COLLECTING A JUDGMENT
By Vande Castle, S.C., Jun 28 2016 08:05PM
Successfully obtaining a judgment against an individual or an organization that owes you money is only one step in the process of recovering what is legally owed to you. Obtaining a judgment does not automatically mean that you get paid. It only means that you now have a legal recourse to pursue collection of the amount determined to be owed under the judgment. Once a judgment has been awarded by it is then necessary to pursue collection.
LEGAL METHODS TO COLLECT A JUDGMENT
Wisconsin law provides a number of different avenues that a creditor can employ to collect a judgment against a debtor. Caution must be exercised, however, because debtors have certain federal and state rights that limit the actions and tactics that creditors can employ to collect a judgement. Violation of those regulations can have significant financial consequents to the creditor.
The first step in judgment enforcement and collection is to make certain that the judgment awarded by the court is properly docketed. By docketing the judgment a lien in the amount of the judgment will automatically be placed against all real estate owned by the debtor or in which the debtor holds an interest in the county in which the judgement is docketed. It is also possible to docket a judgment obtained in one county in another county in the state.
The most common method to collect a judgment is through a garnishment proceeding. There are two types of garnishments: wage garnishments and single time garnishments. Both types of garnishments require the filing of a separate garnishment action against the debtor. In most cases, however, unless the debtor files an objection to the garnishment, the physical garnishment of the debtor’s wages or accounts will occur without the need to appear in court.
Under a wage garnishment the creditor can obtain a deduction of payments from the debtor’s employer directly from the debtor’s wages. Wage garnishments run for 13 weeks. At the conclusion of those 13 weeks another wage garnishment must be started if the creditor has not been fully paid.
There is a limit to the amount that an employer can deduct from an employee / debtor’s wages under a wage garnishment. The maximum amount that the employer can deduct and apply to all outstanding garnishments is 20% of the employee’s disposable income after deduction of taxes and social security.
A wage garnishment debtor is entitled to file an objection with the court to the wage garnishment and attempt to stop the garnishment if the debtor has files federal bankruptcy or a state receivership action or the debtor’s earnings are below federal poverty guidelines.
Single Time Garnishment
If the creditor knows where the debtor has bank accounts or other financial assets the creditor can file a non-wage earner garnishment action with that bank or financial institution. A non-wage earner garnishment is a one-time garnishment per filing. If the bank or other financial institution has assets belonging to or registered to the debtor, the bank or other financial institution must freeze the account and hold the funds in that account for the creditor. The current statutory limitation on account seizures for an individual’s account is $5,000.00. There is no statutory exemption for accounts of a business.
Other Judgment Collection and Enforcement Options
In addition to Garnishment there other legal methods for enforcing and collecting a debt in Wisconsin. State law allows for the seizure and subsequent sale of assets. This can be business or personal assets depending upon the underlying judgment. If the debtor owns or has an interest in real estate the judgement can be docketed in each county within the State in which the debtor’s real estate is located. The docketing of the judgment will establish a lien against that real estate in favor of the creditor. Should the debtor ever attempt to sell that real estate, that docketed judgment and the lien it created will have to be paid by the debtor.
There are a number of viable and effective, legally authorized methods for enforcing and collecting a judgment. Each method has its own set of rules, requirements and limitations to allow a creditor to legally pursue the collection of that debt. If you need assistance in collection a debt or pursuing the enforcement of a judgment please contact the attorneys at VANDE CASTLE, S.C. for advise and assistance.