If I Win My Case, Can I Collect on the Judgment?

When contemplating a lawsuit, most people only consider the initial question: Can I win? People often fail to realize that when a judge or jury decides in your favor in a civil case, that decision (usually) grants you a right to money or other property from the opposing party. A judgment in your favor does not, however, guarantee that you will be able to collect on what you are owed.

If the opposing party in your lawsuit is a business, collection is not normally an issue, as most solvent companies pay any judgments entered against them as a part the regular course of business. If the business is struggling, however, be aware that any judgment you win could force the company into bankruptcy, where your claim joins that of other creditors, and you can expect to collect only a portion of what you won at trial — or perhaps nothing at all. (Of course, when very large judgments are involved, even healthy companies may seek bankruptcy protection.)

Although a great number of lawsuits are filed against corporations and other business entities each year, the ability to collect on a judgment is most often an issue when the judgment is entered against an individual. Although the law does give the winning party various mechanisms through which to enforce a judgment, at times the losing party simply has no money or other assets with which to pay. While identifying these "judgment proof" individuals prior to initiating a suit is not always possible, there are a number of factors that you can look at.

First, it is almost always easier to collect from someone who has a job. If a person fails to voluntarily pay on a judgment entered against him or her, most states allow the winning party to garnish — to take, essentially — up to a quarter of the losing party's wages. Of course, this power is not without exceptions: If a worker makes very low wages, his or her pay may be exempt from garnishment. Likewise, you usually cannot garnish disability checks, unemployment checks, pensions or Social Security payments.

What happens if you ascertain that the opposing party in your potential suit has a very low-paying job, or if all of his or her earnings come from exempt sources, such as disability or Social Security payments? You consider the next potential source of funds: the person's physical assets.

Most people are familiar with foreclosure proceedings, where the bank or another lender forces the sale of a debtor's home to pay off mortgage arrearages. In a similar fashion, most states have laws that allow a winning litigant to force the sale of assets of the opposing party, if the losing party fails to voluntarily pay the judgment owed. Again, this power is not limitless, as debtor protection laws prevent people from seizing a number items, such as certain personal assets — food, clothing, textbooks — and, often, the debtor's personal automobile.

Of course, the question of whether you may be able to collect on a judgment should not be the sole consideration when deciding whether to initiate a lawsuit. In fact, although you should consider it as one factor among many, the most of your discussion with your attorney should concern the merits of your case. Just because you win a case against someone who is currently "judgment proof" does not necessarily mean that you will never be able to collect. Most states allow judgments to be collected for many years; if the opposing party is insolvent now, they will not necessarily be so in the future. In fact, in many jurisdictions unpaid judgments collect interest over time, growing larger every year that they remain outstanding.

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