…Or How to Collect the Judgment Once You’ve Got It”
Part II of II
In Part I of this Article, which appeared in the Second Quarter 2002 edition of Georgia Commons, we explored why it sometimes takes so long to obtain a judgment in Georgia. In the collection wars, many times obtaining the judgment is the easy part of the campaign and the biggest battle, actually getting the money into your association’s bank account, lies ahead. As you will see below, attorneys have many weapons in their arsenals for collecting judgments. But the most effective weapon of all is YOU the board and/or the management company. It is your cooperation that is essential in successfully collecting judgments. The same disclaimer applies to this article: The information provided here is intended to be a GUIDE for association members. No two cases are exactly alike, no two courts are alike and no two attorneys will handle the collection of a judgment in exactly the same way.
- Preliminary Matters
A judgment is an order entered by a court awarding money to someone. The judgment gives the judgment creditor the right to take certain action against the debtor to secure payment of the debt which they would otherwise not have. It does not require the debtor to voluntarily pay you.
- Writ of Fieri Facias
Once the judgment is entered, you will want to see that the court issues a Writ of Fieri Facias, more commonly referred to as a fi fa. (Some counties do this automatically under certain circumstances, but not others. Some counties do not issue them at all without a specific request and payment of a fee. Your attorneys will worry about this.) Fi fas are recorded in a book known as the county’s General Execution Docket, or GED. When checking down title on property scheduled to be sold or re-financed, title examiners always examine the GED. Any outstanding fi fa is an encumbrance on any property owned by the debtor in that county, which must be satisfied prior to the sale of the property. Practice tip: If you believe the debtor owns property in other counties, you may record the fi fa in the other counties’ GEDs as well. Fi Fas are valid for seven years but may be renewed. You do not need a fi fa to collect on a judgment, but because the average length of home ownership in the metropolitan Atlanta area is now five years, it is a good idea to have a recorded fi fa. Occasionally you will be pleasantly surprised by a call from a closing attorney asking for a payoff.
- Ask For Your Money
The least expensive collection strategy is to write a letter to the judgment debtor and let him know that judgment has been entered against him and that he should call you to make payment arrangements to prevent formal collection procedures. Once in a blue moon it works and it costs you very little.
- Garnishments
A garnishment is a new civil action which intercepts certain assets of the judgment debtor. There are at least three types of post-judgment garnishments in Georgia: bank accounts; rents, and wages. If your association or its management company regularly makes and retains copies of checks, it is simple to garnish a judgment debtor’s bank. There are bank locator services which can sometimes find where an individual banks. Generally you do not pay for this service unless they locate a bank for you. I do not know how these people provide this service and do not really want to know. Nonetheless, once an account is known, a garnishment is filed in the county in which the bank’s registered agent is located. Once the garnishment papers are served on the bank ALL of the judgment debtor’s assets in that institution are frozen. Your attorney will almost always receive a hysterical telephone call asking to release the garnishment. The judgment debtor will offer to pay the judgment as soon as the garnishment is released. BE STRONG. It is a terrible hardship on someone to know that their checks to the mortgage company, for their utilities and everything else are bouncing all over town. Nonetheless, insist on a payment of certified funds before releasing anything.
If a house or unit is being rented out, you can garnish the rent by naming the lessee as the garnishee in a garnishment action. This would be filed in the county in which the property is located and would be personally served on the renter. You must know the name of the renter, and that is another example of why it is critical for the association to be an active participant in the collection process. This is generally an effective method of collection because the entire monthly rent is subject to the garnishment and your judgment may be satisfied fairly quickly.
Wage, or continuing garnishments are, as you would expect, filed against the judgment debtor with his employer as the garnishee. If you know where the judgment debtor works, your attorney’s job is that much easier. If the association does not know where the judgment debtor works, a creditor may run a credit check which sometimes reveals a current employer. Once the garnishment is served the employer is required to file successive answers and pay twenty five (25%) percent of the disposable earnings for each pay period for up to 179 days.
- Post-Judgment Discovery
If the Association has no information regarding where their judgment debtor works or banks and they still live in the community, you can pursue post-judgment discovery to learn where his assets are. This can be in the form or a series of written questions called interrogatories which are sent to the judgment debtor and which must be answered within thirty (30) days. In addition to questions regarding bank accounts and employment, questions regarding whether the judgment debtor has other assets, like jewelry or paintings or boats are asked. Sometimes the judgment debtor actually responds to these questions and you can file a garnishment. It has been my experience that the debtor does not respond to these questions. You may then file a motion with the court compelling a response within a certain number of days and asking for an award of attorney’s fees for having to have had to file the motion. Once the court has granted that motion, if the judgment debtor does not respond, you can file a motion for contempt, again asking for attorneys fees for having had to go this extra step. Motions for contempt, including a hearing date, must be personally served on the judgment debtor by a sheriff’s deputy. Because the judgment debtor has now disobeyed a court order compelling him to respond to the interrogatories, he may be found to be in contempt of court and can be incarcerated until you or your attorney gets around to going to the county jail and asking them the questions on the interrogatories and getting satisfactory answers.
In addition to, or in lieu of post-judgment interrogatories, you may schedule a post-judgment deposition. This deposition is an opportunity for your attorney to ask the same type of questions discussed above. If the judgment debtor does not appear for the deposition, the same procedure outlined above would be followed.
- Execution and Levy
Execution and levy is generally a collection procedure of last resort. This is a complicated process which is generally not practical for homeowner and condominium associations because the amounts of the judgments generally do not justify the expense involved in actually seizing and selling assets. Nonetheless, a judgment creditor may identify specific assets, such as a grand piano or a car (which has no outstanding liens on it) to a sheriff who will seize the asset and arrange for its sale on the courthouse steps. Because there is generally very little interest in these items, the Association may not, after paying the sheriff’s fees realize the result it anticipated. Because of the complexity of this process it should not be attempted without the assistance of an attorney.
Of course, at any point in the collection process, either before or after the judgment is entered, the debtor may file bankruptcy. This will stop the process immediately and completely and any further collection will be through the bankruptcy court. A discussion of bankruptcy, and its effect on collections, is beyond the scope of this article.
Not much has changed since a Justice on the Georgia Supreme Court in 1878 wrote: “The true law, everywhere and at all times, delighteth in the payment of just debts. Blessed is the man that pays. The practice of paying promptly, and to the last cent, tends to the cultivation of one of the most excellent traits of human character. . . Debt is the source of much unhappiness. The best possible thing to be done with a debt is to pay it.” Robert v. Tift, 69 Ga. 566, 572 (1878).