You have sent numerous bills to your client, but have not received payment in return. You have sent letters threatening escalated action with no results. Your phone calls are being ignored. At this point, you can give up and write off the debt, hire a collection agency, hire an attorney or you may wish to file your own lawsuit. To maximize your chances of collection, you will need to obtain a judgment, something a collection agency cannot do without hiring an attorney. Getting a judgment doesn’t guarantee payment, but it does give you maximum leverage. Once you have a judgment, you still need to find a way to collect what you are owed and this is often the most difficult part of the process. The court will not collect the judgment for you and if a person does not voluntarily pay, you will have to force them to pay. So, what are your options?
If you know where the defendant works, you can do a wage garnishment. This is somewhat of a complicated and paperwork-intensive process, but effective. A wage garnishment is where up to 25 percent of the debtor’s wages are intercepted by court order and sent by the employer directly to you. Generally, a wage garnishment remains effective as long as the employee continues to work for that employer until the judgment is paid. There are minimum wage requirements before any amounts can be withheld. Tax liens and child support payments have a priority claim over a wage garnishment, so the amount you are able to collect out of each paycheck may be reduced or limited if either of these items is in force. You will need to file wage garnishment reports to account for what you have received and how much more is owed. The process does take time to collect what is owed, but the more money the debtor makes, the quicker it goes.
If you don’t know where the defendant works but you know where he or she banks, you can try a bank garnishment. This allows you to levy all the money in their accounts except for a small exempt amount. A bank garnishment is generally quicker. The complication is often that the debtor doesn’t have any money in his or her account to begin with and this is often the reason you are not paid. However, if your debtor has money in the account, only funds in an account at the time the bank is served with the writ are subject to the garnishment and certain amounts are exempt. You will also have to know where the account is housed, because the writ is only good for the branch you serve it upon (or it can be expanded to the county for an additional fee). Joint accounts or business accounts can only be seized if all of the account holders are defendants in the judgment or to the extent of their ownership interest in the account.
Another option is a general or special writ of execution. A special writ is for property specifically identified in the judgment. A general writ is a “catch all” and encompasses any property a debtor might have, which can satisfy the debt. A writ issued by the court allows the constable or sheriff to take items of personal property from a debtor and sell them at a sheriff’s sale to satisfy your judgment. The items seized should ideally be free and clear of all liens. Items that have liens on them are sold subject to a lien-holder’s interest making them less desirable, more risky and not worth as much. The items are sold at public auction. If nobody shows up to buy the items, the judgment holder can make a “credit bid” and buy the items himself, providing an offset and credit to the judgment.
Another good tool for collection is a debtor’s examination. A debtor’s examination is a deposition of the debtor used to determine if the debtor has any means of payment and any assets. This examination is conducted under oath, with a goal of obtaining information that will lead to the ability to collect the judgment via one of the foregoing methods. It is a post-judgment discovery process used to find all the assets and money a debtor might have which can satisfy your judgment. Of course, once assets are discovered, you will need to levy on the assets using one or more of the methods already mentioned.
This is not an exclusive list of all the possible options, but these are the most common ones. Each option requires a good deal of “know how.” Although some people can navigate the process themselves, most find it complicated and confusing. A good attorney can be invaluable in navigating this process and efficiently and effectively reaching your goals. FBN
Tevis Reich is the owner of a boutique law firm, Law Office of Tevis Reich. He is admitted to practice in Arizona and Florida, in both state and federal courts. Reich is a Flagstaff native and an NAU alumnus. He can be reached at 928-213-1800 or via email at Tevis @TReichLaw.com