You have spent time, effort, and money working your way through the legal process. You have proved up your case as best as possible. You go through a difficult jury trial, and you celebrate after a verdict in your favor. You obtain a judgment, and then you breathe a sigh of relief that it is all over and you can move forward with your life. You ask your attorney “when will I get my money?”
Unfortunately, it isn’t quite that easy. There is one more hurdle in the process: forcibly collecting. Even the most airtight legal cases can run into problems at the end when it comes to actually collecting on a judgment. This is an unfortunate reality within the legal profession. The court does not have the power to automatically force payment of the judgment. Rather, it is your responsibility to properly file and docket the judgment, and to then collect it. Oh, if only there were still debtor’s prisons? Maybe not. But there are ways. And if the debtor doesn’t comply with the process, a warrant and – yes – jail time can happen.
Of course, the debtor may realize there is no end game, and may voluntarily agree to pay the judgment without any work on your end, at least with a bit of compromise. Many times, such payment will happen immediately after trial if the Debtor wants to avoid the financial consequences of having a judgment lien placed upon their home (if the debtor owns real estate, the judgment is an automatic lien for a period of ten years, pursuant to Wis. Stat. §806.15). This is strong leverage against debtors who own real estate.
If voluntary payment does not happen, though, one strategy for collection may seem counter-intuitive, but with today’s interest rates might be wise. A creditor can take a “wait and see” approach. The judgment should, of course, be filed and docketed, but once that occurs things happen automatically. As noted, it is a lien on real estate, so the debtor can’t sell without paying it. It affects their credit rating, eliminating loans and forcing, at some point, a reckoning. Without incurring any additional costs on collection efforts, therefore, the Debtor may eventually contact you and – voila – offer to pay because of the judgment lien’s effects. This strategy may be preferable in situations where the Debtor never answered your complaint and you obtained a Default Judgment, because initiating collection efforts too early may cause the Debtor to file a motion seeking to reopen the case and overturn the judgment you just received.
In other situations, the “wait and see” approach may not be the best option, especially if your own financial situation prevents you from waiting to collect. Instead, you may want to be active in collecting. Often, a good first step in any collection effort is to gain a better understanding of the Debtor’s financial circumstances to determine their payment capabilities and the possible methods for collecting. This information can be discovered by scheduling a “supplemental hearing.” The Debtor is court ordered to appear before a Court Commissioner to both answer questions under oath, and to produce various documents concerning the Debtor’s property and financial affairs. For example, the Debtor may be ordered to produce records relating to wages, taxes, bank statements, real estate ownership, vehicle ownership, debts, business documents, or other assets.
However, a debtor may be uncooperative during this process. For example, the debtor may choose to ignore the order and not show up, or may show up but refuse to provide the full required information and/or documentation. At this point, judgment has been entered and the Debtor has been ordered by the Court to provide such information. If the Debtor fails to comply with the Order, you may choose to file a motion with the Court to hold the Debtor in “contempt.” In short, such motion asks the Court to impose sanctions against the Debtor for failing to obey and respect the authority of the Court order. Such sanctions can range in severity up to and including a potential jail sentence–the threat of which may push the Debtor to make the payment or provide the information. The Debtor often may “purge” any contempt conditions imposed by providing payment, or by providing the financial information and documents requested.
You may also attempt to collect a judgment by forcible means, the most common of which would be initiating a garnishment action. Generally speaking, there are two categories of such actions: earnings or non-earnings. Earnings garnishment actions collect money from the Debtor’s wages by authorizing their employer to take money out of the Debtor’s paycheck to satisfy the judgment. Non-earnings garnishment actions refer to collecting money from the Debtor through means other than through their regular wages, such as collecting the money directly from a checking or savings account. For such actions, it is important to remember exactly who you obtained the judgment against –an individual, an entity (i.e., a limited liability company), or both. For example, if you obtain a judgment against a business owner but in his/her personal capacity, you likely would not be able to collect from the business bank account. Additionally, there are statutory limitations on garnishment actions, including on the amount of money that can be garnished from a Debtor within a given period of time and on whether a garnishment action can be commenced based upon the Debtor’s financial condition. Therefore, it is often preferable to conduct a supplemental hearing prior to filing a garnishment action.
Other forcible collection methods exist, some of which can be rather draconian, but nonetheless very effective. You can, for example, execute on personal property – basically you “take all their stuff.” The movie scene where the bill collectors walk in and start taking things away? It’s rare, but it can happen.
Add to all of the above bankruptcy laws, state court receiverships, the uniform foreign judgment act, and it quickly becomes obvious that legal help is needed. As discussed, collection efforts are often tricky, and highly dependent upon the specific circumstances of the case, judgment, and Debtor. The attorneys at Rose & deJong have experience with all avenues of collecting upon a judgment, and we can help develop formulate a strategy that will provide the best and most cost-effective method to get you the money you deserve.