Winning and Still Not Being Paid: Collecting a Judgment

Why this matters

The moment the gavel comes down, most owners believe the money is coming. Nobody sends it. A judgment is a court's written declaration that a debt exists and a docket entry recording it, and the court that issued it will not lift a finger to collect it. That is a second process, with its own filings, its own fees, its own hours and its own failure rate, and you run it.

The consequence runs backwards through everything else. If collection is a separate project with its own cost, then the question "can this defendant pay" is not a footnote to the decision to sue, it is the first gate. Shops discover this in the wrong order: they spend the whole cost stack proving they were right, win, and then learn that the reachable value was never there. This card is what happens after the win, written so the arithmetic is visible before you start. It is orientation, not legal advice; post-judgment procedure is state law and it varies more than almost anything else in this group.

What you are actually holding

Three properties of the paper matter, and none of them is the amount.

It accrues interest at a rate set by statute, not by you. Federal judgments carry interest under 28 U.S.C. 1961, tied to the weekly average one-year constant maturity Treasury yield, which means a federal judgment earns close to nothing in a low-rate period. State post-judgment rates are set by each state's own statute and several are far higher and fixed. Look yours up once, because it decides whether holding an uncollected judgment is a real asset or a souvenir.

It expires, and it renews. California money judgments run ten years and are renewable before expiry under Code of Civil Procedure section 683.020 and following; New York money judgments are enforceable for twenty years. Most states sit somewhere between, and in almost all of them renewal is a filing you must make BEFORE the clock runs out, not after. A judgment that lapsed because nobody diaried the date is the most avoidable loss in this subject.

It is public. It appears in commercial credit reporting and in the searches a bonding company, a lender or a prequalification department runs. Against a debtor who will ever need credit, a bond or a clean title, that is leverage that costs you nothing to hold.

The debtor examination is the cheap first move, and it is skipped

Owners go straight to garnishment because it sounds like action, and they garnish blind: an account number guessed from a cheque written two years ago, a levy that comes back empty, and the sheriff's fee spent to learn nothing.

The judgment debtor examination goes first. It is a court-ordered appearance where the debtor answers questions under oath about what they own and where it is, and in most states you can serve a document demand with it: bank statements, tax returns, a list of receivables, vehicle titles, the entity's operating agreement. It is called an order of examination, a debtor's exam or supplementary proceedings depending on the state, and it is the single highest-return filing in post-judgment practice, because every later tool needs a target and this is the tool that produces targets.

It also carries teeth that surprise debtors. Failing to appear on a properly served examination order is contempt of court in most states, and in several it supports a bench warrant. That pressure, applied to a debtor who has been ignoring letters for six months, produces payment proposals on its own more often than any other step here.

Garnishment, and everything that is exempt from it

Two different things wear the same word.

A bank levy freezes and takes what is in an account on the day it lands. It is a snapshot, not a tap, which makes timing the whole game: the same account levied the day before a payroll run and the day after returns two completely different numbers. Federal benefit deposits are protected - a bank served with a garnishment order must look back over two months of direct deposits and preserve federally protected benefit funds under 31 CFR Part 212 - and state law adds its own exemptions on top.

Wage garnishment takes a slice of each pay period from an employed individual. The federal ceiling under Title III of the Consumer Credit Protection Act, 15 U.S.C. 1673, is the lesser of 25 percent of disposable earnings or the amount by which weekly disposable earnings exceed thirty times the federal minimum hourly wage, and where state law is more protective the state rule governs. Several states are far more protective: Texas, Pennsylvania, North Carolina and South Carolina bar wage garnishment for ordinary commercial debts altogether, with narrow exceptions such as support obligations and taxes. If your debtor is an individual in one of those states, wage garnishment is not a slow tool, it is not a tool.

Against a business debtor the equivalent is garnishing receivables: serving the debtor's own customers so that what they owe the debtor comes to you instead. It is underused and it is aggressive, and it works best where the debtor's customers are institutional and will simply comply.

The lien on real property is passive, and that is its strength

Recording a judgment lien, usually by recording an abstract of judgment in the county where the property sits, attaches your judgment to real estate the debtor owns there. It does not produce money. It produces a title problem, and title problems get resolved at exactly two moments: a sale and a refinance.

That is the whole mechanism, and it is why this is the lowest-effort tool on the page. You record once, you renew on the same schedule as the judgment, and you wait for the debtor to need a clean title. Against a debtor who owns a house and plans to keep living in it for twenty years, that wait is real.

The limit is the homestead exemption, and it varies more than any other number in this card. Texas and Florida protect a homestead essentially without value limit, subject to acreage rules, so a judgment lien against a homesteaded residence there may never yield anything. Other states protect a modest fixed amount and the equity above it is reachable. Check your state's figure and check it recently, because several states have raised theirs substantially in the last few years.

The trap that catches shops: you sued the entity, so the lien reaches the entity's property. The member's own house is not the entity's property, and reaching it requires a separate basis such as a personal guarantee or a claim to disregard the entity, which is its own lawsuit.

Execution against business assets, and why it usually returns nothing

A writ of execution directs the sheriff to seize and sell non-exempt property. Against a trade debtor it sounds ideal, because you know exactly what they own: trucks, a trailer, equipment, inventory.

Two things usually kill it. The first is that the sheriff needs to be told precisely what and where; a writ naming "business equipment" achieves nothing, and the deputy will not go looking. The second is priority. A lender with a properly filed UCC-1 financing statement on that equipment stands ahead of you, and the debtor's vehicles are typically financed. What you can reach is the equity above the secured lender, which on a three-year-old financed truck is frequently negative. You pay the sheriff's fee, possibly post a bond, and sell an asset whose proceeds go to the lender.

Run the search first. A UCC search in the state of the entity's organisation, plus a title check on the vehicles, tells you in under an hour whether this tool is live. Where it is live, it is fast and it is loud, and the threat of it moves debtors who have absorbed every letter you have sent.

A worked collection

A plumbing shop holds a judgment against a small remodelling LLC for unpaid subcontract work. Express the judgment as 50 lawyer-hours at counsel's rate, which is the unit this group uses so the spend and the recovery sit in the same currency.

The examination, 3 lawyer-hours. The LLC's manager appears and discloses one operating account at a credit union, one financed work truck, receivables from two active jobs, and no real property in the LLC's name. The manager's own house is in his name, not the LLC's, and there is no personal guarantee, so it is out of reach on this judgment.

Levy one, 4 lawyer-hours plus the sheriff's fee. Served on a Thursday. It returns 20 percent of the judgment, because payroll cleared on the Tuesday and the account was near its low point. Lesson bought at full price: the levy is a snapshot, so it goes in immediately before a known deposit, not after a known withdrawal.

The truck, 1 lawyer-hour of searching, zero spent on the writ. The UCC search shows a lender's filing on it and the payoff exceeds any realistic auction price. Nothing to reach, so no writ issues. That hour is the cheapest hour in the whole pass, because it prevented a sheriff's fee and a bond on an asset with negative equity.

Running total after pass one: recovered 20 percent of the judgment, spent 8 lawyer-hours, which is 16 percent of the judgment. Net 4 percent, which is a thin result honestly reported.

Levy two, 4 lawyer-hours. Timed off the examination testimony, served the day after the debtor's largest customer pays on the tenth. It returns 35 percent of the judgment.

Across both passes: 55 percent recovered against 24 percent spent, netting 31 percent of the judgment. That is a reasonable post-judgment outcome and it is worth reading twice, because it is the answer to "we won". Winning returned about a third of the judgment, before any of the cost of winning it in the first place.

What made the difference was not a clever tool. It was the examination that came first and told them where the money moved, and the search that stopped them spending on the truck.

When the honest answer is that it is uncollectable

Against a dissolved entity with no assets, an individual whose only income is federally exempt, or a debtor in a state where their wages and homestead are both out of reach, there is no technique that changes the outcome. Recognising that in the first month is worth more than any tool on this page. The pre-spend version of this assessment belongs to a sibling card and should have been run before the suit; see related: The Other Side Has No Money and What That Changes.

Do two things and stop. Write it off in the books so your receivables tell the truth and the tax treatment is handled with your accountant. Then diary the renewal date and keep the paper, because it costs nothing to hold, it accrues statutory interest, and a debtor who is judgment-proof today may be selling a house in six years.

References

• 28 U.S.C. 1961, post-judgment interest on federal judgments; state post-judgment rates are set by each state's own statute
• Title III of the Consumer Credit Protection Act, 15 U.S.C. 1673, federal wage garnishment ceiling; 31 CFR Part 212, garnishment of accounts containing federal benefit payments
• California Code of Civil Procedure section 683.020 and following, ten-year judgment duration and renewal, as one state example among a wide range
• See related: The Other Side Has No Money and What That Changes, Sue a Customer Who Will Not Pay, What Litigation Actually Costs and How to Control It