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Creditors' Rights: Alternative Ways Businesses Can Collect Judgments against Debtors

creditor rights.jpgYou may have just won the case against the debtor, and received a judgment against him or her, but your work is far from over. Although you received a judgment against the debtor, collecting on that judgment has proven to be the hardest part of this process for most creditors. Luckily, there are many collection techniques available today that might make the process easier.

The first and often most significant problem is locating a debtor's assets. After judgment is entered against a debtor, he or she will be required to fill out a form listing all assets, unless the debtor pays off the entire debt, asks the court for an installment plan or appeals the decision. In most cases the debtor will fail to fill out the asset form, and you might be able to request that the court hold the debtor in contempt, or even worse for him or her, have a bench warrant issued for his or her arrest. If the debtor still fails to fill out the statement of assets, then the court has the power to require the debtor to appear in court for questioning.

Techniques Available to Collect Judgments

If the above-listed court remedies prove to be fruitless, you may search for assets by engaging a private investigator, searching the Internet, acquiring the debtor's credit report or requesting debtor's interrogatories. Once you determine what assets the debtor has in his or her possession, you may pursue, among other things, the following:

  • Wage Garnishment: If you know the debtor's place of employment, you may be entitled to acquire approximately 25 percent of the debtor's disposable income. Disposable income is the net income after the debtor's employer makes the proper deductions. Obviously, if the debtor does not make a lot of money, your collection of wages might be significantly less;
  • Levy: A levy occurs when the local sheriff seizes the debtor's personal property assets, after judgment is entered against him or her, for the purpose of satisfying a judgment. These items may include jewelry, motor vehicles, furniture, electronics, bank accounts, etc. The sheriff will advertise and sell the debtor's property at a public action. Any remaining proceeds after paying any costs incurred (storage, auctioneer) will be distributed to judgment creditors in order of priority. Lien holder priority is determined by the date the judgment was entered or by any Uniform Commercial Code ("UCC") filings. If you choose this option, you should take care to research any prior liens or UCC filings, in order to determine if the debtor has sufficient assets to satisfy your judgment; and
  • Liens: Attaching a lien to real property the debtor owns is also a valid choice to recover any judgment; however, it might take a while before that judgment is realized. After judgment is entered, you need to record the lien in the county where the real property is located.

Consult an Attorney

Obviously, the most effective tool in any creditor's toolbox to recover a judgment is information. If you are attempting to recover an unsatisfied judgment against a debtor, you should contact an experienced San Jose creditors' rights attorney who will be able to assist you in identifying a debtor's assets, advise you of the best way to recover those assets and aggressively pursue collection of any debt.




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  • Santa Clara County Bar Association | 1917
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