Collecting a Debt

Today TaxMama® hears from Joe in the TaxQuips Forum, with a reasonable question.  “I am going after an ex client that owes me $11K. Once you get the judgment how do you go after their assets? Does a lawyer handle that?”

Dear Joe,

No doubt, each state has different rules.

But if you know where the assets are – like the employer, or major clients (accounts receivable), or bank account numbers, or vehicles….give the SPECIFIC information to the officers working with the court.

Here in Los Angeles, we have Marshall or Sheriff with an office in the courthouse.  We fill out their form with the specific information on where to find specific assets (account numbers, addresses, etc.). We pay the fee. They go get it. Once they have it, they hold it for 30 days. Then they turn it over to us.

Incidentally, for a slightly higher fee, the officer will sit in the deadbeat’s office all day, embarrassing the person, and collecting all the money that comes in the mail, money from customers or clients who walk in, etc.

All these costs are added to the judgment. So, while you advance the money, the person you’re suing has to pay it. Plus interest on the judgment.

Incidentally, if you don’t quite have the judgment yet, you could ask the court to insist he provide a list of his assets (discovery). Read this terrific article about discovery in a divorce case.

Do a little research and look up the rules in your state. And remember, when suing a business, be sure to also name the individual owner(s) in the lawsuit as well. So, if the business is dissolved, you can still collect from the owner(s) assets. (Note: If it’s not appropriate to include the owners, the Court will remove them. But will rarely add them.)

And remember, you can find answers to all kinds of questions about collecting judgments, and other tax and business issues, free. Where? Where else? At www.TaxMama.com.

 

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