Collecting a Money Judgment in the United States

A judgment of an American court is a formidable document and an entirely inert one. It does not seize property, freeze a bank account or compel anybody to write a cheque. It establishes that a sum is owed, and it authorises the judgment creditor to begin an altogether separate exercise — conducted under different rules, often in a different state, and against a debtor who has had the entire life of the lawsuit to prepare for it.

Enforcement in the United States is complicated by two features that have no direct analogue in other common law systems. The first is federalism: even a federal judgment is enforced according to the procedure of the state in which the court sits, so there are effectively fifty enforcement regimes rather than one. The second is the breadth of the exemptions, which in some states protect assets that would be freely available to creditors in London, Sydney or Singapore.

This guide sets out how to move a judgment to where the assets are, what instruments reach which kinds of property, what the debtor is entitled to keep, and what to do about a debtor who has been shifting assets since the complaint was served.

First: getting the judgment to the assets

A judgment is enforceable in the state where it was rendered. If the debtor's assets are elsewhere — which, in a mobile economy, they frequently are — the judgment must first be recognised where the property sits.

Between states, the constitutional foundation is the Full Faith and Credit Clause of Article IV, which obliges each state to give effect to the judgments of the others. The mechanism in most states is the Uniform Enforcement of Foreign Judgments Act, under which an authenticated copy of the sister-state judgment is filed with the clerk of the local court, notice is given to the debtor, and after a short waiting period the judgment is enforceable as though rendered locally. A handful of states require a fresh action on the judgment instead, which is slower but not materially harder.

The debtor's grounds of resistance are narrow: that the rendering court lacked jurisdiction, that the judgment was procured by fraud, or that it has been satisfied. The merits are not reopened.

Between federal districts, 28 U.S.C. § 1963 permits a federal judgment to be registered in another district, where it then has the effect of a judgment of that court.

Judgments from outside the United States stand differently. They do not receive full faith and credit; they are recognised, if at all, as a matter of comity and state law, most commonly under a version of the Uniform Foreign-Country Money Judgments Recognition Act. That statute lists mandatory and discretionary grounds for non-recognition — want of jurisdiction, absence of a fair tribunal, want of notice, fraud, repugnance to public policy — and litigants should assume a genuine contest. Our guide to enforcing a foreign judgment across borders sets out the corresponding routes in the other common law jurisdictions.

Finding out what the debtor has

Enforcement begins with information, and American procedure is generous here. Rule 69(a)(2) of the Federal Rules permits a judgment creditor to obtain discovery from any person — including the judgment debtor — in aid of the judgment, using either the federal discovery rules or the procedure of the state where the court sits. State practice offers equivalents, usually described as a debtor's examination, a citation to discover assets, or supplementary proceedings.

In practical terms this means the creditor may serve interrogatories and document requests on the debtor about assets, income, transfers and accounts; take the debtor's deposition under oath; and subpoena third parties — banks, employers, accountants, title companies, brokerages — for records. Non-compliance is punishable by contempt, which is a materially more effective sanction than most jurisdictions provide.

Post-judgment discovery is the most underused instrument in American enforcement. A debtor who has spent two years describing himself as impecunious behaves rather differently when required to say so on oath, with his bank statements attached.

The instruments

Execution against personal property

A writ of execution directs the sheriff or marshal to levy on the debtor's non-exempt personal property — vehicles, equipment, inventory, accounts receivable in some states — and to sell it. The proceeds, after the costs of sale, go to the creditor. Levy works best against a business with tangible assets and poorly against a debtor whose wealth is held in accounts and entities.

Judgment liens on real property

Recording an abstract of the judgment in the county where the debtor owns land creates a lien on that land, and in most states on after-acquired property in the same county. The lien does not produce money immediately. What it produces is a legal obstacle that must be cleared before the property can be sold or refinanced — which, in the ordinary course of a debtor's life, means the creditor eventually gets paid. Where the equity justifies it, the creditor may proceed to a foreclosure or execution sale, subject to any prior mortgage and to the homestead exemption discussed below.

Garnishment

Garnishment reaches property of the debtor in the hands of a third party. The two principal targets are bank accounts, where the bank is served and the balance is frozen and paid over, and wages, where the employer is directed to withhold a portion of each pay cheque.

Wage garnishment is capped by federal law. Under the Consumer Credit Protection Act, 15 U.S.C. § 1673, the amount subject to garnishment for an ordinary debt may not exceed the lesser of twenty-five per cent of the debtor's disposable earnings for the week, or the amount by which those earnings exceed thirty times the federal minimum hourly wage. States may be — and several are — considerably more protective; Texas, notably, does not permit wage garnishment for ordinary judgment debts at all. Support and tax obligations are subject to different and higher limits.

Reaching business interests and equitable assets

Where the debtor's wealth is held through a limited liability company or a partnership, the usual instrument is a charging order against his membership or partnership interest, directing that distributions be paid to the creditor. It does not transfer management rights, and in a single-member entity the analysis differs by state. Where the asset is an income stream or an interest the ordinary writs cannot reach, the court may appoint a receiver, or make a turnover order requiring the debtor to deliver specified property to the sheriff.

What the debtor keeps

Exemptions are the reason American enforcement so often disappoints. They are creatures of state law and they vary enormously.

The homestead exemption protects some or all of the equity in the debtor's principal residence. In most states the protected amount is capped; in Florida and Texas it is, subject to acreage limits, unlimited in value. A judgment debtor with a substantial house in one of those states may be, for practical purposes, judgment-proof as to that asset.
Retirement assets are heavily protected. Plans governed by ERISA contain anti-alienation provisions that place them beyond the reach of most creditors, and individual retirement accounts are protected by state statute to varying degrees.
Social Security, veterans' and disability benefits are generally exempt, and remain so when traceable in a bank account.
Tools of the trade, a vehicle up to a value, household goods and a wildcard amount are exempt in most states.
Property held as tenants by the entirety — a form of joint ownership between spouses recognised in a number of states — is, in those states, beyond the reach of a creditor of only one spouse.

The practical consequence is that a solvent-looking debtor may hold nothing a creditor can take. Establishing that before spending money on enforcement is the whole purpose of post-judgment discovery.

Assets that have moved

Where the debtor transferred property once the claim appeared, the creditor's remedy is a voidable transfer action, brought under the state's version of the Uniform Voidable Transactions Act. Two theories are available: an actual-intent claim, proved by the familiar badges of fraud — transfer to an insider, retention of possession or control, concealment, transfer of substantially all the assets, transfer shortly after a substantial debt was incurred, absence of reasonably equivalent value — and a constructive claim, which requires no dishonest intent where the debtor received less than reasonably equivalent value and was insolvent or rendered insolvent.

What is not available, in federal court, is the pre-judgment asset freeze that a commercial litigator in London would regard as the obvious first step. In Grupo Mexicano de Desarrollo, S.A. v. Alliance Bond Fund, Inc., 527 U.S. 308 (1999), the Supreme Court held that a federal district court has no equitable power to enjoin a defendant from dissipating assets pending judgment on a claim for money damages. Pre-judgment attachment is available only where a state remedy provides for it, borrowed through Rule 64, and those remedies are hedged with conditions and bonds. The contrast with the freezing order available across the Commonwealth is stark, and it is a matter to take into account when choosing where to sue.

Bankruptcy, and the clock

A debtor pressed hard enough may file for bankruptcy, at which point the automatic stay under 11 U.S.C. § 362 halts every enforcement step immediately. Enforcement taken in violation of the stay is void and may itself be sanctioned. Some judgment debts survive a discharge — those for fraud, wilful and malicious injury, defalcation in a fiduciary capacity, certain taxes — but establishing that requires an adversary proceeding in the bankruptcy court, brought within the deadlines that court sets.

Judgments also expire. The life of a judgment is a matter of state law and ranges from around five years to twenty, usually with a right of renewal exercisable before expiry. Interest accrues at a statutory rate in the meantime, which in some states makes patience a genuine strategy. Missing a renewal deadline, by contrast, is a way of losing a valuable asset through inattention.

Sequence and cost

A disciplined enforcement campaign follows a familiar order: domesticate the judgment where the assets are; record judgment liens against any real property immediately; use post-judgment discovery to establish the true asset picture; garnish accounts without warning; and reserve the expensive instruments — receiverships, voidable transfer actions — for cases where the sums justify them.

Two errors recur, and both are expensive. The first is telegraphing the campaign: a courteous letter identifying the account you intend to garnish will empty it. The second is spending incrementally, in small increments, on a debtor whose exemptions were always going to defeat the exercise. Because the American Rule leaves each party bearing its own fees absent a contract or statute providing otherwise, enforcement costs are rarely recoverable — which makes the decision to begin a purely commercial one.

For the equivalent exercise in an Asian common law jurisdiction, where the instruments are similar but the exemptions far narrower, see our guide to enforcing a Singapore judgment, and for the English and Hong Kong position, charging orders and third party debt orders.

If you are holding an American judgment and need to work out where to domesticate it, which instrument reaches which asset, and whether the exemptions make the exercise worthwhile, CommonBench's Legal Chat can take you through the framework and the authorities.

This article is published by CommonBench for informational purposes only and does not constitute legal advice. If you have a US money judgment that has not been paid and need to plan the enforcement campaign, try CommonBench — AI-powered legal research with verified citations across five common law jurisdictions.