I began an eviction against a non-paying tenant, but he left prior to my obtaining a judgment. I’m trying to decide whether or not to continue the process to completion since I think the tenant’s financial condition might make him judgment proof. Would it worth it to continue?
It might be, depending upon the circumstances and your willingness to take a risk. Keep in mind that the tenant’s financial condition could change over time. Being “judgment proof” is not necessarily a permanent condition.
To collect a money judgment, a judgment creditor must be able to successfully reach the debtor’s assets. If a debtor has no assets, limited assets, or only exempted assets, the debtor’s position would make it practically difficult or even impossible for a judgment creditor to legally collect the judgment. The debtor is said to be judgment proof. Taken literally, you would not want to waste your time to even file suit against such individuals. Any judgment awarded would likely be difficult if not impossible to collect.
However debtors can later acquire sufficient assets that could be used to satisfy the debt. The risk is that this debtor may never have enough reachable assets to satisfy even a relatively small judgment.
A debtor being considered judgment proof does not mean that a judgment cannot be awarded against the debtor. Some creditors prefer to file against the debtor to have the judgment on record and defer collection efforts to a future date.
A recorded judgment can sometimes result in unexpected payment without further effort by the creditor because the debtor must years later pay the judgment in order to obtain financing.
Judgments are typically good for 5 to 10 years and can be renewed for additional periods, so the chance of collecting a judgment at a future date may be worth the expense of filing the lawsuit now.
Finally, judgments can usually be collected in another state if the debtor moves from the state where the judgment was obtained. However, it will usually result in increased costs and complications.
Whether you ever get the money depends in large part on the defendant’s ability to pay and on the landlord’s ingenuity and perseverance. No law forces a person to pay a judgment. The Court will not collect the money for you. Instead, the laws provide procedures to attempt to ‘execute’ on a judgment. If the defendant really cannot afford to pay the judgment even these procedures will prove useless, at least at the current time.
Once you have a money judgment, common sense does come into play when deciding when and how hard to pursue collection.
If your decision is to defer collection until a later time, it is important to regularly monitor your debtor’s physical location and financial condition to determine future collection efforts.