Enforcing a Judge Ruling

12 Replies

Dear Biggerpockets members

A section 8 tenant of mine filed a conversion lawsuit against me claiming I was responsible for her missing belongings worth $100,000. I got a lawyer, she lost the case and I asked the judge for judgement ordering the plaintiff to pay my lawyer fees. I received the judges ruling in my favor today. However my lawyer says she’s not a collections attorney to be able to collect the money from the plaintiff. If someone knows what I can do in order to enforce the ruling and recover my expenses please advise. How about having the ruling put in her credit report? Can this be done? How?

@Brandon Turner @Joshua Dorkin @David Greene

I wouldn't waste the time. Trying to collect a judgement from a section 8 tenant is squeezing blood from a stone.

In general judgements will show up in the public record, most tenant screening services will find it.

@Matt N. - How much of a judgment are we talking about? Is she still in your place?  If so, notify her SEC 8 caseworker of the judgment asap. This will freezer her voucher, forcing her to stay until she pays or you say it is ok to leave.  Suggest she call charities for help.  Being at risk of being homeless really makes it easier to get money.  It is highly likly you will be paid. Once you are paid, you can still file to evict.

Originally posted by @Patti Robertson :

@Matt N.- How much of a judgment are we talking about? Is she still in your place?  If so, notify her SEC 8 caseworker of the judgment asap. This will freezer her voucher, forcing her to stay until she pays or you say it is ok to leave.  Suggest she call charities for help.  Being at risk of being homeless really makes it easier to get money.  It is highly likly you will be paid. Once you are paid, you can still file to evict.

 The judgement is about $8k. She's not at my place. I will certainly inform her caseworker of the judgment. I find the part that I suggest to her to call charities a bit weird but I can have my lawyer send her a formal letter. 

How do collection agencies work? What's a typical arrangement with a collection agency? Do you recommend using them?

@Matt N.

I worked in the Finance and Credit Departments of various companies and have used collection agencies. In our case though, we have volume, which fortunately, I believe, you don't have. They charge fees, in the 30% range based on the amount owed. For creditors lucky enough to have an occasional collection, refer the matter to an attorney that specializes in it.

I see the collection activity from both ends as I owned businesses with employees pursued by collectors, for debts and child support. State law governs how it's handled.

Debtors of this type normally has no assets to seize, such as financial assets, i.e. savings, investment portfolios. The law even restricts the seizure of automobiles and even TV sets. That's why garnishees are often the only way of collecting money from these debtors, and in one company I owned, I have 3 employees under garnishment, 2 for debts, and one for child support.

In NY State, garnishees can only be done on 15% or salary, and for child support, 25%, and only if the salary exceeds a certain amout. But the most important things is only one garnishee at a time, so creditors has to wait in line. For instance, I got a part timer who makes $200/week gross, and the weekly garnishee comes to $30.00. So in a year, the creditor gets to garnishee $1,500 dollars, and if a collection agency is involved, 30% paid in fees. She owes creditors more than $100,000, and one time I was notified by a new creditor with a garnishee, and this creditor is on line with 6 others, and he won't start collecting his debts for another 10 years. She was with me when she hit 70 years of age, retired completely, and moved out of state, and social security cannot be garnished. Depending on state laws, many government payments cannot be garnisheed either, though allowances are made for child support payments. At this point, all the creditors who patiently waited, spent money on judgements will receive nothing.

In fact, I was withholding her salary during the first year I owned the company. Then I looked up the garnishment laws and discovered she didn't make enough to even be garnished, wrote a letter to the marshal and creditor saying her salary will no longer be garnished. Thereafter, creditors would send me a questionnaire annually questioning how much she makes.

When I was with major company, people with garnishees often change jobs, you'll have to track down the new employer, and get a new garnishee. Or they start working completely of partly off the books. So chasing after these people is more a matter of principle, than actually recovering what's owed. 

Oh, just to mention my employee owing creditors $100,000 decided to lease a car in retirement because if creditors ever find out she got a new car, they can seize it. She has the money to buy a new car because she was successful in getting after people for slips and falls, collected on a few, but from what I see, creditors didn't catch on. I kept my mouth shut so she won't start suing me. And she is smart enough to have a daughter hold on to monies she received. In one slip and small settlement, I know she got the funds, but promptly transferred to her daughter. Funny she even discussed it with me.

Now if you find having a charity helping the debtor hilarious, I find this women owing $100,000, no one can do anything about it hilarious, and even more hilarious, collecting on slips and falls on top.

@Matt N. $8k is way too much for any charity to help her. This is a poor tenant. She is getting ready to be even poorer if she loses her voucher. You will never get this money back. Don’t use good money to chase bad. Remember, this is a result of being in a low income area, screening and inspections than it is that it was a SEC 8 tenant. Even if they worked three retail jobs they wouldn’t be garnish-able because their income is too low.

Originally posted by @Caleb Heimsoth :

@Matt N. Did your insurance not cover this sort of thing?

Are you talking about insuring against non payment? Few companies carry them, i.e. credit insurance, but I worked in one company that had it. It requires having a credit policy, the insurer does an annual audit, so I doubt any mom and pop business qualifies. The nice thing about it is if a customer files bankruptcy, you collect pennies on the dollar if anything, but with credit insurance, you collect a lot more.

 

Dear Frank @Frank Chin do normal insurance companies provide this credit insurance for that you mentioned or some other special company? The insurer does an annual audit of the property owner or property management company? 

Originally posted by @Matt N. :

Dear Frank @Frank Chin do normal insurance companies provide this credit insurance for that you mentioned or some other special company? The insurer does an annual audit of the property owner or property management company? 

As far as credit insurances goes, I'm not aware of any credit insurance company that does it for rentals, and never heard of property management companies involved in it.

Credit insurance is often involved in the sale of goods, as I was with a trading company involved in annual sales of hundreds of millions of dollars. Though credit insurance can be obtained as a separate thing, the one we had was part of a "factoring receivable financing" arrangement. 

The company has the option of receivable financing, where goods are sold on 30 to 60 day terms, with AR financing, the finance company pays us immediately with a discount, then collect from the customer. With credit insurance, they cover the invoice when the customer doesn't pay beyond the annual deductible.

They cover medium to larger firms, those with finance and credit departments, established credit policies they come in to audit annually to adhere to the established credit policies. 

The closest thing we come to this is a master lease agreement in the real estate business. Usually the master lease investor approaches a tired landlord, or ones with other financial objectives leases your property on a triple net bases, pays the owner the rent whether or not the sub lessee pays them thus guarantying you the payment. I know a investor that does it for older landlords, don't want to sell for estate reasons, tired of chasing after tenants and handling complaints, going for it since the lessor handles the PM duties, in addition to providing steady guaranteed income. When NNN leases goes 30 years and beyond, up to 99 years, it's treated like real estate where the lessor can obtain mortgages on the leasehold. This investors preferred properties in NYC are smaller mixed use, with a business on the ground floor, 2 or 3 apartment upstairs. He creates a NNN lease with the landlord who on longer has to bother with tenant issues and rents. He in turn creates a master NNN lease, not long term, to the ground floor commercial tenant who collect rents from the upstairs residential tenants and handles maintenance issues.