Congratulations! You've won your small claims court case against your current or former tenant. Now it's time to collect your money. Unfortunately, many people believe that the courts collect on behalf of plaintiffs. This isn't true. Once you are awarded a judgment, it's up to you to collect it. The courts can help, but you'll have to do most of the work.

Check out your legal remedies
In many cases, a simple demand letter from you or your lawyer may persuade your former tenant to pay up. You may, however, have to work with the courts to claim your judgment. Each state sets its own laws on collection options, which may include garnishing your former tenant's wages, seizing their assets, or getting a lien on their home.
Your lawyer can explain these options to you. In addition, some courthouses have a self-help legal center that can provide you with the information that you need.

Don't get too aggressive
Your lawyer can help you develop an action plan for collecting the debt that is both effective and won't result in your being accused of stalking or harassment. Another risk of a too-aggressive approach is that your former tenant may file for bankruptcy just to get you off his or her back. If this happens, it's unlikely that you'll be able to collect anything.

Request a financial examination
In most states, a judge can order your former tenant to appear in court and submit to a financial examination by you or your lawyer. This requires that the debtor provide you with information about their employment, assets, and financial accounts. You can use this information to garnish their wages or seize assets.

Consider a settlement or payment plan
Your former tenant may be willing to pay the judgment, but may not have enough cash to pay you in full. Offer to set up a payment plan. You may have to wait a bit to get your entire settlement, but this is better than getting nothing. If you discover that your former tenant has few assets and a limited income, consider settling the debt for less than he or she owes. This can be a good option if you don't have a lot of time to spend on collection activities.

Be aware of changes in your debtor's situation
Even if your debtor doesn't have a high income or assets right now, he or she may become more prosperous in the future. Use Internet search databases, social media and word-of-mouth to find out where the debtor is living and working. If you believe that he or she is in an improved financial situation, you can go back to court and ask for another financial examination, garnishment, lien, or levy.

Consider renewing the judgment
First, the bad news. There is a statute of limitations on collecting judgments in all states. The length varies between states but can be as long as ten years. Once the statute of limitations expires on your judgment, you can still ask your former tenant to pay up, but you won't be able to garnish their wages or levy their accounts.
The good news is that you can ask the court to renew your judgment. This allows you to continue your collection efforts, including garnishment and bank account levies.

Use credit reporting to motivate repayment
A settled judgment account not only looks better on a credit report than an unsettled judgment, but the settled judgment will drop off the tenant's reports after seven years. Pointing out this fact to your former tenant may give you some leverage in negotiating a settlement or payment plan.

POSTED March 19 2015 4:23 PM

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