When civil litigation begins often times client want their day in court and believe that once they win, the defendant (person or company you are suing) will turn over the money owed; however, that is not the case. Simply winning your lawsuit does not guarantee collectability. This is why it can be crucial before even commencing your litigation to review the collectability from the defendant.
You may have a “slam dunk case”; however, winning does not mean you will get paid. A judgment in your favor awarding you money is essentially just a piece of paper saying you are owed money. Collecting that judgment is a whole other story and often can take months or years to collect, if in fact you ever collect. That is why it is important for you and your attorney to determine whether it is worth filing a case or at the very least what the strategy is going to be taking into consideration collectability.
Some of the things to consider are whether the person or company you are suing:
- Owns property;
- Has steady income;
- Has insurance covering your claim;
- Has other judgments against him/her/it;
- Likelihood of person you are suing filing for bankruptcy.
Assuming you decide to move forward with your case, the person or company you are suing has assets and in fact you win your case, you still have a ways to go before getting paid. That is why generally, the first step is to attempt to reach an agreement with defendant regarding payment or sometimes setting up a payment plan. Commonly, if the defendant agrees to a payment plan or amount, they are more likely to comply; however, in situations where that is not possible you can continue seeking collection of your judgment using a myriad of options.
If you are aware of the defendant’s assets such real property, you can place a lien on the property securing your judgment. If they do not have real property another option is to place a wage garnishment, so you are paid a percentage of their income, generally 25% of their gross wages.
People often think that after they win their case, there is nothing left to do. However, often, it is not the case. There are still post judgment proceeding that must take place and collection efforts if the party whom you obtained a judgment against is not willing to simply paid the amount ordered.
Litigation is expensive, complex and requires many factors to be taken into consideration. That is why it is important that you seek legal advice and that you are fully aware of your likelihood of collecting before commencing a case.