How Attorneys Collect Court Judgments Across State Lines
After fighting for years to win a judgment, many attorneys find themselves facing a second — and equally difficult — fight to collect the judgment. That difficulty increases when the judgment issues in one state, say California, but the defendant’s major assets reside in another state, such as Illinois. Here are the basic steps the attorney, or the plaintiff in the original lawsuit, must take to collect the judgment:
- Domesticate the judgment — The U.S. Constitution requires states to give “full faith and credit” to the laws and court judgments of other states. For this purpose, most states have enacted some form of the Uniform Enforcement of Foreign Judgments Act. As long as the debtor has assets in the new state, a court in the new state can exercise jurisdiction. But, if the first suit was tried in federal court, the plaintiff need not “domesticate” the judgment; he merely has to “register” it with the federal court in the new state.
- Record the judgment — Recording the judgment with the Recorder of Deeds for the county where the defendant’s assets reside accomplishes two things: it notifies the defendant’s other creditors of the judgment, and encumbers the defendant’s real estate – which reserves a place in line for the plaintiff to be repaid. This usually pressures the defendant to pay the judgment, as lenders may hesitate to do business with a defendant until the amounts owed by the judgment are paid.
- File an action to execute on non-real estate assets — An execution freezes the defendant’s non-real estate assets (such as bank accounts), and prevents a defendant business from meeting payroll and other obligations. A properly filed execution may create sufficient leverage to force the defendant to enter a payment plan for the amount owed on the judgment.
Enforcing judgments across state lines takes extra steps, but should not present an insurmountable obstacle. However, execution laws differ widely from state to state, and we always recommend finding a qualified local attorney to handle collections in his/her jurisdiction. Teaming with a qualified local collection attorney greatly facilitates the process.