Individuals who are owed a personal debt may be tempted to take matters into their own hands. Rather than filing a civil claim against the debtor, presenting evidence to win their claim, and taking all of the necessary steps to ensure that the court enforces the judgment, individuals may decide to simply take someone else’s property and hold it, forcing the debtor to pay them.
Unfortunately, while this may seem like a good idea, in some cases, this could be considered an illegal action, and rather than getting paid what you are owed, you may find yourself charged with a crime or facing high fines and penalties.
Steps to Recover Personal Debt
All states have legal steps that must be followed to legally enforce debt collection. Simply taking property, whether the court has issued a judgment or not, is never a good idea. For example, you cannot simply decide to go to your neighbor’s house and take their grill because they owe you $500. Let’s review the most common steps for personal debt collection and enforcement:
1. Make a demand for the debt.
If someone owes you a personal debt, the first step is to talk to them. Surprisingly, many disputes can be resolved with a conversation. Make sure that the debtor understands the terms of the written or verbal contract, and specifically ask for what you are owed. Let them know the date when you expect payment and the amount owed. Also, be clear on the steps that you will take if the debt is not paid.
Another option is to send a formal demand letter demanding payment. A demand letter should contain information about the debt, including the amount owed and the required date of payment. The letter should also detail your plan to take legal action if you are not paid.
2. Follow through with collection actions.
Collecting small personal debts is most easily done by filing a claim in small claims court. Suits can be quickly and easily filed against individuals, corporations, partnerships and other entities. State laws will determine the amount that can be recovered in small claims courts, with amounts generally ranging from $2,500 to $25,000.
To file a claim, you will need to determine where the suit can be filed, which can vary based on where the contract was signed or executed, where the defendant resides, where the business is located, or where the damage occurred.
Next, the defendant will have to be served (notified of the suit), and you will have to present evidence at the hearing.
Assuming that you win your case, the court will issue a judgment for payment.
3. Enforce the judgment.
If the court issues a judgment for payment, it’s unlikely that the defendant will simply write you a check. In fact, you will generally have to take additional legal steps to enforce the judgment. The types of enforcement options available can differ by state and by the type of debt owed. Steps you may be able to take to enforce the debt can include:
If your state allows a debtor’s wages to be garnished to repay personal debts, you will need to complete a writ of execution form, have it approved by the appropriate court, and serve it to the defendant.
If your state allows a debtor’s bank account to be levied, you will need to identify where the debtor's bank is, complete a writ of execution form, and present it to the bank.
Some states may also allow you to file a writ of execution to repossess a debtor’s non-exempt property and sell it to satisfy a judgment. Unfortunately, many debtors will have very little non-exempt property to sell, and this step may accomplish very little.
Another option to collect debt, especially if your state does not allow the wages of the debtor to be garnished, is to record an abstract of judgment and place a lien on property that the debtor owns.
To record an abstract of judgment, you will have to locate the debtor’s property and file the appropriate form in the County Recorder’s Office. Although some states may exempt a homestead from liens, placing a lien on other personal property will require the debtor to satisfy the judgment prior to its sale.
In some states, such as California, if a defendant owes you money for injuries sustained in a car accident (assuming you won your case for compensation), you may request to have their license suspended until the judgment is paid.
Bottom line: If someone owes you money or if you have won a judgment in court, it is never a good idea to take matters into your own hands and simply take their property. The law does, however, allow several enforcement methods to help you enforce the judgment.