Last month, our office released Part One of our two-part blog on collection actions. We had examined the steps involved in filing the suit for collection and what to expect on the day of Court. Our article ended with the entry of a Judgment against the Defendant, along with the obligatory cliffhanger of how the Plaintiff can finally get paid. Today, in Part two of our blog, we will discuss methods used in collecting the Judgment.
Since both our practice and this article are primarily focused on collections against tenants, we need to point out that a rather large percentage of collection actions against Defendants result in Defaults This means that the Defendant either failed to show up to Court, or failed to submit an answer to the Complaint. After the Complaint is filed, the Defendant must submit an Answer to the Court within 35 days (Note: This rule does not apply to actions in Small Claims Court). If no Answer is submitted or, even if an Answer is submitted and the Defendant fails to appear in Court, a Default will be entered.
After the entry of a Default, or after the Defendant has breached a Settlement Agreement, the Plaintiff may apply to the Court for a Judgment. The Court, however, will not simply enter a Judgment based solely on the Complaint. The Plaintiff must submit proofs of the claim to the Court. In cases where the claim is based upon non-payment of rent, the proofs may be as simple as providing the Court with a Lease and a Ledger, along with an Certification by the client that the amounts due under the lease and ledger are truthful and accurate.
If, on the other hand, the claim is based upon physical damages to the property, the Court may conduct a Proof Hearing to determine the actual amount of damages to which the Plaintiff is entitled. A Proof Hearing is similar to a trial. The Plaintiff will testify to the claim, and in most cases, the Judge will ask some additional questions of the Plaintiff to clarify the testimony. The Defendant, however, does not present a case. In the rare instance the defaulting Defendant actually shows up to the proof hearing, he or she may be entitled to cross-examine the Plaintiff, but ideally, the Defendant should not be allowed to testify. Finally, the Plaintiff will need to submit an Affidavit of Non-Military Service, setting forth that the Defendant is not an active member of the United States Military. Affidavits of non-military service can be based either on personal knowledge of the Plaintiff, or preferably, based upon a certification from the Defense Manpower Data Center, which is available online. Finally, we note that, in some cases, the Defendant will apply to set aside the Default and have the matter relisted for trial. We will discuss those circumstances in a later article.
Upon entry of a Judgment, the Plaintiff will need to decide how to get paid. The Judgment can generally paid by one of three methods. The first method we will examine is a Wage Execution. The Wage Execution will generally allow the Plaintiff to collect up to 10% of the Defendant's Wages until the Judgment is satisfied. For more specific rules as to how the Wage Execution is calculated please see the enclosed link to Appendix XI-J of the Court Rules. In the instance in which the Defendant already has an active wage garnishment, the Court must wait until that amount is satisfied before moving onto the next execution. Therefore, Plaintiffs may have to wait their turn in order to get paid.
The second method, commonly employed is a levy against the Defendant's bank account or assets. This method is seldom effective for collections against residential tenants, who rarely carry any significant balance in their bank accounts. Typically, a landlord seeking to execute against a bank account will be successful in obtaining a nominal sum of money that the Defendant has in his or her account, and is then forced to resort to another method of collection afterward.
Finally, if all else fails, the Plaintiff can have the Judgment against the Defendant "Docketing the Judgment in Trenton. The effect of the Docketing of the Judgment is that the Judgment will become a statewide lien that may be collectable in the event that the Defendant attempts to purchase or sell real estate in New Jersey. The Judgment will remain active for 20 years. Thereafter the Plaintiff can apply to have it renewed if it has not been satisfied by then.