Collecting after you win a settlement in small claims court isn’t quick and easy. You won’t automatically receive the money in your bank account. Oftentimes actually getting paid is the hardest part. Workers comp lawyer Glendale Green has written out a guide for the readers to follow should they ever be in the position of trying to collect a settlement after they win in small claims court.
1. Don’t rush it.
Most Small Claims Courts allow a losing defendant to appeal, so wait until the appeal deadline passes (30 days from the mailing date of the judgment letters, not the judgment date). Appeals threaten your collection chances for two reasons: first, you may lose the appeal, and second; while the appeal is pending, the defendant doesn’t have to pay you a penny.
2. Don’t forget to ask.
A polite written request often does wonders. While you can mention, in general terms, that you plan to take legal measures to collect if payment isn’t forthcoming, don’t be specific. This will give a wary debtor time to thwart your plans.
3. Treat the judgment as a long-term investment.
California authorizes you to collect up to *% annually on a judgment. View this as a long-term, uninsured investment. When (or perhaps, if) you finally get paid, a judgment could be worth a lot with the accrued interest thrown in. Just don’t forget to renew the judgment every 10 years.
4. Think through a collection strategy.
Your strategy must depend on the debtor’s assets and income and the cost of the collection methods. Generally, the easiest and most effect collection methods are:
- getting the debtor to pay voluntarily,
- garnishing wages,
- seizing money from bank accounts or safe-deposit boxes, and
filing a lien (legal claim) against real estate.
5. Bank on the future by creating liens.
Establish liens against the judgment debtor’s real estate and business property. Liens put you in the best position to get paid if the debtor declares bankruptcy or acquires, sells, refinances or transfers property.
6. Do your homework.
The more you know about the business or person who owes you money, the more likely you are to get paid. Periodically write or telephone the debtor.
7. Know when to call it quits.
“Don’t throw good money after bad.” Keep a sharp eye on how much you are spending trying to collect–you may not get it back.