2009 UPDATE--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
