Blood from a Stone? Making Sure Your Judgment Is Worth More Than the Paper It Is Printed On

The decisions to commence and remain in a lawsuit trigger a number of legal and practical considerations including: the merits of your claims; the potential counterclaims that may eat into your recovery; and the unintended consequences that a lawsuit could have on a business relationship. These are only a few factors that a potential plaintiff must consider. This article focuses on another consideration: how to increase the chances that you will actually get paid if you succeed in a lawsuit. Although the remedies and strategies described below should be executed by experienced attorneys, a client familiar with this information may be able to save costs and achieve better results by working closely with his or her counsel as a team. To that end, the procedural minutia has been omitted from this article, which is intended to be a broad overview and cannot substitute for guidance from an experienced attorney.

Winning the Battle but Losing the War: A Frustrating Scenario

Consider this scenario: You’ve spent countless hours and substantial funds on attorneys’ fees pursuing a claim as a plaintiff. The process has been grueling and a distraction to you personally and to your business. Finally, through a lot of hard work from you and your counsel, you prevail in your lawsuit and you obtain a judgment in your favor.

Is that the end? Maybe not. Yes, the defendant, now a judgment debtor, may admit his or her defeat and pay you in full. However, there is also a good chance that the debtor will offer to pay you a fraction of the judgment or simply refuse to pay anything. If you are unable to resolve this impasse, you will need to decide when and how to seek satisfaction through one or more post-judgment remedies noted below.

Some Common Challenges to Satisfying a Judgment

One of the most common challenges in litigation is determining collectability and actually collecting on a judgment, also known as satisfying a judgment. A judgment debtor, whether an individual or a company, may be insolvent or have limited assets by the time a judgment enters. On the other side of the coin, a solvent debtor has a number of mechanisms at their disposal to frustrate a creditor’s efforts to collect on a judgment. The debtor may maintain assets in the name of a spouse, create irrevocable trusts with spendthrift provisions, or their wealth may be accrued in retirement accounts, that may not be reached by a creditor, just to name a few. Other assets—such as real estate protected by a homestead declaration and/or owned by a married couple as tenants by the entirety—may not be readily available to satisfy your judgment. In short, there are many traps for the unwary judgment creditor.

The following discussion provides some tips and considerations to increase your chances of actually getting paid when you prevail in a lawsuit.

Consider Collectability Early and Often

When you sue a successful large corporation, collectability may not be on the top of your list for strategic concerns. However, if you are considering bringing a lawsuit against an individual or a smaller business, an asset search early on may be a good idea to help you and your counsel determine whether collectability will be an issue by identifying what assets may ultimately be available to satisfy an eventual judgment. It also provides insight into whether you should pursue prejudgment security remedies to satisfy a judgment.

Prejudgment security remedies allow a creditor to attach a debtor’s assets such as real estate or even cash in bank accounts. An attachment is essentially a security interest or lien that will preserve your position against other creditors while limiting, by decreasing the marketability of the asset or in some cases, restraining altogether, the debtor’s ability to transfer the asset. Depending on the circumstances, an attachment could also be helpful if the debtor faces substantial liabilities and declares bankruptcy. In any event, an attachment early in the case could pay off in the long run.

As an example, you should notify your counsel if you know that the debtor maintains an account at a particular bank. Your counsel may be able to use this information to pursue a trustee process attachment at the commencement of the lawsuit and effectively freeze the debtor’s account up to the amount of your eventual judgment. When successful, a trustee attachment can be a very powerful tool for a creditor. Not only does it secure cash to satisfy an eventual judgment, it also provides additional leverage that may open the door for a settlement early on in the case. Although there are a number of strategic and procedural considerations with this and other attachments, the key here is to share any information about the debtor’s bank accounts or other assets with your counsel so he or she can effectively advise you on whether a prejudgment attachment may be available.

So how do you locate assets to attach? You should start by checking your files for cancelled checks that will identify the banks where the debtor maintains accounts. Law firms often subscribe to databases that are helpful in locating debtors and their assets. Publicly available information, such as records in the registries of deeds, are invaluable for locating real estate owned by the debtor and to determine whether the debtor’s real estate is already encumbered by a mortgage or other encumbrance. Other sources, such as social media websites, may be able to provide clues as to the debtor’s financial health and whether or not there will be assets available to satisfy a judgment.

Consider Collectability Whenever Negotiating a Potential Settlement

A debtor or their attorney will often “cry poor” and push you to settle for a fraction of what you are owed by claiming that any judgment will be worthless because of a lack of assets. While this may simply be a negotiation tactic, collectability should be considered whenever a settlement offer is on the table. Any claim that the debtor is “judgment proof” should be tested against what you have learned in an asset search. For example, if the debtor owns a number of valuable properties free of any mortgages or other encumbrances, you may be less inclined to take a deep discount based on collectability if you’re able to obtain attachments on the properties. However, if there are minimal assets available and/or the debtor is nearing insolvency, collectability should be a significant factor when considering a settlement.

Finally, as noted below, post-judgment remedies such as sheriff’s sales are often time-consuming, antiquated, and complex so one should be weary of writing off collectability as a settlement consideration.

Once You Have a Judgment, Stay Aggressive and Creative with Post-Judgment Remedies

If a debtor refuses to pay a judgment, creditors are often able to take discovery to formally investigate a debtor’s ability to pay. These tactics are beyond the scope of this article but can be useful, especially when a debtor has kept his or her assets out of sight.

Once you have a judgment and have identified assets to potentially satisfy the judgment, you and your attorney may be able to pursue a number of post-judgment remedies to finally get paid. These remedies will vary by state and circumstance and include court-ordered periodic payments, wage garnishment, sheriff’s sales of real property and personal property, executing on a trustee process attachment, and domesticating a judgment in another state where a debtor has additional assets. Each of these remedies has practical and legal limitations so they must be carefully considered by counsel and client alike to avoid throwing good money after bad. Only two remedies will be addressed in detail here: a sheriff’s sale of real estate and domesticating a judgment.

While a sheriff’s sale of real estate may be an effective tool to satisfy a judgment, it is also time-consuming and filled with traps for the unwary. One must first determine whether there is sufficient equity in the property to ensure that a sheriff’s sale is a worthwhile pursuit. As for procedure, the authors will (mercifully) spare the reader from describing the elaborate requirements for a sheriff’s sale in detail but are available to discuss in greater detail if anyone is particularly interested in archaic statutes.

Highlights of the sheriff’s sale procedure include elaborate notice requirements for the judgment debtor as well as for parties who may have an interest in the subject property (e.g., creditors with a lien on the property). The creditor must also publish specific notices of the sale in local newspapers and properly post notice of the sale in public. These requirements are complex and they must be strictly followed by the creditor to achieve the end result: a public auction of the property, the proceeds of which will be used to satisfy the judgment. This process typically takes several months after a judgment is entered and can be costly. Finally, even after the sheriff’s sale is completed, the judgment debtor has a one-year right of redemption although he or she must pay the entire judgment, plus interest and costs to redeem the property. Despite the drawbacks and challenges of a sheriff’s sale, it may be an effective tool to gain leverage over a judgment debtor for settlement, especially if the equity in the subject property exceeds the underlying judgment.

If you discover the judgment debtor has assets in another jurisdiction, yet another option is to domesticate your judgment, which allows you to enforce the judgment in another state. Perhaps the last thing a creditor desires after going through a lawsuit—regardless of how long or how expensive—is to file a new one. However, if you know that your debtor has property (newly acquired or otherwise) in another state, you should consider domesticating the judgment where the property is located. Doing so is typically a straightforward process and allows you to use the available post-judgment remedies to collect on your judgment in other jurisdictions. These are just some of the options available for targeting the assets of a recalcitrant debtor.

Be Persistent Without Throwing Good Money After Bad

Creditors should be patient but persistent if they are unable to immediately collect on their judgment because they are typically valid for a number of years. In Massachusetts, for example, a judgment is enforceable for twenty years. Another silver lining is that you may be entitled to post-judgment interest that could substantially increase your recovery if you’re able to collect at a later date. However, because the debtor may declare bankruptcy and for other strategic reasons, a creditor should not simply “sit” on a judgment simply to gain a higher recovery.

Using the techniques referenced above, you can periodically check on the judgment debtor to determine if his or her financial situation has improved and evaluate whether it may be a good time to enforce your judgment. In addition to databases and post-judgment discovery, there are less expensive ways to assess the debtor’s financial situation.

What if your debtor is posting photos of his new yacht or Lamborghini on Facebook, Twitter, or Instagram? You may see that your debtor or their spouse has a new lucrative job on LinkedIn. If the judgment debtor is a business, there may be clues of its success on its website, its social media pages, or in articles announcing its lucrative transactions. Google Alerts may also help you keep tabs on the debtor. Finally, be sure to review the registries of deeds periodically to determine whether the debtor has acquired any real property that could be used to satisfy your judgment. Any evidence that the debtor’s financial situation has improved may be worth further investigation by you and your counsel.

These are also all valuable sources of information at any stage of the process although it may not be economical to ask your attorney to regularly check these resources. A judgment debtor can use these resources and save costs to determine whether there should be an additional inquiry with their counsel about potential new assets to satisfy a judgment.

Closing Thoughts

There are a number of reasons why a defendant in a lawsuit may not become a recalcitrant judgment debtor including social stigma, concern for their business’ reputation, and the damage that judgments may inflict on a party’s credit. Still, the risk of a recalcitrant judgment debtor remains in many cases. While there is no guarantee that a successful lawsuit will result in actual payment, customizing a strategy with your counsel will improve your chances of getting you paid, thereby maximizing your return on investment in litigation.


This article is intended to serve as a summary of the issues outlined herein. While it may include some general guidance, it is not intended as, nor is it a substitute for, legal advice. Your receipt of Good Company or any of its individual articles does not create an attorney-client relationship between you and Sheehan Phinney Bass & Green or the Sheehan Phinney Capitol Group. The opinions expressed in Good Company are those of the authors of the specific articles.