Understanding Money Judgments: Laws and Enforcement
A money judgment is an order from a court that awards the plaintiff a certain amount of money as a result of court proceedings. There are some common categories that money judgments fall into, such as:
- Unpaid rent cases
- Damage to a rental property
- Funds that were borrowed, and not paid back according to the original terms of the loan
- Medical bills
- Credit cards debt
- Unpaid auto loans that have resulted in repossessed vehicles
- Funds owed for court costs and / or legal fees
There can also be money judgments from small claims courts that address claims filed by individuals that involve financial damages.
How do money judgments work?
When there has been an agreement between two parties that involves money, and one of the parties defaults, i.e. does not carry out their side of the agreement, the other party may choose to file a suit in court to recoup the money owed. This usually happens after multiple attempts to negotiate outside of court, when it becomes apparent that a favorable outcome will not be attained without court intervention.
If a court reviews the case, related documentation and any previous related court records and decides that the case has merit, it may grant a money judgment to the plaintiff. A judgment is an order to pay.
Enforcing Money Judgments
Most states and counties give a certain period of time to the debtor to pay or appeal the decision, usually 30 to 60 days. If the payment is not made during this period, and an appeal is not filed, the party that is owed the funds can initiate multiple efforts to collect, including:
- Reach out to the judgment debtor, either personally or through a debt collection service
- This can include phone calls, letters, and emails
- Seize the debtor’s assets
- Usually these are listed on the Judgment Debtor’s Statement of Assets form that gets filed with the court
- If the debtor does not produce the Debtor’s Statement of Assets after the court order, a bench warrant can be issued
- In order to locate unknown asseste examine judgment debtor in court
- This requires follow-up court proceedings
- Petition to suspend the judgment debtor’s driver’s license
- This is usually done if the money judgment related to an auto accident
- Petition to suspend the judgment debtor’s professional license (such as a general contractor license)
- Petition to place a lien on land, buildings, or residences that belong to the debtor
It is important to note that enforcing the money judgment is not done by the court, but rather requires the party that is owed the money to take additional steps and possibly utilize the court to help enforce the judgment. It can become time consuming, expensive, and frustrating. This means that if a fairly low amount of money is owed, the party that is owed may choose not to pursue it, if the effort does not justify the outcome.
Useful Terminology Related to Money Judgments
When navigating money judgments, you might encounter the below terms:
Attachment - Attachment allows the party that has won the money judgment to take personal property, such as a vehicle, from the debtor and sell it. The term essentially means taking legal possession of the property in question.
Execution – This term refers to selling the “attached” property to recoup the funds that are owed per the judgment
Garnishment - Garnishment allows the party that has won the money judgment to take something of the debtor’s that is in the hands of another person or institution, such as wages from his employer.
Laws pertaining to money judgments vary from state to state and county to county. If you are the debtor or creditor of a money judgment, it is important for you to research the laws and procedures of your state and county. Whether you are involved as an individual or a representative of a business, you should be able to locate the relevant information online.
Money judgments that deal with significant sums of money may need an attorney’s help to optimize results. Be sure to seek out counsel with expertise in your situation – be it related to real estate, business law, or other matters.