Enforcement of Judgments

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After all of the hard work before and during the trial, a party finally receives a judgment in its favor. Now what? Does the party go home, hoping that the liable party will simply send a check in the amount of the awarded damages? What happens if the monetary damages are millions of dollars and the defendant only has $50,000 in assets? Should the successful party simply expect the liable party to turn over its entire bank account? Is it automatically understood that the liable party will pay the successful party monthly payments until its debt is satisfied?

These are the questions for which law has developed overseeing the enforcement of judgments. While some liable parties will pay their debts immediately, others are less inclined to turn over their property to the other party. Some parties need more incentive to satisfy their obligations. In some cases, the successful party may ask the court to intervene and take further action so that the successful party receives the money that it is owed. This subchapter addresses the technique a party can use to enforce a judgment.

After a plaintiff receives a judgment against a defendant, the plaintiff may issue something called an “execution of judgment” upon the defendant’s property. The execution is issued by the plaintiff to the sheriff, who will, under the execution, impose a levy the defendant’s property.

So what does this mean in plain English? Upon recovering a judgment against a defendant, the plaintiff may send an official document to the local sheriff who has jurisdiction over the area in which the defendant’s property is located, informing the sheriff that he or she is to seize the defendant's designated property. Once the sheriff seizes the designated property, he or she may either turn it over to the plaintiff, or the property may be sold at a public sale so that the proceeds of such sale may be turned over to the plaintiff. The property may be real or personal property.

The sheriff may not use the execution to levy against all of the debtor’s property, and an execution that indicates that all of the debtor’s property is to be levied is improper. The execution may only pertain to enough of the debtor’s property so that the debt can be satisfied, along with interest and costs.

If the execution refers to more property than will satisfy the debt, interest and costs, the sheriff (or execution officer) should make a division of the property and only sell enough to cover the designated amount. For example:

Steve secures a judgment against Adam and issues an execution to the Sheriff of Monroe County. The execution notifies the Sheriff that he is to levy upon Adam’s two cars, to be sold at public sale, so that Steve can obtain his $5,000 judgment (including interest and costs). One car has a fair market value of $10,000, and the other car has a fair market value of $7,000. The house and two cars are located in Monroe County. In this scenario, the Sheriff should levy upon the second car (worth $7,000), sell it in a public sale, and turn $5,000 of the proceeds over to Steve. If the Sheriff fears that the sale of the second car will not generate enough proceeds to cover the $5,000 debt, the Sheriff should levy upon the first car (worth $10,000) as well. If the sale of the $7,000 car generates enough proceeds to satisfy the judgment, the second car should not be sold.

It should be noted that

“[f]orced sales of property usually do not bring full value.” -Griggs v. Miller, 374 S.W.2d 119 (Mo. 1963).

Thus, levying property to sell it for the purpose of recovering a judgment is inefficient. It should only be used if the debtor will not or cannot pay the judgment from his or her other funds.

Not all property, however, is necessarily subject to execution. Many jurisdictions have specific exemptions to cover certain property that is not subject to execution. One popular exemption from execution is an income exemption. For example, federal law provides for an income exemption that limits the garnishment of wages to a maximum of, the lesser of:

• 25% of the debtor's total income; and
• the amount of income generated by the defendant over and above the federal minimum wage times 30.
  

See 15 U.S.C. §§ 1673-1674.

Some states provide their own income exemptions. For example, New York provides that 90% of the debtor’s income from wages is exempt from execution. (Income from other sources, like dividends or capital gains, however, may not be exempt). The reason for exemption statutes is to

“relieve the person exempted from the pressure or claims hostile to his dependents’ essential needs as well as his own personal ones, [so as] not to relieve him of his familial obligations and destroy what may be the family’s last and only security, short of public relief.” -Schlaefer v. Schlaefer, 112 F.2d 177, 185 (D.C. Cir. 1940).

But what happens if a judgment creditor does not know what property the judgment debtor has? Without knowing what property to which the execution should correspond, the judgment creditor may encounter difficulties in execution. It is for this very reason that jurisdictions have developed broad discovery rules so that a judgment creditor may examine the judgment debtor's finances to determine the judgment debtor’s assets.

If the judgment or order awards the plaintiff possession of real property, through execution, the sheriff can forcibly evict the judgment debtor from the real property.

If a judgment debtor refuses to obey a judgment or order, he or she may be punished for contempt of the court. See New York Civil Practice Law and Rules § 5104.

In most jurisdictions, one’s home is exempt from execution to satisfy a money judgment. In such a case, the judgment creditor will often put a lien on the judgment debtor’s real property. Although the debtor cannot be evicted from the house under this exemption, a lien operates to give the judgment creditor a legal interest in the real property. This legal interest lasts only until the judgment is satisfied. If the real property is ever sold while the lien is still operable, the judgment creditor will be entitled to a certain amount of the proceeds so as to satisfy the judgment, interest and costs. After satisfaction of the judgment, however, the judgment creditor’s   interest in the property is extinguished.

A judgment creditor may also, through appropriate legal means, stop the judgment debtor from disposing of the judgment debtor’s assets, so that, eventually, the judgment creditor may reach them. This is commonly known as a “restraint” on the judgment debtor’s assets. A restraining notice may be served on the judgment debtor himself or herself, or on a third party. For example, a restraining notice may be served on a bank, which will have the effect of freezing the debtor’s bank accounts in that bank.

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