In civil cases when the parties do not settle, the “end” of a case is commonly thought to be when the court enters a judgment. However, entry of judgment is only a step toward obtaining payment of the awarded damages. In collecting, a judgment creditor* may consider several methods available to secure interests and force payment.
Securing a Judgment Before an Execution Issues
Once the court makes a final decision, it enters judgment. However, in many situations, some portion of the case may remain open; for example, when a party appeals or files post-judgment motions. In these situations, a judgment creditor may request that the court attach assets belonging to the debtor and held to satisfy the judgment, once the case is fully closed.
Attached assets permit the creditor to hold the debtor’s available property and, in the event the debtor fails to pay, have that property liquidated. Common examples of asset attachments include the attachment of real estate, personal property (e.g., vehicles, boats, machinery, inventory or office equipment), and bank accounts. These types of attachments eventually permit the creditor to take title of the property and apply it against the judgment. Additionally, the judgment creditor may request to have the debtor’s wages garnished. For wage garnishments, the court may order the debtor’s employer to pay a portion of the debtor’s wages to the creditor, over a set amount of time. Judgment creditors may also apply for a keeper attachment. Under a keeper attachment, a custodian, such as a sheriff or person appointed by the sheriff, holds property of the debtor (e.g., business receipts paid into the business) to pay off the judgment.
Collecting on a Judgment After an Execution Issues
After judgment enters and the appeal period passes, the court issues an Execution. An Execution is an order from the court notifying the debtor of the creditor’s intent to collect on the judgment. Because an Execution is served after final judgment enters, the creditor may take direct steps to force payment or seize the debtor’s property. Two different routes are available to force collection. Selecting between these options usually comes down to whether the judgment creditor can locate the debtor’s assets.
When the creditor is unable to locate assets, supplementary process is a useful tool. Supplementary process is a procedure where a creditor seeks to enforce the judgment through court-ordered payment. It is an inexpensive and efficient way of obtaining information regarding what assets the debtor holds and usually ends with an order of payment against the debtor. Supplementary process involves having the debtor served and ordered to appear before the court for an examination of the debtor’s assets, liabilities, and general financial information. The court then has the option of ordering the debtor to produce nonexempt property to be seized, ordering the debtor to convey property to the creditor, or ordering payment in full or partial periodic payments.
When the judgment creditor knows of assets owned by the debtor, the judgment may be satisfied by directly seizing, and possibly selling, that property. A common example of asset seizure occurs where vehicles, machinery, boats, or other tangible goods belonging to the debtor are taken and held for auction. Asset seizure is a process that requires the involvement of the sheriff’s department. The sheriff either serves the debtor with the Execution and demands the production of assets, or has accessible assets directly seized. This method of satisfaction requires additional time and effort in waiting for assets to located and taken, but has the benefit of potentially satisfying a larger portion of the judgment at one time.
Benefits of Utilizing Post-Judgment Collection Options
Judgment creditors must weigh costs and benefits in selecting the best post-judgment collection methods. In some situations, debtors voluntarily provide payment once judgment enters. However, it is not uncommon for a debtor to avoid paying. The post-judgment collection options listed above are helpful tools to secure interests and force collection. Experience shows that once a person or entity learns that their vehicles or machinery will be sold at auction, that their bank accounts will be frozen, or their wages or credits taken, they are much more likely to try to come up with voluntary payment arrangements. For more details about collecting on a judgment, creditors should seek the advice of a Massachusetts business attorney.
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*Once the judgment enters, the plaintiff becomes the “creditor” and the defendant becomes the “debtor.”