’s assesses.  In those cases, the judgment creditor can request that the court schedule a debtors exam. The court will thereafter schedule a hearing and issue a summons ordering the debtor to appear at court and answer questions concerning all of the debtor’s property that may be subject to garnishment or execution. Although debtor’s prisons no longer exist, if the judgment debtor does not appear at the debtors exam the judge can find him or her in contempt of court and issue a warrant for their arrest. In these cases the judge can make it a condition of his or her release on bail that he or she appear at the debtor’s exam.

Walking Away

Regardless of what method a judgment creditor chooses to collect on his judgment, an important consideration before starting any collection action is the judgment debtor’s ability to pay. If the judgment debtor simply does not have the funds or assets to pay the whole action can be a waste of time and money. In those cases the judgment creditor will have to make the difficult decision of simply writing off the bad debt and walking away. Some facts to take into consideration are whether the debtor filed for bankruptcy, if the debtor is a business or an individual, or the answers given at the debtor’s exam indicates that the judgment debtor simply does not have the ability to pay.

Summary

This article is a basic top-down level overview of the options a judgment creditor has to collect on the amounts that it was awarded. There are often several other considerations a judgment creditor needs to take into account when it decides whether to continue the collection action and the most efficient steps to move forward. Koley Jessen has experienced collection attorneys in its Litigation department to assist you in your judgment collection needs.

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