Your New Jersey collections attorney will explain the importance of knowing whether or not the debtor will have the ability to pay you if you win your case.
Your New Jersey Collections Attorney Can Help You Understand Debtor Solvency
New Jersey debt collection attorneys will tell you that if you win your case, you will still have to collect the money you have been awarded. This is known as the judgment. The court does not collect it for you. If the opponent is solvent, collecting on a judgment is not usually an issue. However, if they do not pay, there are several legal strategies to force payment. In some cases, the opponent might claim to be broke. The legal term for this is “judgment proof.” They might also be skilled at shielding or obscuring their assets so you will have a nearly impossible time trying to receive payment. Prior to going through the time and money to receive payment through a legal case, you should determine if you will be able to collect on a judgment if you win.
What You Should Consider Before Filing A Lawsuit
Your New Jersey debt collection attorneys will advice you to think about the following before filing your case:
1) Whether the debtor’s property is protected under the law.
- Personal property exemptions. In most states, there are personal properties that are protected. This will often include clothes, certain pieces of furniture and household appliances. It is also possible that equity in electronics, jewelry and artworks can be protected.
- Vehicle exemptions. In most states, debtors will have protections over some equity in vehicles such as cars, trucks, vans, motorcycles and other vehicles. Debtors can also protect vehicles that are used specifically for the business.
2) Might the debtor file for bankruptcy? A debtor might choose to file for Chapter 7 bankruptcy and list you as a creditor. It is likely that the debt will be wiped out as the bankruptcy is concluded. Bankruptcy will eliminate the debtor’s obligation to pay the debt to you if you have a security interest in the property owned by the debtor. You will still be able to take the property that was used as collateral.
3) Can you garnish the debtor’s wages? A common way to collect on a judgment is to garnish the wages the debtor earns. For this to succeed, the debtor must have a job with enough wages to make it viable. There is a legal limit to what you can take according to both federal and state laws. Some income is untouchable. That will include Social Security.
4) Can you seek payment through debtor’s bank accounts? If the debtor has bank accounts, stocks, bonds or other assets, it is possible that you will be able to receive payment for the judgment from these.
5) Is there real estate owned by the debtor? Collecting on judgments through real estate that the debtor owns is an option. Generally, this must be property that is owned in addition to the debtor’s primary residence. However, you might be able to pursue payment through the debtor’s home if there is equity. Many states protect debtors from this based on the amount of equity there is in the home.
6) Are there business receipts? A debtor who owns a business might be vulnerable to having the money owed taken directly from the cash register by order of the sheriff or marshal. Alternatively referred to as a “till tap,” this can help you collect on the judgment. It is also possible that you force the sale of equipment or machinery that is valuable to satisfy the judgment. If the business is not one with a permanent address or clear collection source, you might not be able to do this. Some businesses do not have a cash register and lease their equipment. In the event your case is against a contractor with a current license, you can file the judgment with the licensing board in the state and the license might be lost if the judgment is not paid.
7) Are there assets or income the debtor will have in the future? A debtor that is unemployed and does not have any assets might have a job and assets in the future. If you and your New Jersey debt collections attorney believe that this is a possibility, it could be a sound strategy to file a lawsuit. Many states will allow the collection on payments decades after the judgment. You can also seek an extension on these time constraints.
Call An Experienced New Jersey Collections Attorney
If you have questions about collecting on a judgment, call (973) 265-6100 to speak to a New Jersey collections attorney at Snellings Law LLC.