When the lawsuit
is necessary to collect your money
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Since
these are difficult economic times, we’ve heard recently from clients who want to employ various degrees of compassion
for consumer debtors.
While your debtor may not have the ready
cash, or any cash to pay your bill immediately, a plan should nonetheless be forthcoming. If it is not and we hear nothing
from your debtor, we must recommend a lawsuit to secure a Judgment (in District Court-NOT “Small Claims”) to protect
your interest. More later on why we don’t, nor should you, use Small Claims court.
If they own a home, our court Judgment will have more weight than simply a credit bureau “derogatory.”
It will be a lien against that particular parcel (or any they may own in the state the judgment was taken) should they sell
or become deceased.
After a Judgment is awarded, the Court Officer will “Levy”
Herewith an explanation.
“Active Levy” – this
is a court ordered levy that will always take assets away from the debtor. Usually these are assets that are cash (in a bank)
or can easily be conveyed to cash, i.e. valuable artwork, collector car. Usually a judge will not order the sale of a debtor’s
home to pay a debt, unless there are extenuating “fraud-type” or possible criminal circumstances. It can, in fact,
happen for a debt, but it can be time consuming, unreliable and costly. Welfare benefits, Social Security benefits, SSI, Veterans'
benefits or unemployment benefits cannot be levied upon.
“Constructive Levy”
– This is a “softer” levy. Assets are encumbered (liened) but are not sold. Your Judgment is a lien against,
for instance an elderly debtor’s home and they will not have to pay during their lifetime (or until the home is sold,
transferred, etc.). In New Jersey, for instance, the only item that can’t be levied is clothing.
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If we don’t know of
a debtor’s assets: Our attorneys can file an “Information Subpoena” or [obtain an] “Order
for Supplemental Subpoena” (Discovery) to ask as many questions of the debtor regarding his assets until he is satisfied.
If these subpoenas are ignored, our attorneys (if the claim warrants) can issue a Warrant of Arrest.
“Small Claims Court”: We don’t recommend
or use Small Claims Court for our clients’ collection suits as they may have problems for businesses. Other than the
fact that SCC has the historical feeling of a consumer’s court, the judge must employ Rules of Evidence and Rules of
Procedure, which you, as a business would not be familiar.
Garnishment of a debtor’s wages (not in Pennsylvania): If place of business is known, or can be found, the Court Officer
will be directed to the debtor’s employer to have funds deducted from his paycheck (provided he earns more than $127.50
per week in NJ).
