Congratulations! You have won a brief judgment that the debtor owes you money. But how do you collect? It may be easier than you think.
The practice of the National Center for Judgment Recovery divides the collection process into the following steps:
abstract judgment
Research the contact details of each of the debtors in the judgment
Investigate the assets owned by each of the debtors
Investigation of debts and encumbrances against each of the assets or debtors
Conclude on the best option for the collection
Hire a lawyer to file the necessary documents with the court
Summarizing the judgment is just a fancy way of posting the judgment in the county records to notify the world that the debtor owes you money. Be careful how the summary of judgment is prepared. There are specific rules about who to name, what information must be included, and who can prepare the summary. In most cases, the easiest thing to do is to ask the court to prepare a summary of the judgment and then have your lawyer review it to confirm that it has been prepared correctly. A judgment summary is invalid if it is not prepared correctly, even if the court prepared it! (However, you may file another Summary Judgment if the first one was improperly prepared.)
Investigate each of the debtors, if there is more than one. If one of the debtors is an individual, find out their marital status if a spouse is not named. Shrewd debtors sometimes put property in their spouse’s name! However, in many cases, you can still collect on this property, depending on state law. (For example, Texas is a community property state, so unless strict laws are followed, all property is jointly owned by the husband and wife, regardless of how it is titled.) Use court resources such as marriage records, divorce records (always a lot of information!; sometimes more than you want to know), online phone books, paid phone book services like Net Detective and Intelligator, Accurint, assumed name, also known as doing business as records, appraisal district records, etc.
Then investigate each of the assets owned by each of the debtors. If they own a “company”, it is a business in reality, or just on paper. Check appraisal district records for both real estate and commercial personal property by searching by name and address. Check the secretary of state’s records for businesses owned by the debtor. Also research real estate records using a site like courthousedirect.com to locate debtors’ property.
You can also do a post-judgment discovery to discover the assets owned by the debtor. This topic will be covered in a separate article.
After locating debtors’ property, investigate both voluntary and involuntary liens. A voluntary lien is given voluntarily, such as a real estate mortgage or business loan. Typical involuntary links include lawsuits, IRS links, state tax links, mechanical and material links (also known as M&M links), property tax links, city mowing links, demolition cost links by the city, etc.
Assess the market value of the property against mortgages and other liens. Do you want to own a home worth $100,000, if there is a mortgage against it for $105,000 and a federal tax lien of $30,000? Especially when foreclosure on the house under your lien is likely to create an event of default under the mortgage documents? (This will allow the current lender the ability to foreclose on your bond.
After evaluating the debtor’s property, decide whether or not to proceed. If the debtor has property with equity, file a writ of execution for the sheriff (the man with the badge and the gun) to sell the property. This ends the excuses! The debtor has to pay you and pay the cost of the foreclosure deed, or the property will be sold!
