Webb & Webb P.C. | Caring. Committed. Professionals.
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Collecting Judgments

While winning at trial is indeed something to be celebrated, it is rarely the end of the story. As we have encountered many sordid tales of the difficulties and frustrations encountered in collecting on judgments, if you are given the choice of entering into litigation, you should consider not only that you may lose at trial but that you may fail to collect even if you win at trial.

There are many legal means available to collect on a judgment if the losing party does not voluntarily pay up. The first step in a collection initiative is likely to be instigating some post-judgment discovery to find out what the debtor owns. This can obviously involve some formal discovery directed at the debtor, but it can also include scouring publicly available information. You an also direct discovery at third parties or hire a private investigator to do some of the footwork for you.

Once you have an idea of the debtor’s assets it’s time to select a means for pursuing those assets. Judgment liens are a relatively inexpensive tool for casting a net over assets. Since a judgment itself does not create a lien it is necessary to file an abstract of judgment in each county in which the debtor is believed to have real property. This will put others on notice (e.g. potential purchasers) of your clam and fix a lien on the debtor’s non-exempt real property in that county, which lien will generally persist for ten years.

Since having a lien alone does not put money in your pocket it may be necessary to utilize something that does. A writ of execution may be issued, which directs the sheriff or constable to take the debtor’s non-exempt property, sell it, and deliver the proceeds to you. If possible, provide the sheriff or constable with detailed information about the debtor’s property so they know what they are looking for.

While a writ of execution can be used to seize property in the debtor’s possession, a writ of garnishment is used to seize property of the debtor in the hands of a third party, usually a financial institution (e.g. bank). A sheriff or constable must serve the writ upon the third party (i.e. the garnishee) holding the debtor’s property. The garnishee may not release any property to the debtor or pay any debt to the debtor after the writ of garnishment has been served. The garnishee must answer the writ by indicating what property, if any, that it has in its possession that belongs to the debtor. Any of the debtor’s money, up to the amount of the judgment against the debtor, in the garnishee’s possession is rendered as a judgment against the garnishee.

Lastly, Texas has a turnover statute under which a court can order a debtor to surrender non-exempt assets to the registry of the court, a sheriff or constable, or a receiver. As writs of garnishment and execution allow seizure of most assets, the turnover statute is customarily used to get at assets that may otherwise be unreachable (e.g. uncertificated securities, accounts receivable, cash on hand, and property located outside the state).

Whoever first said that “winning isn’t everything” was correct. There’s more to it than winning or losing at trial. Be sure to consider the time and money that may be involved in collecting on your judgment when you evaluate enforcing a legal claim.