I Just Obtained a Judgment! Now, How Do I Get My Money?

By Andrew M. Creal

One of the most under-discussed elements of any law practice is the matter of collection. Attorneys and clients spend countless time and money prosecuting or defending a lawsuit, as the case may be. We draft and respond to complaints, engage in written discovery, depositions, motion practice, and sometimes, a trial. All of this to get to a final judgment—to say nothing of the appellate process. 

The process of collecting a hard-earned judgment brings to mind a famous provocation by a former United States president. In response to the 1832 Supreme Court decision in Worcester v. Georgia 31 US (6 Pet.) 515 (1832), President Andrew Jackson, who disagreed with the Supreme Court’s ruling, famously quipped to the Court, “You’ve made your ruling, now let him enforce it.” A similar sentiment is often felt by successful plaintiffs who earn a judgment against a defendant. It is as if those defendants, and now judgment debtors, point to their victorious counterparts and state with a mischievous grin, “You’ve won your judgment, Plaintiff, now see if you can collect it.” 

In Michigan, there are many tools at the disposal of successful plaintiffs to collect on their judgments. The various options for post-judgment proceedings depend on a number of factors, which include, but are not limited to: the collectability of the judgment debtor, the client’s budget and business incentives to pursue collection in the first place, the judgment debtor’s flight risk, and the amount of the judgment. Each factor must be analyzed when determining the best course of action for your post judgment enforcement. This article will set forth several of the most commonly deployed mechanisms to pursue post-judgment remedies. 

The foregoing is intended solely to focus on post-judgment remedies in the State of Michigan, and to provide a broad-form overview. Any specific inquiries should be addressed with an attorney on a case-by-case basis. 

Writ for Garnishment (Periodic or Non-Periodic)

Statutory Authority: MCL 600.4011 et seq., MCR 3.101

If a judgment creditor has information as to where a judgment debtor works, banks, or otherwise may hold monies that can be used towards satisfying a judgment, it is best to target garnishments to those institutions to increase the chance of success that one will “hit” on a garnishment. A periodic garnishment is particularly useful in garnishing wages from a judgment debtor’s employer if the debtor is an individual and the judgment debtor remains employed with the known employer. 

Non-periodic garnishments are more of a scattered-shot approach to collecting from a judgment debtor. For example, when a client obtains a judgment but has no idea where the judgment debtor banks, one option is to send multiple non-periodic garnishments to the largest banks in the area near a judgment debtor’s place of business and hope to find an institution that holds funds for the judgment debtor. This single issuance filing is relatively low cost (typically $15 per garnishment) but requires funds to be on deposit at the garnished institution for those funds to be reachable. For judgments of smaller amounts, for example, in the $10,000 to $25,000 range, the garnishment option can be an effective means of collection without incurring substantial time and fees—but requires a bit of luck!

Notice of Judgment Lien

Statutory Authority: MCL 600.2805

A judgment creditor may seek issuance of a notice of judgment lien with the court that issued the judgment. Following certification by the court, the judgment lien is recorded in the land title records of the local register of deeds. The judgment lien remains effective for five years, provided the judgment is not satisfied within that time period. Judgment liens may be renewed once, for a period of an additional five years, so long as renewal is sought in a timely manner as provided by statute. Judgment liens are useful as they appear on title work. Title work is typically ordered and reviewed in advance of a potential conveyance, sale, or refinance of real property.

It is important to note that because judgment liens attach to property, they should be filed in the county or counties where a judgment debtor owns or is suspected of owning real property. There is no prohibition in Michigan on filing a judgment lien in a county where a creditor does not have actual knowledge of a judgment debtor’s real estate interest in said county. 

Creditor’s Examination

Statutory Authority: MCL 600.6104, 600.1455, 600.1701, 600.6110, 600.6119, MCR 2.506

A creditor’s examination, sometimes referred to as a judgment debtor examination, is a deposition by which a judgment creditor has the right to require the judgment debtor to produce individual or corporate books and records, bank statements, asset statements, and other information that may be useful in satisfying a judgment. A judgment creditor’s attorney then gets to conduct an examination and ask questions to the judgment debtor while the judgment debtor is under oath. The purpose is to identify which assets may be reachable by the judgment creditor to satisfy its judgment. 

MCL 600.6104 is one of the more powerful statutes for creditors in post-judgment proceedings. It provides:

After judgment for money has been rendered in an action in any court of this state, the judge may, on motion in that action or in a subsequent proceeding:

1. Compel a discovery of any property or things in action belonging to a judgment debtor, and of any property, money, or things in action due to him, or held in trust for him;
2. Prevent the transfer of any property, money, or things in action, or the payment or delivery thereof to the judgment debtor;
3. Order the satisfaction of the judgment out of property, money, or other things in action, liquidated or unliquidated, not exempt from execution;
4. Appoint a receiver of any property the judgment debtor has or may thereafter acquire; and
5. Make any order as within his discretion seems appropriate in regard to carrying out the full intent and purpose of these provisions to subject any nonexempt assets of any judgment debtor to the satisfaction of any judgment against the judgment debtor.

The court may permit the proceedings under this chapter to be taken although execution may not issue and other proceedings may not be taken for the enforcement of the judgment. It is not necessary that execution be returned unsatisfied before proceedings under this chapter are commenced.

In advance of a creditor’s examination, it is best practice to file a motion before the presiding judge seeking an order that the judgment debtor appears for a creditor’s examination, produce books and records in advance of the examination, and issue a restraint on the transfer of property unless or until the judgment is satisfied. MCL 600.6116. The purpose of the request to restrain a judgment debtor from transferring property is to preserve assets that can be used to satisfy a judgment and prevent fraudulent transfers made following a judgment to avoid paying creditors. Obtaining an order for a creditor’s examination is a powerful leverage tool to bring judgment debtors to the negotiation table in trying to reach a binding resolution. Unsurprisingly, judgment debtors are extremely reluctant to have their finances examined in-depth and under oath by counsel. 

Order to Seize Property

Statutory Authority: MCL 600.2920, MCL 600.6002, MCR 3.106

By far the most aggressive approach to collection, the court can order, upon a motion before the court, that a court officer to seize and sell non-exempt personal property of a judgment debtor to satisfy a judgment. Of course, properly perfected liens of record can take priority over an Order to Seize, and that must be investigated prior to the enforcement of the Order to Seize. Personal property can include motor vehicles, art, clothing, or furniture, among other things. If a judgment debtor’s personal property is insufficient to satisfy the judgment, the court officer may seize and sell any real property of a judgment debtor that is not exempt in order to satisfy a judgment. Again, prior perfected liens, mortgages and encumbrances must be considered in evaluating this remedy.  Importantly, a judgment issued in Michigan¹ against one spouse is not grounds to seize and sell property owned by the entireties of a married couple. The most common example is a marital home. If a creditor has a judgment against the husband or the husband’s business, and the husband owns his home in the entireties with his wife, typically, their marital home cannot be used to satisfy a judgment in post-judgment proceedings. 

Exemptions

The following are general examples of some types of assets that are typically exempt from garnishment or seizure by a judgment creditor. 

• Individual Retirement Account (IRA) – MCL 600.6023(1)(k)
• Social Security Benefits – 42 U.S.C. § 407
• Worker’s Compensation Benefits – MCL 418.821
• Unemployment Benefits – MCL 421.30
• Property Owned by Entireties (e.g., a marital home). 

This is not a complete nor absolute list of exemptions. A judgment creditor should always consult a lawyer before proceeding to collect on a judgment. 

We at Maddin Hauser are experienced at collecting judgments obtained by our clients and we are committed to exploring all avenues of collection in the most economical and efficient way possible.

1. This analysis applies to Michigan law. Entireties properties under other state law must be evaluated on a case-by-case basis. ↩︎