Judgment Collections

After a monetary judgment is entered in favor of one party (referred to as the judgment creditor) as against another (referred to as the judgment debtor), the judgment is a matter of public record and may affect the credit of the judgment debtor. “Lien searches” performed by title companies for the benefit of lenders will usually reveal whether a person has a judgment that has been entered against them, and whether the judgment has been paid. In Indiana, monetary judgments accrue interest on the unpaid balance at the rate of eight (8%) percent per year.

Upon entry of a judgment, the Courts do not independently take action to enforce payment of the judgment. If the judgment is not paid by the judgment debtor within thirty days after the judgment was entered, the judgment creditor may initiate collection proceedings. In Indiana, the process of enforcing payment of a monetary judgment is referred to as “Proceedings Supplemental to the Judgment” or “Proceedings Supplemental.”

Although largely governed by the same rules, Proceedings Supplemental, including the forms to be used and the process to be followed, are handled according to the preferences of each county and the courts in which judgments are being enforced, which means every county does things a little differently! Indiana Trial Rules provide that a judgment creditor may compel the judgment debtor to appear in court and answer questions, under oath, concerning his or her income and assets. An Order to Appear and Answer, once served upon a judgment debtor, requires the judgment debtor to appear in court and answer questions concerning their employment, income, banking
accounts, and assets that might be liquidated to pay the judgment. The purpose of Proceedings Supplemental is to determine how the judgment debtor will pay the judgment. Most judgment creditors will accept reasonable payment plans.

If the judgment debtor was served notice and fails to appear for the Proceedings Supplemental, the court may issue a Rule to Show Cause ordering the judgment debtor to appear in court and explain why he or she failed to appear at the Proceedings Supplemental hearing. In the event the judgment debtor fails to appear, the court can issue a body attachment, similar to an arrest warrant, which requests that law enforcement physically bring the judgment debtor to the jail until he or she can appear in court to answer the
questions of the judgment creditor.

Indiana Law provides that some property is “exempt” from execution, meaning the property cannot be taken to satisfy a judgment. A list of exempt property is found in the Indiana Code and includes such things as a certain amount of cash or money in a bank account, some retirement accounts, a specified amount of equity in a residence, health aids, tools of the trade, etc. A judgment creditor can garnish income and/or bank accounts (beyond the exempt amount) in order to collect a judgment. Currently, a judgment creditor can garnish the lesser of (1) 25% of your disposable earnings, or (2) the amount by which your weekly disposable earnings exceed 30 times the federal
hourly minimum wage. Disposable earnings means the amount left after the employer has withheld deductions required by law, such as for taxes. The federal hourly minimum wage is currently $7.25. Minimum wage multiplied by 30 is $217.50. Therefore, by way of an example, if a judgment debtor’s disposable earnings are $271.87 per week, a judgment creditor could cause the employer to withhold the amount of $54.37 per week. If the judgment debtor’s weekly disposable earnings are less than $271.87, the garnished amount would be less, and if the weekly disposable earnings are more than $271.87, the garnished amount would be more.

Many of our clients have found that obtaining a judgment is often much easier than collecting it!

Taylor Law Office has invested in creating an effective system for processing judgment collections, that has yielded great results for our clients, which sometimes including finding debtors who frequently change residences.

I’d like to encourage any of you with judgments you can’t collect or don’t want to mess with to give Patti Taylor, fellow landlord and collection attorney, a call. The job she is doing for us is nothing short of miraculous. We deal with the toughest people to collect from and she is somehow getting blood out of a turnip. We have been getting checks monthly. Thank you Patti!!

Chad Zartman