Why a Judgment in Your Favor is Not as Great as You Think
If you’re awarded a judgment, don’t celebrate just yet – it may not be the windfall you think it is.
A judgment is a decision of the court that comes about after a lawsuit is settled or threatened. For example, let’s say Tony is driving and runs into Victoria’s house, causing a large amount of damage. She may end up with a judgment against Tony in the amount of $100,000 for the damage sustained to her property.
That’s great! $100,000 is a lot of money, right?
Yes, it is – if she can ever collect it.
A Judgment is Not a Guarantee of Payment
Unlike a settlement, which is money in the hand, a judgment is more like a mortgage, as it attaches to any real property of the person against whom the judgment is placed – in this case, Tony. Sometimes that money can be collected immediately, sometimes at a later date, and sometimes not at all.
The reason that money often can’t be collected is because of exemptions established in the law. If the judgment is against an individual (not a business), the law protects that individual’s property up to certain amounts, meaning the judgment can’t be taken from those assets up to those limits.
For example, the exemption amount for the primary residence for an unmarried person is $59,100, or $118,200 if married. If Tony is married and owns a $200,000 house, and has a $100,000 mortgage, Victoria can’t expect to collect her $100,000 even though it appears as though he has twice as much money as she’s trying to collect. It can’t be collected on because it’s protected.
Other assets are protected up to certain dollar limits. For the year 2016, these amounts are:
- $59,100 in equity in debtor’s residence/$118,200 married
- $5,900 in one motor vehicle
- $4,725 in household furnishings, clothes, animals, crops, musical instruments
- $1,125 in jewelry
- $5,900 in cash and other liquid assets
- $1,775 in professional tools of the trade
- $5,900 in value of an unused exemption from above
- Any unmatured life insurance
- Public benefits like Disability, Veterans Benefits, Alimony, and Child Support
- Rights to crime victim reparation laws, personal injury claims, wrongful death claims, etc.
- 401Ks and other retirement plans
(Note that this list is not exhaustive.)
The dollar amounts for exemptions are updated in even-numbered years in South Carolina.
What Does it Really Mean to Have a Judgment in Your Favor?
Whether your judgment ends up being worth more than the paper it’s written on depends on the person you’re collecting against. Having a judgment in your favor means that the person it’s against does owe you that money, whether they end up having to pay it or not.
Also, judgments are mobile. A judgment is filed in the County where the incident or damage occurred, but the judgment can follow the debtor across county and state lines. A judgment can even follow someone to other countries, depending on the treatises the U.S. has with other countries. In short, if there’s a judgment against you, don’t think you can outrun it by moving to a different city, state, or country.
A judgment lasts for 10 years in South Carolina (each state has its own laws regarding judgments), so if in that time Tony sells or refinances his house, Victoria can collect the money she’s owed. Unfortunately, sometimes there’s never an occasion to collect. Maybe Tony never sells his house, or maybe his house is in his wife’s name only.
If the person you have a judgment against is very wealthy, and/or has a second residence, you can likely collect relatively easily. If not, you may have to work a little harder to get your money.
How Do You Collect a Judgment You Have Against Someone Else?
To “execute against the judgment,” you can have the sheriff try to collect. In the majority of these instances, the debtors say the same thing: “I have no money.” The sheriff returns with a nulla bona execution, which means “no good.”
After this, the next step you can take is to put the debtor on the stand and with the judge go through the debtor’s tax returns and other financial documents to see if they really do have the money to pay.
Need More Information on Judgments?
If you’re trying to collect on a judgment, or you’ve got a judgment against you and you want to know what your options are, contact Gem McDowell at Gem McDowell Law Group. You can reach Gem at their Mount Pleasant law office by calling (843) 284-1021 or by filling out this contact form online. Get in touch and schedule an appointment today.