Legalese December 2, 2004
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This column is not intended to provide legal advice. You should contact a lawyer to determine your legal rights and obligations.
The Plight of the Judgement CreditorThe increase of the limit on Small Claims Court actions to $10,000 has been of assistance to people who have debts owed to them by debtors who refuse to pay. The Small Claims Courts procedures are not as technical as the higher courts and the costs involved in bringing an action are less. The court is designed for the layman to pursue remedies at a reasonable cost.
However, as a potential Plaintiff (one who is suing another), you should be aware of the challenges that lie ahead in the ultimate collection of your debt. To obtain a judgement from the Court, you must show that the Defendant is liable for the debt and you must also prove the amount of the debt. If you have persuaded the Court on these two counts, a judgement of the Court will be awarded against the Defendant.
Upon judgement being awarded, you, the Plaintiff, become a Judgement Creditor and the Defendant becomes a Judgement Debtor. However, the judgement does not necessarily mean that you, as Judgement Creditor, will be paid by the Judgement Debtor. Rather, the judgement gives you certain additional rights or remedies to collect the debt.
Those rights do not include the right to self-help by simply taking property from the Judgement Debtor. Although taking and selling property of the Judgement Debtor is one way of being paid, such seizure must be done in accordance with the following legal procedures.
To seize personal property you must apply for a Writ of Seizure and Sale of Personal Property. The Writ can then be enforced and the property of the Judgement Debtor seized and held for auction.
To seize real estate the Judgement Creditor must apply for a Writ of Seizure and Sale of Lands that is filed with the Sheriff of the county or district where the Judgement Debtor owns land. This filing may prevent the Judgement Debtor from selling or purchasing any land until the judgement is paid.
Another remedy available to collect a judgement is garnishment. Garnishment is the collection of money from someone who owes money to the Judgement Debtor. This is often the employer of the Judgement Debtor but can include others such as banks in which the Judgement Debtor has an account and persons who owe the Judgement Debtor money under a contract.
If, as a Judgement Creditor, you are not sure of the financial resources of the Judgement Debtor, you can arrange to have the Judgement Debtor attend at an Examination of Debtor before a Judge. During the examination you can ask questions about the bank accounts, assets, employment and related financial information about the Judgement Debtor. The Examination of Debtor will provide valuable information about the practicality of collecting on the judgement.
Although obtaining a judgement gives the Judgement Creditor more options to collect the debt, it is evident from the foregoing that obtaining a judgement is no guarantee that the debt will be paid. It should be kept in mind that each of these collection remedies involves fees, which are added to the judgement to be paid but will only be recouped if and when the judgement is collected.
Before starting an action to collect a debt, it is wise to do some research on the financial resources of the Defendant. In that way, you are able to make an informed decision about whether it is prudent to proceed or you are simply throwing good money after bad.
Peter Graham, Lawyer
