COLLECTING ON JUDGMENTS IN INDIANA
If you are the party suing (“The Plaintiff”) another party that owes you money (“The Defendant”) in court, and you win a judgment will be granted in your favor. The Court will typically order that the Defendant pay you within a given time frame, but what happens if that person does not pay? How can you collect the judgment? Here is some information that can help you on collecting on judgments in Indiana
A judgment is good for twenty years in Indiana. Of that twenty-year time span, that judgment remains a lien on the debtor’s real estate and a personal judgment against the debtor for the next ten years. A judgment can be reinstated after the twenty years is up if the creditor and/or his attorney files a motion to reinstate the judgment.
After the judgment is obtained, the creditor can enforce the lien right for the first ten years by attempting to foreclose on any real property or personal property the judgment debtor owns. For example, if the debtor owns a home or a vehicle that is free of any liens, you, as the creditor can try to seize the property and have it sold to apply towards the judgment value. If that doesn’t work, there are other means on collecting on judgments in Indiana.
If you have the debtor’s date of birth, social security number, and maybe even bank account information for the debtor, you can try to institute a garnishment on the debtor’s bank account to be applied towards the judgment. You will need to submit a set of questions (“interrogatories”) to the court to be signed by the judge. Those questions will then be sent to the bank to see if the debtor has an active account and if there are funds in that account. If the bank answers come back positive with funds in the account, you will need to be sure that the account has greater than $450.00 in it and that the funds are not from an exempt source, such as disability or unemployment. What is the bank account is closed or the funds are less than the exemption amount?
Assuming you have the date of birth and social security number for the debtor, you can try to get a garnishment in place against the wages of the person who owes you money. If you don’t have their employer information, you can submit a request filed by the court to find out where they work. If that report comes back showing that the debtor is gainfully employed, you can file interrogatories with the court to be issued to the employer to find out what they earn and if there are already garnishments in place against their wages. If the owner is not employed or has wage garnishments pending, then you can file another motion to find out the debtor’s employer again as employer information is updated quarterly with the Indiana Department of Workforce Development.
If the debtor is not employed and has no active bank accounts, real property or personal property that can be seized, collecting on a judgment may become tricky.
However, because the judgment stays valid for so long, all hope is not lost. Many people who are younger make poor financial decisions but later after becoming established financially, they may want to buy a house or a car. The lender is going to run a credit check on the buyer to see if there are outstanding judgments. That 10-year old judgment that seemed to be uncollectible may now get paid in full as the buyer, your judgment debtor, needs to clear up his/her credit. People can often find money to pay for judgments when these outstanding judgments prevent them from obtaining something they really want.
Although a judgment is valid for 20 years, there are certain limitations in place by statute to protect the judgment debtor from losing everything due to an outstanding judgment. If the property is the debtor’s primary residence that is subject to a mortgage or is involved in a foreclosure or bankruptcy proceedings, then there are certain values that must be considered when enforcing a judgment. Also, a creditor should always check to see if the debtor’s property has been foreclosed on by the mortgage company or if the debtor has filed bankruptcy. If the debtor has filed a Chapter 7 bankruptcy (debtor wipes all debts clean) and has named you as a creditor in the bankruptcy then your attempts to collect on the debt must stop. If the debtor has filed a Chapter 13 bankruptcy (repayment plan) and has named you as a creditor, you may be able to file a claim with the bankruptcy to get paid.
The likelihood of getting paid through a bankruptcy claim decreases if you are not a secured creditor in the debtor’s bankruptcy case. That means is you don’t have a lien that runs with the property such as a mortgage or a car loan, your claim is very low in priority and you may never receive money through the bankruptcy claim. If you are unsure whether your claim is a secured debt or an unsecured debt, you may want to consult an attorney who can advise you whether or not it’s a good idea to file a claim within the debtor’s Chapter 13 Bankruptcy plan.
Whether you use an attorney or not to collect on your judgment, you always want to be sure that you have not violated bankruptcy laws. As soon as a debtor has filed bankruptcy, an automatic stay, or hold, goes into place that protects the debtor’s assets. There can be fines for violating the bankruptcy stay, so you want to do all of your homework before suing someone or trying to collect on a debt. If you have a judgment against someone or want to file suit against someone who owes you money, you should strongly consider contacting an attorney who is familiar with collections and/or review IC 34-55-10-2 prior to attempting to enforce a judgment.
If you are interested in talking with an experienced collection attorney and setting up a strategy session, give us a call at 317-939-3000. Additional information on judgments can be found here.
