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Collecting a Small Claims Court Judgment:
You're on Your Own
by Lisa Goldoftas and Stephen Elias
Copyright © 1995 Nolo Press
- Don't rush it.
- Don't forget to ask.
- Treat the judgment as a long-term investment.
- Think through a collection strategy.
- Bank on the future by creating liens.
- Do your homework.
- Know when to call it quits.
If you win your small claims case, you'll probably feel vindicated by
day in court. The judge saw things your way and awarded you a judgment
the defendant. But in the weeks and months that follow, post-trial
turns to surprise and then dismay: surprise that the court does nothing
sure the defendant pays you, and dismay at the time, expense and work
for you to do it.
To get paid, you (or someone you hire to do it for you), must follow
legal procedures to get money or other assets from the loser (called
debtor). The procedural trail takes different twists and turns in every
but the following tips should be helpful everywhere.
1. Don't rush it.
Don't be in a hurry to start bugging the defendant to pay up. Most
courts allow a losing defendant to appeal, so wait until the appeal
(usually 30 days or so) passes before asking for your money. Otherwise,
pushing may nudge the defendant into filing an appeal. Appeals threaten
collection chances for two reasons: first, you may lose the appeal, and
while the appeal is pending, the defendant doesn't have to pay you a
2. Don't forget to ask.
A surprising number of debtors will pay once a court judgment is
ask for the money. A polite written request often does wonders,
it reminds the debtor that an unpaid judgment will probably show up in
debtor's credit file. You can also mention, in general terms, that you
take legal measures to collect if payment isn't forthcoming. But don't
what measures you plan to take--for instance, garnish the debtor's
wages or seize
a bank account--since this will give a wary debtor time to thwart your
3. Treat the judgment as a long-term investment.
Every state authorizes you to collect interest, commonly 8% to 12%
annually, on a
judgment. Viewed as a long-term, uninsured investment, court judgments
off handsomely. Compared to limited partnerships, start-up companies
many stocks, a court judgment has relatively low risk and moderate
In most states, a judgment is valid from 5 to 10 years (the range is
to 20 years) and can be easily renewed. Renew it, even if you don't
ever get paid--years from now, the debtor could win the lottery,
inherit a bundle
or write a bestseller. At that auspicious time, a renewed judgment
could be worth
a lot with the accrued interest thrown in.
4. Think through a collection strategy.
There is no one best collection approach. Your strategy must depend on
debtor's assets and income and the cost of the collection methods
your state. For example, going after one debtor's wages might pay off
judgment, but might prompt another person to file for bankruptcy.
As a general rule, the easiest and most effective collection methods to
small claims judgment include:
- getting the debtor to pay voluntarily
- garnishing wages
- seizing money from bank accounts or safe-deposit boxes, and
- filing a lien (legal claim) against real estate.
Two more techniques are a little more complicated, but can also pay
- collecting from a business debtor's cash register ("till tap"),
- seizing and selling valuable property such as cars, airplanes
5. Bank on the future by creating liens.
An important step in any collection plan is to establish liens (legal
against the judgment debtor's real estate and business property. Liens
put you in
the best position to get paid if the debtor declares bankruptcy or
sells, refinances or transfers property.
6. Do your homework.
The more you know about the business or person who owes you money, the
likely you are to get paid. So here's your opportunity to be a private
of sorts, and keep tabs on the debtor's assets, lifestyle and projected
Here is a little test: Would you know if the debtor moved, got married
divorced, expanded or sold a business, refinanced real estate or
Do you know whether or not the debtor cares about his or her credit
you know what could pressure the debtor into bankruptcy?
If you can't answer "yes" to every one of these questions, you've got
work to do.
Periodically write or telephone the person who owes you money. Keep in
business contacts who also know the debtor.
7. Know when to call it quits.
You've heard the warning, "Don't throw good money after bad." There is
can do to collect a judgment, but these efforts cost money. And
judgment collection costs are recoverable, that won't do you any good
never catch up with the judgment debtor. So keep a sharp eye on how
much you are
spending trying to collect--you may not get it back.
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