So you’ve just won in small claims court, and it’s now time to receive compensation. The only problem is that your convicted debtor refuses to pay their judgement. Debtors have 30 days to appeal the decision in a small claims court if the settlement is more than $2,500. If it’s been more than 30 days and you have not received compensation or the notice of appeal, contact your lawyer.
What happens if a debtor won’t pay their judgement? There’s no need to panic, there are way your lawyer have help you receive your settlement such as:
- Writing a letter to the debtor discussing payment options
- Getting a court-ordered garnishment to take part of the debtor’s wages
- Getting a court-ordered seizure to take or sell the debtor’s property
If the debtor does not pay the creditor right away, post-judgment interest will be added to what is already owed.
Forms of Payment
Even if the debtor must still pay eve if they’re currently unemployed or don’t have enough money to pay off the debt. If the debtor is likely able to pay in within 5 to 25 years, the court will make a payment plan for them. For instance, let’s say your debtor is a student who still has a few years before they graduate. Since they are currently unable to pay for the debt, but will most likely be able to pay in the near future, a post-judgement interest will be added to the current debt. The student will not have to pay until they have a job, or have come into substantial money such as an inheritance.
There are several ways your debtor can pay off your settlement.
Garnishing wages
In most states, you can receive up to 25 percent of a person’s net wages to settle. There are a few states that will not allow wage garnishments. This payment option may not be worth it if the debtor works a low-income job. Be sure to ask your lawyer about what state laws apply to you.
Levying a bank account
This payment will allow you to order a sheriff, marshal, or constable to withdraw funds from their account. To levy a person’s account, you need to get permission from the court in a writ of execution, garnishment, or attachment. If your debtor is actively trying to avoid paying their debts, it’s likely that they will move the account after you access their account.
Recording a property lien
This payment puts a lien on the debtor’s personal property. Some states will already put a lien on someone’s property if there is already a court judgement. Other states require you to lien a person’s property in that property’s county. If the debtor sells or refinances their property, the title will be clouded in your lien.
Taking business property
This payment will allow you to seize funds from the debtor’s business such as accounts, inventory, valuable equipment, cash, and other property. Law-enforcement will then seize the property.
Taking additional property
Although it’s not as common, you can still receive payment from collecting real estate assets as long as there is enough equity to pay off the mortgage. Exemption laws limit what kinds of property can be seized
Insurance
If you were in a motor-vehicle accident, the debtor will most likely have to use their insurance to pay for your settlement. Some states will even suspend a person’s license if they cannot pay. If you need your insurance provider to pay a settlement, speak to your lawyer about filing a claim.
Jailtime
This is also an unlikely form of payment, but a debtor can serve jail time if they are violating their court order to pay your settlement. This form of payment is common with debtors that refuse to make child-support payments despite the debtor being able to make them.
What Happens If The Debtor Files For Bankruptcy
Be careful if your debtor files for bankruptcy. Your right to a settlement is cut off along with their other debts during bankruptcy. If a debtor or their business declares bankruptcy, you are technically a creditor. Unless the debtor caused injury, fraud, or malicious behavior to you or your property. If this is the case, you are still able to collect your settlement.
Have open communication with your lawyer about whether or not your debtor is continuing to make payments on your settlement. If payments on a settlement have not been made or have been stopped, talk to one of our Premier Partners about filing for a court order.