In many cases, obtaining a judgment from a court in New Jersey is regrettably not the last stop in a civil suit. When the judgment debtor does not pay the judgment voluntarily, Parsippany collections attorneys advise creditors to act quickly to maximize the chances of collecting every dollar owed. Obtaining a judgment may merely be the beginning of a long process that can ultimately reach a wide variety of debtor assets. Enforcing a judgment in New Jersey may be tougher than you actually think.
Collecting a Judgment from the Debtor’s Personal Property
Writ of execution. The first step in enforcing a New Jersey judgment is to obtain a legal document known as a writ of execution, which is issued by the court. A writ of execution allows creditors to access numerous types of assets owned by a debtor including:
- Money in bank accounts.
- Rental income owed to the debtor.
- Automobiles, equipment, and other types of personal property.
- Stocks and other business interests.
Once the court issues the writ, the sheriff or a court officer will attempt to execute it.
The creditor may also ask the court to issue a wage execution. When the writ is granted, the debtor’s employer will be required to deduct a portion of the debtor’s wages each payday in payment of the judgment. Before the wage execution is issued, the debtor is entitled to notice and a hearing at which he or she can object.
Finding the debtor’s assets. The creditor will need to advise the sheriff or court officer which assets of the debtor are available to satisfy the judgment. In the best case, the creditor obtained this information from the debtor before extending credit.
If the information is not up to date or the creditor did not get it, an attorney can help the creditor identify and locate the debtor’s assets or bank account information. Attorneys can use information subpoenas or obtain court orders that present a series of questions to the debtor to determine the nature of the debtor’s assets. Additionally, attorneys can compel a debtor to submit to a formal court examination for the same purpose. Debtors can be held in contempt of court for failing to answer any of these asset related questions.
The court has the option to issue an arrest warrant against a debtor if the debtor fails to comply with the information subpoena or court ordered examination. If arrested, the debtor will be brought to a judge and released only on compliance with the original information subpoena or court ordered examination requested by the creditor. Once the debtor submits, an attorney can reliably trace all of the debtor’s substantial assets prior to the examination and formulate precise questions that will give the creditor the best opportunity to determine how to satisfy any outstanding judgment.
Exempt property. Certain assets of a debtor cannot be confiscated to pay a judgment due to public policy legislation. These protected assets include: $1,000.00 of personal property; disability payments; insurance policies; and workers’ compensation and retirement benefits. Judgment liens that impair the rights of a debtor to valid exemptions are usually not enforceable.
Similarly, the amount that a creditor can collect from execution on a debtor’s wages is limited to the lesser of: (a) 10% of gross weekly pay; (b) 25% of disposable weekly earnings; or (c) disposable weekly earnings above $217.50.
Sale of personal property. When personal property is sold to satisfy a judgment, debts to secured creditors must be satisfied from the proceeds first. As a practical matter, this can mean little or nothing is left for an unsecured judgment creditor. For example, if the debtor has a car loan, the car may be worth less than balance on the loan.
Collecting a Judgment from the Debtor’s Real Estate
Judgment lien. If the judgment was obtained in Special Civil Part (small claims court) and the creditor has had difficulty locating viable personal assets, the creditor can have an attorney record the judgment in the Office of the Superior Court Clerk in Trenton to create a lien on the debtor’s real estate. This will help to safeguard a creditor’s interests by preventing a debtor from selling property owned in New Jersey with clear title until the recorded judgment is paid in full.
Judgments should be recorded quickly so that they predate and are senior to any other competing recorded judgments. For these reasons, hiring an attorney sooner rather than later can substantially impact the amount of recovery, especially when the debtor is subject to multiple creditor judgments.
A judgment lien is automatically created in New Jersey when the judgment is obtained in Superior Court.
Judgment liens will be associated with the debtor’s property for a total of 20 years, regardless of the whether ownership of that property changes. This will prevent a debtor from attempting to hastily sell New Jersey real estate to avoid satisfaction of a judgment because the debtor cannot sell or refinance it without first satisfying the judgment lien. This restriction applies not only to property held in the debtor’s own name, but also to property the debtor holds jointly with a spouse or any other individual.
Sale or real estate. If real property is subject to a Superior Court judgment, a writ of execution enforcing the judgment may be submitted directly to the sheriff’s department of the county for which the property is located. Once the property is sold, a writ of possession is served upon the debtors who must subsequently vacate the property. The proceeds of the sale will be used to pay creditors. Each county has variations on these procedures. An attorney can help decipher these variations and work with the sheriff’s department to avoid any unnecessary delays.
Satisfying a judgment by selling the debtor’s real estate can be complicated and can sometimes be impractical. The property may be heavily mortgaged leaving little to no equity for an unsecured judgment creditor. Or the property may be jointly owned and the judgment may be against only one of the owners. The property may be too small to divide (partition) or it may not be divisible if the joint owners have a right of survivorship, as is the case with married co-owners. Parsippany collections attorneys can advise you whether you are better off to proceed with a sheriff’s sale or to wait for a sale of the property to a third party to pay off the lien.
There is also the consideration that a debtor may file for bankruptcy. Although this can be a tricky situation, creditors can still collect on judgment liens if they act in a precise manner. Creditors must either attempt to implement a levy before the bankruptcy or within one year after the bankruptcy filing. An attorney familiar with judgment enforcement in New Jersey can take the necessary steps to prevent a debtor from using bankruptcy to void a judgment lien.
For help with your debt collection problems, call the Parsippany collections attorneys at Snellings Law LLC at 973.265.6100.