Commercial Collections Blog

Collecting on Judgments

You now have a judgment — now what?

Creating an asset lien against the debtor is a way of ensuring payment in the future – when the debtor decides to sell or refinance the asset (such as real estate and business property).

Secured liens will have you in a better position than unsecured debt (the lien secures the debt).  At any future date, if the debtor sells, refinances or transfers ownership of property, a lien-release will be required to complete the transaction.  To get the release — your debtor must pay you.

Keep in mind, though, that a bankruptcy can void the lien.

Source: www.invtitle.com/node/1538

The property owner may seek the protection of the bankruptcy courts by filing a voluntary petition, or may have an involuntary petition filed by his or her creditors.

All debts owed by the debtor when the petition is filed are called “prepetition” debts. The principal goal of the debtor once in bankruptcy is to obtain relief from as many pre-bankruptcy obligations as possible. The principal and most commonly known way is obtaining a discharge of the debt

A discharge:

(1) voids any judgment to the extent that such judgment is a determination of the personal liability of the debtor with respect to any [pre-petition] discharged debt

(2) operates as an injunction against future efforts to collect, recover or offset the debt as a personal liability of the debtor

Lastly, know when to call it quits. You’ve heard the phrase, “Don’t throw good money after bad”. Although most judgment collection-costs are recoverable — that is of now value if the debtor never pays or declares bankruptcy and the debt is discharged.

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