If someone owes you money you can take them to Small Claims Court. If you can prove they owe you money chances are good you’ll get a Small Claims judgment against them. But even if you are successful in court please don’t start counting your money just yet. According to eHow*, 79% of all Small Claims judgments go uncollected. That’s because most people who win those judgments don’t understand how to get their cash from an unwilling defendant. If you have a judgment against someone, here are all the steps you can take to make your deadbeat debtor pay up.
1. Paper Work
Small Claims Court judgments mandate a time period (up to 30 days from the day the judgments are rendered) during which the debtor must pay up. Wait for the time to elapse before you take any steps.
Once that period has expired, find out from the court clerk if the debtor has filed an appeal. If he has, wait until that appeal period is over and get the appeal decision. If your judgment hasn’t been overturned or if there is no appeal, go to step 2.
At this point, you know that either no appeal has been filed or that the judgment hasn’t been reversed on appeal. Send the debtor a certified letter demanding full payment. It’s very important to be as professional as possible. Keep all your emotions out of the letter. Tell the other person you expect full payment and reference the amount due, the case number and the judgment in your favor. Give him 10 days to comply and say so in the letter.
As an alternative and depending on the situation, you might want to offer a last-ditch compromise without taking drastic steps.
If nothing comes of this, your next step is to go after his assets. Of course you need to know what his assets and income are before you can go after them. Ask the court to order the debtor to complete a written disclosure of assets and income. This is also known as a Judgment Debtor’s Statement of Assets. Once you get that document you can decide how best to proceed.
4. Turn Up The Heat
If this sleaze ball doesn’t provide the asset disclosure, you can apply more pressure. Ask the court to issue an Order of Examination. This examination hauls him in to court for questioning about his income and assets. If he doesn’t appear for this examination, ask the court to issue a bench warrant for his arrest.
Once you get him in court for examination ask him about all his assets, his income, lifestyle etc. You need to know where the money and/or property are. You need to know how accounts are titled and which banks or institutions they are held in. This will help you as we get further down the list of action steps.
It’s going to be a lot easier on you if you can find a friendly solution to this conflict and negotiate a settlement. At any time before or after you go to Small Claims, you might want to offer an olive branch. If someone won’t cough up the loot he owes you he either hasn’t got the scratch or he just doesn’t feel like paying you. You need to figure out his motivations in order to know which the best way to proceed is.
To get inside his head offer him a way out. Contact this person and respectfully offer to negotiate the terms of payment. See how receptive the other party is. If he responds in good faith, maybe he really doesn’t have all the money right now and a payment plan is the way to go.
In order to “motivate” your debtor, explain how you can take him to Small Claims Court and get a judgment. Tell him this will ruin his credit report and how you’d hate to see that happen. Also, explain all the other options you have (explained in this post) and how you’d far prefer to come to a friendly settlement before having to resort to these measures.
If your debtor comes up with some cash as a down payment and a reasonable payment plan, give him a chance. But if the defaulter doesn’t try to work things out, it’s time to introduce this dead beat to your bad self.
5. Let the Games Begin
You now have a Small Claims judgment and you know where this person’s assets are. Now it’s time to go after the dough. Get proof of the judgment from the court. This document is referred to as a writ of execution, writ of garnishment, abstract of judgment or writ of attachment. It just depends on which state you get the judgment in and which assets you are going after.
With the proof of judgment, call your local sheriff and ask him to serve papers. If you have the debtor’s bank information (including the account number and exact name on the account) you can have the sheriff serve a bank levy and get your money. You can’t get to the person’s retirement accounts but all other bank accounts are fair game.
If the person owns real estate, you can file a real estate lien with your judgment at the country recorder’s office. You won’t get your money until the property is sold but it’s certainly better than nothing. You can also use this lien as leverage to make your debtor become a bit more cooperative.
But the easiest way to get your money is to file a wage garnishment. If this person has a job you can get 25% of his wages until the debt is paid off. The sheriff will go down to your debtor’s work and set this up with their employer as long as you know where he works. There are a few constraints. If the person proves that their wages are needed for basic support, the sheriff won’t put the wage garnishment on. There are a few other restrictions as well depending on the state you are dealing with. If the person is on public assistance, a federal or military employee or have another garnishment in place, your garnishment won’t work.
The best way to collect a Small Claims Judgment is to be professional at all times and possibly to try to work it out with the person who owes you money. If that doesn’t solve the problem, let them know of all the steps you are about to take and the options you have at your disposal. If that doesn’t soften them up, don’t be afraid to take the steps above to get this other party to live up to their promises.
Have you ever used Small Claims Court to collect a debt Did you receive the money you were owed What worked best?