Two major considerations stand between the plaintiff and collecting money from a defendant: (1) a good case and (2) the defendant’s ability to pay. Unfortunately, the plaintiff needs BOTH to recover money owed. All too often a plaintiff has a winnable case, but the elephant in the room remains: will the plaintiff ever get paid by the defendant?
The excitement from a courtroom victory and a judgment is often tempered by what a victorious plaintiff often leaves the courtroom without: payment. The defendant is often allowed to leave the courthouse without paying the plaintiff a dime, and the plaintiff leaves the courthouse with merely a judgment on a piece of paper. So the value of a judgment is not solely determined by the amount of the judgment, but more importantly, the defendant’s ability and desire to pay.
Except when the defendant has insurance or a bond to pay the judgment, the plaintiff will have to collect money directly from the defendant. The defendant becomes plaintiff’s debtor, and the plaintiff becomes defendant’s creditor. The creditor’s collection is far from guaranteed, as the creditor will have to find the debtor’s non-exempt property, if any exists. Texas law generally allows an individual debtor quite a bit of property exempt from seizure by a creditor. A creditor generally cannot seize an individual debtor’s homestead, retirement accounts, college savings accounts, and personal property totaling $30,000 for individuals and $60,000 for a family. A creditor generally cannot seize an individual debtor’s wages either. Fortunately for creditors, asset protection for entities are far more favorable to creditors.
An attorney or private investigator can access databases to discover a debtor’s real property, motor vehicles, boats, and airplanes. After obtaining a judgment, the creditor can also send written questions to the debtor, which the debtor must answer under oath, to discover debtor’s assets. The creditor can also take the debtor’s deposition. If the debtor fails to fully and truthfully answer the creditor’s oral or written questions, the creditor can ask the court to sanction the debtor. Sanctions can include money fines or confinement if the debtor continues to fail to fully and truthfully answer the creditor’s questions.
A judgment merely gives a plaintiff the legal right to collect from a defendant. A plaintiff should perform due diligence on a potential defendant’s assets to discover whether this legal right to collect is worth the plaintiff’s time and money.