by William R. Thomas (Summer 2016)
Having successfully been awarded a civil judgment against an individual or an entity in an Illinois state court requires further action to collect the damages awarded. The “judgment creditor” is the individual or entity having received a judgment; and any defendants, individually or entities, against whom a judgment has been entered are “judgment debtors.” When the debtors are not opening their wallets and voluntarily paying the judgment creditor the amount of the judgment, efforts on behalf of the judgment creditor must be exerted to collect.
Before initiating collection, a judgment creditor should understand that it can take a long time to collect a judgment. None of the efforts described herein will generate immediate gratification. But there is some good news: a civil money judgment earns interest at the rate of 9% per annum from the date the judgment is entered until it is satisfied (735 ILCS 5/2-1303). Moreover, the judgment may be collected for an initial period of seven years from the date the judgment is entered, and you have the ability to revive that judgment for subsequent seven year periods, if needed (735 ILCS 5/12-108).
So, if the judgment debtor is not making voluntary payments, what steps do you take to proactively attempt to collect on the judgment? First, how much information do you know about the judgment debtor? In most situations you will have little to no knowledge about the financial situation of the debtor, and without the debtor voluntarily making payments, you must be proactive to identify potential assets, accounts or property that might be subject to attachment in the collection proceeding.
Assuming that you have limited or no financial information on your debtor, the initial step would be to initiate asset finding through a “Citation to Discover Assets.” The citation proceeding is commenced in the court in which the judgment was entered. The citation requires the judgment debtor to whom the citation is directed to appear for examination under oath concerning her/his/its assets. The citation also requires production at the examination of any books, papers or records in the judgment debtor’s possession that contain asset and property information. The citation needs to be personally served and is returnable in court on a date designated by the circuit clerk.
Once you have served the citation, you then appear in court to begin your examination. Assuming that the citation was properly served and the judgment debtor appears, she/he is placed under oath and swears that they will provide accurate information of their income, property and assets. You would then step outside of the courtroom and find a place to be able to review the individual’s paperwork pursuant to the citation and ask questions about any assets. Typically the judge will direct the parties to come back into court to indicate whether the examination on the citation has been completed. If so, the court will terminate the citation. If not completed, the court will continue it to have further examination if paperwork has not been properly provided.
The citation packs a “punch” in that Illinois Supreme Court Rule 277(h) provides for sanctions for any person who fails to obey a citation, subpoena or order or other direction of the court as punishable by contempt of court. Moreover, the citation places a lien against the judgment debtor’s property. Therefore, if the judgment debtor transfers property, such as a car, following service of the citation, the debtor could be subject to punishment from the court.
Now being armed with knowledge as to assets, income or property, there are various tools that can turn those assets into funds that can be applied towards the judgment. A quick and easy tool is through the recording of a Memorandum of Judgment if the judgment debtor (as an individual or an entity) owns real estate in the State of Illinois. Through a properly recorded Memorandum of Judgment, a judgment creditor can place a lien on real estate owned by the judgment debtor. The proper place of recording is the Office of the Recorder of Deeds for the particular county in which the property is located. If the judgment debtor, as owner of this property, ever intends to sell it and/or refinance the property, your Memorandum of Judgment acts as a lien that would need to be addressed before clear title on that property can be passed to a third-party.
If the information obtained from the judgment debtor includes bank account information and/or wages, the judgment creditor has the ability to pursue a garnishment proceeding to go after non-wage assets or a wage deduction to pursue wages. A garnishment of non-wages is governed by 735 ILCS 5/12-701, and most circuit clerk’s have forms available to initiate the garnishment process. The judgment creditor must complete, and file with the clerk, an “Affidavit for Non-Wage Garnishment,” which identifies a “Garnishee” as an individual or entity that is indebted to the judgment debtor or has in its possession, custody or control property belonging to the judgment debtor. The non-wage garnishment proceeding also requires a “Notice of Non-Wage Garnishment” be sent to the Garnishee, along with written interrogatories to be answered by the Garnishee with respect to the indebtedness or other property owed to or owned by the judgment debtor.
Most commonly, judgment creditors will serve non-wage garnishments on a bank to recover the funds in a bank account. Once served, the bank will answer the written interrogatories advising as to what assets are held. Once the answers are brought to the judge’s attention, the court has the power, pursuant to 735 ILCS 5/12-717, to enter a turnover order for the delivery of the property held to the judgment creditor to be applied to the judgment.
Another weapon for judgment collection is the wage garnishment, commonly known as a wage deduction (735 ILCS 5/12-801). This process also begins by the submission of an “Affidavit for Wage Deduction Order” to the circuit clerk in the county where the judgment was entered. The Affidavit provides basic information as to the employer of the judgment debtor and, once served, requires interrogatories to be answered by the employer. The interrogatories include a calculation for the employer to complete to determine the amount of withholding possible from the judgment debtor’s wages. A summons is served on the employer that requires answers to the interrogatories to be returned to the court. Once answered, the court will enter an order directing the employer to deduct certain statutorily-acceptable amounts of money from a judgment debtor’s wages to be applied toward the judgment.
As previously indicated, deciding to engage in litigation to collect on a debt requires a two-part process of first obtaining the judgment, and secondly, collecting on that judgment. In many scenarios, both parts are timely and costly, but in situations where you won the “battle” to obtain the judgment, you have not yet won the “war.” In many instances, the war is only won by using the various tools at your disposal to seek information and pursue the turnover of assets through the tools of a Memorandum of Judgment, garnishment and a wage deduction. Most judgment creditors who were serious enough to pursue the action in the first place will recognize the need to pursue the collection of their judgment further, regardless of the amount of time necessary.