How Creditors Collect Judgments

Florida statutes provide creditors a collection to tools to satisfy their civil judgments from the debtor’s assets. These collection tools each are subject to very detailed procedural rules. The following is a summary of creditor collection tools.

Execution and Levy:

Execution is a collection remedy used to obtain a debtor’s tangible personal property and real property. Execution and levy is used to seize real estate, stock in corporations, and the debtor’s personal effects. The creditor can execute against the debtor’s property in possession of a third party.

A creditor must identify the debtor property subject to execution. The county sheriff executes writs of execution by seizing the debtor’s property. The sheriff then auctions the debtor’s property and applies the sales proceeds, less expenses, to satisfy the judgment. Any preexisting liens on the property must be paid before any money is available to pay the judgment creditor. The debtor can bid for his own property at the auction.

Assets frequently subject to execution include the debtor’s automobiles, stock in private companies, and valuable home possessions. Creditors are apt to direct the sheriff to levy upon automobiles which a debtor owns free and clear. Creditors do not typically levy upon automobiles subject to significant car loans and liens because the procedure is costly, and few people will pay significant money to buy a car subject to a lien.

Creditors can use execution and levy against shares of common stock the debtor owns in his own business. If the debtor states that his privately held corporation has not issued stock, or that the debtor misplaced the stock certificates, the creditor can obtain a court order directing the corporation to reissue stock certificates.

Execution can be used to seize the debtor’s home furnishings. Because a creditor must direct the sheriff to seize specific items a creditor cannot get a blanket attachment against “all the debtor’s stuff” in his house. Creditors cannot break into a debtor’s house without notice and grab property. However, if the creditor identifies non-exempt assets within the debtor’s house a court will issue a “break order” to assist the sheriff’s seizure of these assets. Florida’s homestead exemptions does not shield the debtor’s tangible personal property held inside the homestead.

Garnishment

Garnishment is the most prevalent judgment collection tool. Garnishment is a remedy by which a creditor can reach money in a debtor’s bank account or a debt owed to the debtor. Garnishment involves notifying the third party that it must retain an asset or money which belongs to or is owed to the judgment debtor and to thereafter pay the money as the court shall direct. Garnishment is used against debtor assets including the debtor’s bank accounts, the debtor’s future wages and commission, the debtor’s financial accounts holding publicly traded securities, and any debts or rights to money payable to the debtor.

To obtain such assets, a judgment creditor obtains from the clerk of court a writ of garnishment and serves the writ upon the appropriate employer, bank, financial institution of person obligated to the debtor. The creditor is not required to provide advance notice to the debtor prior to serving writs of garnishment.

Money subject to a garnishment must be in the actual possession and control of the garnished third party. The money must be owed to the debtor without condition and the amount owed must be liquidated (fixed) in amount. In most instances, a writ of garnishment pertains to current debts and obligations owed the debtor. Only debts owed to the debtor at the time the writ is served are thereby frozen and subject to the garnishment. The debtor’s salary and wages are subject to continuing writs of garnishment. A single writ of garnishment served upon the debtor’s employer subjects to garnishment all future non-exempt wages, salary, and commissions payable to the debtor/employee. A creditor cannot get a continuing writ against payments due by a company to a debtor working as an independent contractor, nor the payment of rent.

Debtor defenses to writs of garnishment are explained elsewhere on this website.

Jon Alper

About Jon Alper

Jon is an attorney focusing on bankruptcy and asset protection in Orlando, Florida.