Enforcement of Judgments
Once a litigant wins a lawsuit, she does not automatically get money. Instead, the end of a lawsuit may not end the process for a litigant to collect money from a reluctant defendant. That process may involve looking for the defendant’s assets, demanding money from third parties that owe money to the defendant, and getting a sheriff to seize the defendant’s assets.
Why should you continue to read this post about judgment enforcement?
You have a judgment, but you would prefer money
You’re curious about what sheriffs do outside of old western movies
You like reading short pieces and aren’t picky about the subject matter
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Litigants Must Identify Defendants’ Assets
If a defendant does not voluntarily pay a judgment, the plaintiff must find assets that belong to the defendant and collect them. This process may be easy for some defendants if they have well-known assets or if details about their bank accounts were shared in discovery.
But for others, plaintiffs may need to engage in research, such as hiring an investigator or using public records (like property records or vehicle registrations) to find assets. They may also serve post-judgment discovery requests where state law authorizes them to do so. In New York, plaintiffs may serve questionnaires to judgment debtors, asking them questions about where they have assets so they can be collected. They may also take depositions and demand documents as part of an asset search.
A common practice among judgment creditors in New York is to issue requests to many major banks, with the hope that the judgment debtor holds an account at one of them. Lawyers often send “retraining notices” with these requests, telling the banks to freeze the money in the account so that the judgment debtor does not just immediately withdraw the funds once the judgment creditor finds them.
Litigants May Need to Use Various Legal Procedures to Collect on Judgments
Once a judgment creditor finds assets, she cannot just take them by force. Instead, for assets like cash or physical property, she must pay a sheriff to take them. For real estate, a sheriff may supervise the changing of the locks of a home after giving notice to the judgment debtor. For intangible assets, like the ownership of a business entity or intellectual property, the judgment creditor may ask the court for an order that declares the judgment creditor to be the new owner of the property.
In many American jurisdictions, a judgment creditor may take her judgment from one state and enforce it against property in another state pursuant to the Uniform Enforcement of Foreign Judgments Act. In New York, a judgment creditor from another state may need to domesticate the judgment in New York pursuant to CPLR 5402 before enforcing it in the state.
If a judgment creditor discovers that a third party owes the judgment debtor money, such as a bank that holds the judgment debtor’s money in an account, the judgment creditor can initiate a new proceeding called a “turnover” proceeding to take the property to satisfy the judgment creditor’s debt.
Judgment Debtors May Declare Bankruptcy
Some judgment debtors do not have enough assets to satisfy the judgments against them. In that situation, a judgment creditor may wait for the debtor to accumulate assets and then collect years later. In New York, judgments for money are valid for twenty years.
Those debtors may consider declaring bankruptcy, which generally has the effect of cancelling the judgment. To derive the benefits of bankruptcy, a judgment debtor needs to get an order from a federal bankruptcy court.
A judgment creditor is not entirely out of luck if the judgment debtor successfully declares bankruptcy. She may get a pro rata share of a portion of the judgment debtor’s assets to satisfy her judgment. But this is usually just a fraction of the amount due under the judgment. And if the judgment debtor is a person, many of a her assets may be exempt from collection in bankruptcy, such as her home.