Assuming a claimant wins in small claims court, the next step is to collect. Collecting a judgment, however, may be more difficult than filing a claim if the judgment creditor cannot locate the judgment debtor, the debtor refuses to pay, or the debtor simply lacks the ability to pay all or part of the judgment.
Unless the court orders otherwise, a judgment debtor has 30 days to make full payment on the small claims judgment. If the judgment is not paid in full and no appeal or motion to vacate the judgment has been filed, the judgment creditor may begin efforts to collect on the unpaid judgment.
Please note courts typically allow a debtor to pay the judgment in installments when requested. Additionally, the creditor is always free to accept less than full payment of the judgment as part of a negotiated resolution.
Collection - Step One
The first step to collect is to make a written request for payment of the judgment if the judgment debtor has not voluntarily paid. It is best to include a copy of the court order and send the request via certified mail, return receipt requested. Track all expenses incurred trying to collect the judgment as these may be reimbursed upon request to the court.
Make sure not to make false or misleading statements or harass / threaten the judgment debtor as this may complicate collection efforts and may be a violation of the law. If contacting the debtor by telephone, do not call before 8:00 a.m. or after 9:00 p.m. and if a third person answers (i.e. family member, employee, etc.) do not discuss the fact the debtor owes money. Be calm, respectful, and use commonsense when trying to collect in order to avoid complications or violations of the law.
Collection - Step Two
If the judgment debtor does not pay the judgment, it is time for step two - locate the assets. The best thing is to request a debtor's examination which will give the judgment creditor the opportunity to ask about income, employment, real property, personal property, the location of assets, rental or business income, etc. In order to get a debtor's examination, the creditor must file with the court an Application and Order to Produce Statement of Assets and to Appear for Examination (Cal. Court Form SC-134). Include a blank Judgment Debtor's Statement of Assets (Cal. Court Form SC-133) as well as a Small Claims Subpoena for Personal Appearance and Production of Documents at Trial or Hearing and Declaration (Cal. Court Form SC-107) requesting any of the debtor's documents (bank account records, pay stubs, evidence of other income, etc.) related to assets. Documents must be filed with the court that issued the judgment and served on the debtor using a registered process server.
Collection - Step Two (continued)
The creditor will conduct the examination at the court, usually in a small jury room or hallway. If the debtor does not show up or refuses to answer questions, ask the court for assistance. Additionally, a creditor should consider having a licensed court reporter attend and transcript (type out) the entire examination so there is a clear record.
Collection - Step Three
Once the judgment creditor has knowledge of the judgment debtor's assets, the creditor can request, among other things, the court garnish the debtor wages using a Writ of Execution (Cal. Court Form EJ-130) and Application for Earnings Withholding Order (Cal. Court Form WG-001) which must be filed and then served on the debtor along with the Employer's Return form (Cal. Court Form WG-005) and Employee Instructions form (Cal. Court Form WG-003).
Depending on the facts, a creditor may also levy the debtor's bank account or safe deposit box as well as conduct a "till tap" where, for a fee, a sheriff goes out to the debtor business and collects the cash on hand or even stays at the debtor business for several hours to collect. Additionally, if the debtor has a professional license and the dispute is related to their professional services, a court may be take action against the license in certain circumstances.
Collection - Step Three (continued)
In short, the key is to learn about the location, nature, and value of the debtor's assets and then take the appropriate action against them in court. All the time, however, be mindful of collection expenses as well as trying to reach a peaceful, negotiated settlement with the debtor. If the creditor is unsure about collection tactics or methods, contact an attorney for assistance.
Interest calculated at 10% per year is usually added to the unpaid balance of the judgment as of the date the judgment is entered. It is important to note, however, that interest applies only to the unpaid principal and cannot be charged on the unpaid interest - no compounding.
Contact an Attorney
If the judgment creditor has been unable to locate the judgment debtor or the debtor refuses to pay, the creditor can contact an attorney to assist in locating the debtor and/or assist in collecting. Attorneys may charge an hourly fee for their work or a contingency fee meaning they will take a certain percentage of what is recovered.
Before speaking to an attorney, however, the creditor should organize all documents including a copy of the small court claim, the court order, requests for payment, any contact information for the debtor, collection expenses, dates of partial payment from the debtor, etc. Having these documents well organized will go a long way in assisting the attorney.
An attorney can also assist with the debtor's examination, which is similar to a deposition, and can request the court take certain actions if the debtor fails to appear or refuses to answer.
Renewing the Judgment
A small claims judgment will expire after 10 years and a judgment creditor will no longer be able to collect money after that time. Prior to the expiration of the judgment, however, a creditor may file a request for renewal of the judgment with the court and thereby extend the judgment for another 10 years. To renew a judgment, use an Application for and Renewal of Judgment (Cal. Court Form EJ-190) and the Notice of Renewal of Judgment (Cal. Court Form EJ-195). The Notice of Renewal of Judgment must be filed and personally served on the judgment debtor or served by first-class mail.
Satisfaction of the Judgment
If the judgment debtor makes a full payment to the judgment creditor, the creditor must file an Acknowledgment of Satisfaction of the Judgment (Cal. Court Form SC-290) with the clerk of the court where the judgment was issued. If the creditor does not file this form within 14 days of a written request, the creditor may be required to pay the debtor $50.00 in addition to all damages sustained by the debtor as a result of such failure.
If the creditor has placed any liens on the debtor's property, the liens must also be removed immediately.
A small claims court case and subsequent collection efforts can be a frightening and complicated experience. It is always best to try to reach a negotiated resolution with the other party to avoid the time, stress, and expenses involved in such cases. All resolutions should be confirmed in writing. However, if a claim is unavoidable, seek the assistance of a local attorney. While the attorney cannot represent a claimant in small claims court, they can assist by preparing the claimant. Additionally, an attorney can be helpful in collection efforts. Finally, contact your local court for information regarding court forms, procedures, and policies.
This material is for informational purposes only and does not constitute legal advice or an attorney-client relationship. Please be mindful the law changes over time. You should always consult a licensed attorney based on the specific facts of your situation.