Phase Twelve: Collection
Collection is often the most important part of a lawsuit. It is at the collection phase the money changes hands. If the case settled, collection proceeded by agreement. If the case ended by dispositive motion or trial, then collection often still proceeds by agreement. However, in other cases, the losing party must be forced to let go of the money, and formal collection efforts are required to find and collect money from the losing party.
The law gives successful litigants several tools to effect collection of a judgment, including Abstracts of Judgment, Writs of Execution and Judgment Debtor Exams.
Abstracts of Judgment can be recorded in all counties in which the judgment debtor owns or may own property. This effectively prevents the judgment debtor from selling or refinancing property in those counties without dealing with the judgment creditor. The Abstract of Judgment can stay on the books for ten years, renewed for another ten, effectively keeping the judgment debtor \” on the hook\” for twenty years.
Writs of Execution are used to seize the judgment debtor’s property, be it real property, money in the bank, or even receivables. One effective tool is the keeper who is physically located at a place of business and takes all receipts that come into the company until the judgment is paid in full, plus expenses. A Writ of Execution can also be used to garnish wages and force-sell real property.
The Judgment Debtor exam is essentially discovery for the judgment creditor. It is like a deposition where the focus of the inquiry is what is owned by the debtor and where it is.
Because of these highly effective methods for collection, unless the losing party has no money or assets, or the losing party has effectively hidden assets, most losing parties settle without the need for collection efforts.