I won a case against someone who owes me money. How do I go about collecting what the court said I am owed?
Unfortunately, the easiest part about taking someone to court is sometimes prevailing at the hearing or trial, and the actual collection of the money owed can be the most complicated. While it may feel good to have your argument validated by a judgment, that judgment is only a piece of paper. Until you are able to collect what you are owed, you haven’t really been made whole.
The first step in the collections process is docketing the judgment. This is done automatically in the county where the judgment is won, and it grants you a lien on all the real property possessed by the judgment debtor (the person who owes the judgment) in that county. If the judgment debtor owns real estate in a different county, you’ll have to file a copy of the judgment with the clerk of court in that other county. The judgment will be good for ten years, and may be extended for an additional ten year period.
Having a lien against real property is well and good, but in reality, it’s not much more than just another piece of paper. If the judgment debtor sells his real estate, you’ll get the proceeds of the sale before he does. But if he doesn’t sell, your lien doesn’t necessarily accomplish much. In order to get some actual money from the judgment, you’ll need to execute it.
Before beginning the execution process, you must first wait for the judgment debtor’s window to appeal the judgment to expire. Next, if the judgment debtor is an individual, you’ll need to serve him with a Notice of Right to Have Exemptions Designated and a Motion to Claim Exemptions. These must be filed with the clerk of court in the county in which you’re seeking to execute the judgment, and they must be served on the judgment debtor by the sheriff or sent by registered or certified mail, with a return receipt requested. The exemption forms allow the judgment debtor to designate certain property upon which you cannot execute on, often his residence and/or motor vehicle up to a certain amount, retirement accounts, and other assets. The judgment debtor has 20 days to claim his exemptions. If he fails to do so, or if his filed exemption form lists property as not exempt, you can move on to execution. It is important to note that if the judgment debtor is not an individual, you do not need to worry about the exemption documents.
Execution is the step in this process that will finally get the money you are owed in your pocket. Once the exemption period is done, you can petition the clerk of court for a writ of execution. This is a document issued to the sheriff allowing him to seize and sell the judgment debtor’s assets to satisfy the judgment. Generally, any personal property which is not exempt can be seized and sold. The sheriff is not always able to identify all the property held by the judgment debtor, so if you know of anything, make sure you pass along that information. Money in non-exempt bank accounts can be seized. North Carolina does not allow you to garnish a judgment debtor’s wages to satisfy a judgment, but if you know of money owed to the judgment debtor, a writ of execution will allow you to be paid that money directly.
There is one final step after execution that is frequently forgotten by unrepresented parties. Once the judgment had been satisfied through execution, you have to ensure the judgment is marked satisfied and paid in full. This can be done by filing a form with the clerk of court. If you forget this important step, the judgment debtor can actually sue you for damages.
Winning a judgment is really only the first step in being made whole when you’ve been wronged. Actually collecting on the judgment can be a long difficult process, especially when the judgment debtor is not cooperative. In some cases, you may even be subject to the federal Fair Debt Collection Practices Act or the North Carolina Debt Collections Act when you try to collect your judgment. In most cases, you’re far better off hiring an experienced attorney to handle the collections process for you. Here at Miller & Monroe, we have significant experience obtaining judgments for our clients and executing on judgments to get our clients paid. Contact us today at 919-809-7346 to set up a consultation.