Have Questions About Enforcing A Judgment?
Many people mistakenly believe that a court judgment entered in their favor is the end of their legal matter. However, you still need to collect on the judgment. Difficulties with collecting may arise when the individual or entity that owes you is experiencing financial hardship, particularly if it involves dissolving a business, going through bankruptcy or fraudulent or deceptive behavior.
Below are some of the frequently asked questions we receive regarding enforcing and collecting on court judgments. For a more detailed discussion of your situation, call our office in New York City at 212-460-0047 or send us an email. We regularly represent individuals and business entities throughout New York with collection and judgment enforcement matters. We can help.
Can Bankruptcy Stop Judgment Enforcement?
Some debts can be discharged through bankruptcy. During the course of bankruptcy, creditors must stop attempting to collect on debts.
Bankruptcy is a complex area of the law, however, and not all debt is eliminated. In New York, for example, a judgment remains on the record and can be used as a lien against future property for 10 years. The amount you can recover will depend on individual circumstances, including the type of bankruptcy filed, whether your debt is secured or unsecured and other factors.
What If The Business Has Dissolved?
When a corporation dissolves, it must first deal with outstanding debts. The debts will be paid by a trustee, similar to how debt is handled in bankruptcy. Also similar to bankruptcy, there is a hierarchy of claims. To collect, a creditor must submit a claim.
However, many businesses with outstanding debts fail to properly dissolve. Instead, they simply stop doing business or try to avoid debts by starting a new business. It is possible to collect from debtors under these circumstances. This is called “piercing the corporate veil” (going after the owners of the business) or pursuing fraudulent transfers.
Why Not Use A Collection Company?
Collection companies require you to turn over the debt to them. In addition, most collection companies simply write letters and make phone calls to collect — which may do no more than alert the debtor that someone is trying to collect. Collection companies will not sue the debtor. They will not pursue successor entities, either, meaning there are fewer opportunities to collect.
By using an experienced debt collection attorney, you will be pursuing all legal avenues to collect on a judgment. This could include holding an individual or entity in contempt of court, obtaining a lien against the debtor’s property or garnishing wages.