When many people start a lawsuit, the end goal is getting to trial and obtaining a judgment against the other party. However, what many litigants do not consider is that a judgment is only a piece of paper.
The Court does not help you with collecting the money owed to you by the other party (the debtor), which can leave many litigants confused and frustrated.
So, if you have a judgment and the debtor does not want to pay you. What happens next?
Finding out whether the debtor has any assets that you may be able to use to collect the money owed to you should be an important consideration for all litigants. This step should be explored as early as possible in the litigation process but is often left much too late.
The article will explore a few common steps that litigants can take to find out what assets the other party has and how to use that information to collect the money owed once they receive a judgment.
How can I find out if the debtor has any assets?
A good place to start when trying to determine what assets the other party may have is to conduct a search to see if the other party owns any real property (land). Property searches can be conducted at any time before, during, or after litigation.
If you are aware of property that the other party may own, you can request that a lawyer pull a parcel register search. A parcel register search will verify who owns the property and show whether the property has any mortgages or other charges registered against it.
Alternatively, if you are not sure whether the debtor owns any property, you can conduct a real estate name search in the area where the debtor lives or any other areas that you believe he or she may own property. A name search is broader and searches by the debtor’s name to see if they own any property in the region you have requested the search for.
Judgment Debtor Examinations
Another option you have is to schedule what is called a “judgment debtor examination” or an “examination in aid of execution.” Judgment debtor examinations occur after you have obtained a judgment. At these examinations, the debtor is required to give sworn testimony about his or her financial situation and assets.
A judgment debtor examination is a helpful tool to collect information about the debtor’s assets. For example, you may want to enforce your judgment through garnishment (which is discussed in more detail below) and need to know where the debtor works or banks.
At the examination, the debtor is generally asked questions about his or her employment, any property he or she owns, such as motor vehicles or land, and about all bank branches where they have an account.
How can I collect my Judgment?
One option you have if you won your case and the debtor has not paid you is to file a notice of garnishment. Garnishment is when the Court, through the sheriff, takes the money owed to you directly from money the debtor regularly gets, such as wages, or the debtor's bank accounts.
It is important to note that there are some restrictions on the amount and the type of money that you can collect through garnishment. For example, you cannot garnish more than 20 percent of a person’s wages. So, if the debtor makes $1,000 per week, you can only garnish up to $200. You also cannot garnish the debtor’s employment insurance benefits, social assistance and pension payments.
Forcing the Sale of Property
If you discover that the debtor owns property, one option you have is to register your judgment against the debtor’s property. This is called a writ. Registration of a writ will limit the ability of the debtor to sell or refinance their property until the judgment has been removed by you or by a Court order.
If you have filed a writ and the debtor still refuses to pay, you can force the sale of the debtor’s property to collect on your judgment. Forcing the sale of a debtor’s property will require you to adhere to certain timelines and take specified steps to initiate the process, so this route is generally a last resort. In addition, if there were mortgages registered against the property before you obtained your judgment, the mortgage holder will be paid out of the sale proceeds before you receive any payment.
The processes discussed above provide a few examples of the steps that you can take to collect your judgment if you are successful in a lawsuit and the other party has not paid you.
As you can see, obtaining a judgment is only the first part of the battle, since enforcing that judgment may be a very difficult and time-consuming process. Although enforcement proceedings take place after the lawsuit is over, it is important to discuss with your lawyer the prospects of collecting your prospective judgment early in the litigation process so that you can make informed decisions as your lawsuit progresses.
Written by Brittany Miller