As almost any credit manager knows, sometimes you may as well frame a judgment and hang it in your office if you can’t collect it. Oftentimes obtaining the judgment can be a relatively simple task; it is the collection of the judgment that requires finesse, after all, if the debtor wanted to pay the money owed, the debtor would have already paid it.

Certain phrases circulate among civil litigation lawyers and creditors; we sometimes say the debtor is “judgment proof” or describe the situation as one in which you can’t squeeze blood out of a turnip. And of course, when that well-seasoned debtor gleefully tells us we cannot force the debtor to pay, we may even mutter a few things of an altogether different sort. We suggest a more appropriate phrase for your office: The squeaky wheel gets oiled first.

The fact is not everyone who purports to be judgment proof really is; effective collection procedures can oftentimes coerce a recalcitrant debtor to start paying your judgment. Additionally, it is sometimes the case that after you hit the debtor when it is least expected you gain the psychological edge. An example of this situation is where you obtain an order from the court (without notice to the debtor) directing that the debtor=s bank account be frozen and all funds in the account to go toward the satisfaction of your judgment. The debtor goes to an ATM machine to take money out and nothing is there. Suddenly, your calls are being returned and offers of settlement start coming your way!

One of the most neglected collection procedures is the debtor examination. Typically, after a judgment has remained unpaid and an execution has been unsatisfied, a creditor may ask the court to order the debtor to submit to your questions in court as to the debtor’s ability to pay your judgment. You can ask questions concerning the debtor=s income, personal property and bank accounts, as well as whether anyone owes the debtor money or holds property for the debtor’s benefit. You may ask the court to order the debtor to bring to Court for your review all references of checkbooks, bank accounts, tax returns, business records, a list of inventory, a list of assets, etc. This allows you the opportunity to truly review what assets the debtor may own.

The purpose of the examination is to allow you the opportunity to find assets from which your judgment can be satisfied. It is also your chance to regain the psychological edge; after all, the joy of taking time from work to go to court should be a shared experience, shouldn’t it?

The debtor examination also allows you another advantage: the possibility of arrest. As we all know, many debtors ignore all the legal proceedings, fail to come to court, fail to claim any personal property exempt from execution (usually), and generally live in the security of the knowledge that if they simply ignore the entire situation, everything eventually will go away. Creditors give up, write it off, and move on, right? Wrong. If the debtor ignores the court’s order to appear for the examination, the court may hold the debtor in contempt and have the debtor arrested. Thus, you now have the debtor’s full attention and hopefully can extract payment from the debtor.

One of the most important things to remember in collecting a judgment is to be persistent. Truly, there are debtors that are judgment proof. However, most debtors have some form of assets to provide collection of the judgment. We have found that if the debtor is still in business and has any cash flow, generally we as creditors can extract the assets from the business to satisfy the judgment. Often times, the debtor will not help you in voluntarily giving you information and thus we are called upon to be persistent in gathering information and pushing the judgment to collection! What fun! Be persistent!