BCA 2010 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
