You are entitled to receive monetary compensation if you win your small claims action. However, it might be difficult to get since the court will not manage collection for you.
You are legally entitled to receive monetary reward if you win your small claims case, but collecting your judgment is not always straightforward. Because the court will not manage collection for you, recovering your money might be difficult. Before suing, consider if the individual has any income or assets that may be utilized to satisfy your claim. If the individual has income or assets, or is expected to have any in the near future, you will be able to collect your money, but not without some work.
Send a formal Demand for Money Owed letter first. Always be kind and professional. For many debtors, a formal letter will suffice, and you will not need to take more drastic actions.
Occasionally, the individual who owes you money is prepared to pay but is unable to do so owing to current circumstances. In this case, the simplest method to collect is to work together to devise a fair payment plan or to arrange for them to pay later.
If the debtor flatly refuses to pay and you are unable to work out a payment plan, you have other choices. Although methods differ from state to state, you should normally receive documentation from your small claims court that you obtained the judgment and so have the right to collect. This document is known as a writ of execution. Take this to your local sheriff’s office. He or she will serve the papers on the proper institution and seek payment from your debtor.
Following the service of the document, collecting possibilities may include:
Garnishment. You might garnish up to 25% of the debtor’s salary. However, there are numerous restrictions that vary based on the circumstances, so be sure to consult your sheriff for your state’s garnishment requirements.
Until the tap. If the debtor is a business, the sheriff may be entitled to remove the judgment amount immediately from the cash register.
Other physical assets include equipment. To satisfy your claim, you may be able to order the sale of certain equipment and physical assets (such as automobiles and machines). However, debtor protection rules restrict the effectiveness of this technique.
Accounts for deposits. You may be able to seize funds from the debtor’s deposit accounts, which include savings, checking, money market, and mutual fund accounts at banks, savings and loans, or credit unions. You need need the bank’s name, the branch’s name, the actual name on the account, and the account number to do so.
Lien on real estate. A real estate lien grants you the right to receive a set amount of money from the property’s revenues. Placing a lien will not result in immediate payment. It offers you the right to be compensated from the profits if the property is sold or refinanced. Register your judgment with the land records office in the county where the debtor owns real estate to impose a lien. Keep in mind how many creditors have previously filed liens, since their claims will be served before yours.
It is critical not to force the debtor into bankruptcy. A debtor’s small claims judgment is discharged in Chapter 7 bankruptcy, which means you will be unable to recover anything. Remember that judgment collection regulations differ by state, so check with your state for more particular information, or consult with a lawyer for extra assistance.
