Judgment Lien Against Debtor’s Lawsuit Settlement ($50k)

November 2, 2023

Some debtors have no obvious assets like real estate or bank accounts. But most creditors don’t realize that a debtor’s claim against someone else is an asset, which can be applied to satisfy an outstanding judgment. That brings us to a recent case. The Plaintiff sued a resident of California in a New York federal district court for failure to repay a large loan, and received a judgment in his favor for $50k. Unfortunately, the debtor had no assets we could immediately see. With the conversation close to “this case is a dead end”, the Plaintiff said he knew that the debtor was about to receive a large settlement. Turned out, the debtor was actually suing someone else for injuries arising from an alleged dog bite she received, and their insurance company was going to settle for $150k for her medical bills, pain and suffering, and emotional distress. And unfortunately, the settlement was due to pay out in less than a week's time.

Moving at Warp 9 to get this done in time, we registered the New York federal court judgment in the appropriate Federal Court in California. Then we immediately filed a Notice of Lien in the Debtor’s pending dog bite lawsuit (which had been settled and payment was imminently forthcoming). Amazingly, counsel for the insurance company told us she’d just received the settlement check the same day we filed the Notice of Lien! This immediately put a halt on the settlement payment to the debtor by the insurance company. We then sought and obtained a Court Order directing the insurance company’s counsel to hand over the settlement proceeds in an amount sufficient to cover the entire judgment amount.

The debtor still had the ability to throw up additional roadblocks by claiming that the settlement proceeds payable to the Judgment Debtor herself (net of contingency fees and medical liens) was insufficient to clear the judgment amount. Instead of wasting additional time litigating this issue, the debtor was forced to come to the table and settled for a very respectable figure. The takeaway here is that a judgment collection agency has the ability to utilize strategies that a regular run-of-the-mill collection company won’t typically bother with. Speed and efficiency are of the utmost importance when it comes to getting a case collected when you have a hard deadline that must be met in a judgment enforcement matter. A competent judgment recovery professional will know how to pull out all the stops to enforce even the toughest unsatisfied judgments.

Collect your judgment

Did you know over 80% of court judgments go uncollected according to the American Bar Association? Final Verdict Solutions is here to remedy that problem.
Get Started