Once a lawsuit has been initiated, there are a number of elements that must be taken into account. Whether it is the discovery process or taking depositions, the goal is to try and get the case settled. However, when the lawsuit has settled many people are unsure about the process of collecting a judgment. In addition, there are several different types of judgments that an individual or business may receive.
Default Judgment
One method in which a company or person may collect an award is through a default judgment. A default judgment is when one side fails to take the necessary action(s) in the lawsuit. Typically, this occurs when one side, usually the defendant, fails to appear after being served with the lawsuit.
When the individual or company does not make an appearance, any monetary relief that is requested will be awarded to the Plaintiff.
Vacating a Default Judgment
In some instances, however, a default judgment may be set aside by the court. The default judgment can be vacated under certain situations, which include but are not limited to when the lawsuit was not served properly on a Defendant; there are extending circumstances, such as the Defendant being out of the country or in the hospital for an extended period of time; or the Plaintiff entered a judgment when they were not entitled to do so. One example of a Plaintiff entering a judgment would be when the opposing side was served properly but the Plaintiff attempts to receive their judgment in a method that is quicker than what is allowed.
Collecting on a Jury Award
When a case goes to trial and the Plaintiff wins, the jury will award monetary damages. There is no guarantee, though, that the Plaintiff will be able to collect their money. There are several methods that a party can follow in an attempt to gain the award. Some of these paths include but are not limited to garnishing the Defendant’s wages; garnishing any bank account funds that the Defendant may have; and collecting any assets that the Defendant may have, such as any money in a 401(k) or a similar retirement fund.
Typically, the Plaintiff has ten (10) years to collect any monetary award. However, the 10 year window can be extended for another 10 year period as needed. This allows a Plaintiff to continue to have the opportunity to collect their award down the road if a Defendant does not have the necessary capital to quickly pay the award.
However, if a person or company does not have adequate finances to pay the judgment, then the business or individual may file bankruptcy. When a bankruptcy is filed, then the Plaintiff will be unable to collect any money that they were awarded.
Judgments-Other Effects
At the same time there are other consequences if an individual or organization has a default judgment against them. For example, the Debtor’s name is placed on a register that is accessible to all individuals and businesses. The register can be used to determine the credit-worthiness of an individual or business. At the same time, an enforcement may be placed upon the Debtor. The enforcement may include wage garnishment or a bank levy, as mentioned above.
Payment Options
It is important to keep in mind that most Plaintiffs that are awarded a judgment are not able to collect their money. If the Defendant does have money but cannot pay the entire award upfront, then the Plaintiff can attempt to work with the Defendant to set up a payment plan. In addition, speaking with the Debtor to see what assets they have can benefit both sides as it would allow the Defendant to evaluate what they can afford to pay upfront and what their obligations would be down the road. The Plaintiff can also get an idea as to the amount of money they can expect to receive.
However, if a Debtor is unable to pay the award and/or files for bankruptcy, the Plaintiff will be stuck with a judgment that they will not be able to collect.
Conclusion
If a Plaintiff has received an award in a case but is unsure about their options or collecting the money, it can be beneficial to speak with a business attorney. The lawyer will be able to review and explain all potential options to the individual or business. At the same time, the attorney will be able to explain the entire process of how an award works and any potential issues that the collector will be facing. Lastly, a lawyer can discuss what approach the Plaintiff would want to use if the Debtor has some assets but is unable to pay the entire verdict immediately or at once.