You and your attorney filed a lawsuit. The county court judge awarded you the verdict. Everything’s great. Right? Well, brace yourself. Because now the tricky part comes – how to collect a judgment.
It happens all the time, especially in a small claims judgment. Maybe you’re a landlord trying to evict a delinquent tenant behind on rent. Perhaps you’re a business with a business partner that refuses to honor your contract. Maybe you create a website for a client who refuses to pay the bill after completing the work.
So, in each of these cases, you hire a local attorney. You complete the court forms and litigation proceeds. Finally, the court schedules a trial. In an act of defiance, the defendant may fail to show up at the trial. Or maybe they do, and you sit through the labors of a court trial.
The judge or jury decides in your favor. You have a court judgment declaring the defendant owes you money. Finally, you’re going to get paid. You’ll walk out of court with a check in your hand backed by a court order demanding payment.
And then the reality sets in. Yes, you won the case. But no, you’ll not see any money because winning your case only means you’ve been awarded a judgment. So now you’ve incurred attorney’s fees. You’ve spent countless hours preparing for the case and appearing in court. And you get nothing.
What was the point? And now, how do you collect on your judgment?
How a Judgment Differs from a Verdict
Understanding this point is essential – a judgment is different from a verdict. Pennsylvania law recognizes that a judgment represents an official entry of a ruling or decision by the judge relating to your case. In this scenario, the verdict is that you won the case, which becomes a matter of court record.
But here’s the catch. You can collect on a judgment, not a verdict.
As a result, you have to take additional steps. But first, let’s address some terms. You become the judgment creditor. The individual who now owes you the money becomes the judgment debtor. And understand this –many judgment debtors go to great lengths to avoid relinquishing assets.
Judgment Debtors and Assets
After issuing a judgment, the debtor must file a financial disclosure statement listing all their assets. If the person fails to comply, the judge can issue a contempt of court charge.
A judge can also demand the debtor appear in court for an examination to disclose assets relating to the below categories. Failing to appear may result in an arrest warrant.
- Checking and savings accounts
- Investment accounts
- Business ownership shares
- Trusts and inheritance
- Safes, vaults, and other secure storage spaces
- Real estate
- Personal property, including home, vehicles, and jewelry
- Property transfer
As mentioned, some debtors resist payment. In that case, you may be able to seize assets, including wage garnishment, taking cash or assets from the person’s business, and seizing real estate or vehicles.
Steps on How to Collect a Judgment
You’ll need to take these steps if you run into that scenario. You’ll want to talk with a lawyer near you for legal advice on how to navigate the process.
Step 1: Converting a Verdict to a Judgment
In trying to collect money, your first step as a judgment creditor is to convert your verdict or other court determination declaring both parties’ rights and obligations into a judgment. You do this by filing a Praecipe (a request for a legal document) to Enter Judgment with the county’s prothonotary, where the court rendered its verdict.
Step 2: Determining the Location of the Debtor’s Property
Your second step is determining where the judgment debtor holds their personal property. The judgment allows you to place a real estate lien against property owned by the judgment debtor. You must record your judgment with the county recorder’s offer. With the lien in place, the person must fulfill the obligation before they can sell a building or property.
But here’s the caveat. It only serves as a lien on that real estate in the county where the judgment is filed. For example, if the court enters a small claims judgment of $5,000 in Montgomery County, but your judgment-debtor owns real estate in Bucks County with no other personal property, you’ll likely never collect on your judgment.
Step 3: Transferring the Judgment Lien
So, your third step is transferring the judgment from Montgomery County to Bucks County, where the person’s property lies. As a result, if the judgment debtor attempts to sell their real estate in Bucks County, a title search alerts prospective buyers to the $5000.00 judgment. The judgment remains attached to the property until paid or satisfied.
As the judgment creditor, you may transfer the judgment to any county, though it makes the most sense to transfer the judgment to a county where the person possesses personal property. You may also continue to apply a judgment lien against the property until the amount of the judgment is satisfied. A lawyer can help you with the transfer.
However, understand that you'll encounter new filing requirements each time you transfer a judgment to another county and get hit with additional fees. And that’s part of the issue with collecting on your judgment.
When you factor in attorney’s fees, filing fees, time spent, and other items, you can quickly reach an amount equivalent to the money you’re trying to collect. Indeed, that’s what many judgment debtors count on. You’ll conclude you’re spending what it will take to collect your money, and you’ll give up.
Step 4: Seizing Personal Property
Now that you have the judgment lien assigned to the correct county, you can enlist that county’s sheriff to seize the judgment-debtor’s assets, including real property, bank accounts, and other personal property. The county sheriff has the authority to take bank accounts and conduct sales over seized real estate.
Engaging the sheriff’s office requires a writ of execution with the county prothonotary, who then signs the writ of execution. That signed writ, along with a fee (yes, more money), is then sent to the sheriff. Your attorney can help with executing the writ.
You must describe in detail within the writ of execution the property the sheriff is to seize, such as money, personal property, or real estate. You can gain insight into the person’s finances through the Pennsylvania Rules of Civil Procedure. It permits you to engage in “discovery in aid of execution.
Discovery in Aid of Execution to Collect on a Judgment
As the judgment creditor, you can take the deposition of any person, including the judgment debtor, representative of their bank, or other financial institution holding the person’s funds), known as the garnishee. And you can take discovery in aid of execution any time after judgment, including before the Prothonotary approves the writ of execution.
You may also issue written discovery to the garnishee, known as interrogatories to garnishee, to obtain more information regarding the person’s monetary assets. And you can serve the interrogatories to the garnishee whenever the writ of execution issues. The person then has twenty days under Pennsylvania law to provide you with written answers.
Although you can use these legal tools for bank account garnishment, wage garnishment, with few exceptions, is generally unavailable in Pennsylvania.
If you find the person is cash-poor, you can instruct the sheriff (by way of an adequately authored writ of execution) to levy against the debtor’s personal effects or real estate. The sheriff can take an inventory of the personal property available and schedule a sale of the assets, which is open to the public, a few weeks later.
If the judgment is a substantial amount, such as tens of thousands of dollars, then attaching a judgment lien against the judgment debtor’s house may be an option. However, the costs associated with securing a judgment to real estate can cost hundreds, if not thousands of dollars.
In addition, the Sheriff typically only holds real estate sales at regular intervals, at times as infrequently as every other month. So, it could take you as long to collect on the judgment as it did to get the judgment in the first place.
Renewing Your Judgment
Judgments aren’t permanent. In Pennsylvania, judgments are valid for five years. But, you can renew them for another five years. As a result, judgments act as liens against real property for 20 years and longer when properly renewed.
Hiring an Agency to Collect on a Judgment
After taking the above steps with no success, you can hire a collection agency. Some specialize in collecting debts from people who defy judgments. However, you’ll be spending even more to collect what you’re owed.
For example, a collection agency may ask for one-third of the judgment amount, plus an hourly rate. Many request half the amount of the debt they collect as payment.
Trying to Determine How to Collect on Your Judgment?
As you’ve read, trying to collect on a judgment is no picnic. It can take years before you see your money if you ever see it.