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Debtor Creditor Law FAQ

Free Information on New Jersey Debtor/Creditor Law

For informational purposes, we have included a list of frequently asked questions pertaining to debtor-creditor law. This free information is not intended to provide legal counsel, but rather to offer some insight into the legal issues addressed by a collections law attorney.

To discuss a contract dispute with an experienced New Jersey collections litigation attorney, please call us at 201-214-3992 or e-mail our Hackensack law office.

Debtor—Creditor FAQs

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If you have a question not listed here, please contact the Law Offices of Myron D. Milch, P.C., at or e-mail our Hackensack law firm using the contact form provided on this Web site.

What is a judgment?
A judgment is the official decision of a Court of Law in a lawsuit. Typically, a final judgment resolves the issues involved in a lawsuit, and determines the rights and obligations that each party in the lawsuit has to the other. Enforcement of civil judgments is typically left to the parties.

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What is a "money judgment"?
A money judgment in a civil matter is a judgment, issued by a Court, that one party to a lawsuit owes a certain sum of money to the other party in the lawsuit. The amount of money awarded is referred to as the "money judgment". If a judgment debtor does not pay the judgment voluntarily, there are a number of coercive means that may be used by the judgment creditor to effect payment of the judgment.

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Who is the "judgment creditor"?
A judgment creditor is the party in whose favor a money judgment has been issued. The judgment creditor is entitled to enforcement of the judgment through whatever means are legally available to it, such as voluntary payment, or more coercive means, such as enforcement of liens, levy and execution.

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Who is the "judgment debtor"?
A judgment debtor is the person against whom a judgment has been entered. An unsatisfied judgment may be picked up by a credit reporting agency and remain part of the data base of that credit reporting agency. The property of a judgment debtor may be subjected to lien, levy and execution by the judgment creditor.

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What is "satisfaction of a judgment"?
When the money due under a money judgment has been paid in full, the judgment is said to have been satisfied. The means by which official notice of a satisfaction of the judgment is given is through the filing, with the clerk of the Court in which the judgment has been entered, of a "Warrant to Satisfy Judgment". The Warrant is filed by the judgment creditor or his attorney.

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How is a judgment perfected?
In New Jersey, there are two Courts. The County Special Civil Part Court has authority over debtors who can be located within the County, and it can issue money judgments for up to $15,000.00. The Superior Court has authority over debtors located anywhere within New Jersey -- and, under certain circumstances, anywhere in the world-- and it can issue money judgments for an unlimited amount. To perfect a judgment issued by either the County Special Civil Part Court or the Superior Court, a certified copy of the judgment must be docketed with the Clerk of the Superior Court, in Trenton. Docketing is a form of filing and causes the judgment to become a lien of record against all real property owned by the judgment debtor that is located in the State of New Jersey.

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How are assets of the judgment debtor discovered?
There are a number of ways in which assets of the judgment debtor can be discovered:

(1) Through past experience with the judgment debtor, the judgment creditor may already know about certain assets of the judgment debtor, such as the debtor's bank account. Typically, this comes about if the judgment creditor has kept a copy of a check given to it previously by the judgment debtor;

(2) At the beginning of the relationship, the judgment debtor may have given the judgment creditor a credit application containing asset information;

(3) The judgment debtor may have assets at its place of business, such as inventory, which may be used by the judgment creditor to satisfy the judgment;

(4) If the judgment creditor has no current knowledge or information about assets of the judgment debtor, an Information Subpoena may be served upon the judgment debtor. The Information Subpoena contains a list of questions about the judgment debtor's income and assets which must be answered by the judgment debtor within a certain time limit. If the judgment debtor fails to answer all of the questions contained in the Information Subpoena, further Court proceedings are available which can eventually lead to the arrest of the judgment debtor;

(5) Instead of an Information Subpoena, a Post-Judgment Order for Discovery may be obtained and served upon the judgment debtor. This requires the judgment debtor to appear at a certain time and place and to answer questions, under oath, about his income and assets The questions are asked by the attorney for the judgment creditor. The judgment debtor may be ordered to produce certain documents at the time and place of the appearance. If the judgment debtor fails to appear and/or to produce the required documents, further Court proceedings are available which can eventually lead to the arrest of the judgment debtor;

(6) A Writ of Execution may be issued by the Clerk of the Court. This authorizes a Court Officer or the County Sheriff to attach certain assets of the judgment debtor which, when turned into cash and given to the judgment creditor, will reduce and/or eliminate the money judgment;

(7) Wage Garnishment. This is a form of execution by which the judgment debtor's employer becomes obligated to deduct a certain percentage of the judgment debtor's wages or salary, and to pay those monies over to the Court Officer or County Sheriff who, in turn, will pay those monies to the judgment creditor.

(8) Order To Pay Out of Income. This is an Order of the Court which obligates the judgment debtor to make payments directly to the judgment creditor. If the judgment debtor fails to make the required payments, then this failure may be treated as a form of contempt of Court.

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How does a judgment creditor levy an execution against property owned by a judgment debtor?
Under a levy and execution, property of the judgment debtor is taken and either delivered to the judgment creditor or sold so that the proceeds of sale can be delivered to the judgment creditor. A judgment creditor should never take, or attempt to take, property of the judgment debtor. In New Jersey the person who is authorized by law to do the taking of the judgment debtor's property is a Court Officer or County Sheriff, and the authority of the Court Officer or County Sheriff to take such property is set forth in a Writ of Execution. If the judgment was issued by the County Special Civil Part Court, upon request of the judgment creditor, the Clerk of the Court will normally prepare a Writ of Execution and issue it to a Court Officer. The judgment creditor must advise the Court Officer what property is to be subjected to levy by the Writ of Execution. If the judgment was issued by the Superior Court, the judgment creditor or its attorney is normally responsible for preparing the Writ of Execution and sending it to the County Sheriff. The Sheriff must be given instructions about what property is to be subjected to a levy of the Writ of Execution. Property that is usually subjected to a levy of a Writ of Execution includes the following:

(1) Money in a bank account;

(2) Personal property owned by the judgment debtor that is in the judgment debtor's possession;

(3) Personal property owned by the judgment debtor that is in the possession of a third party;

(4) A vehicle or vessel owned by the judgment debtor;

(5) The judgment debtor's interest in personal property of a decedent's estate;

(6) Accounts receivable, commercial paper, instruments and negotiable documents of title owned by the judgment debtor.

(7) Real property that is owned by the judgment debtor. Real property, that is, land and the buildings and things that are attached to the land, may be subjected to a levy of a Writ of Execution. However, the law in New Jersey requires that, before any Writ of Execution is levied on a debtor's real property, all personal property of the judgment debtor must first be exhausted.

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How does a judgment creditor obtain a Wage Garnishment against a judgment debtor?
Under a Wage Garnishment, the employer of the judgment debtor becomes obligated to withhold a portion of the judgment debtor's earnings and wages that are earned--subject to limits imposed by both State and Federal Laws--and then to pay those monies over to the Court Officer or County Sheriff who, in turn, will then pay those monies over to the judgment creditor. The employer is entitled to keep a small amount of the proceeds of the garnishment for bookkeeping costs. Only one wage garnishment at a time may be deducted from a judgment debtor's wages and earnings. If a judgment debtor has several judgment creditors, the first judgment creditor to levy a wage garnishment against the judgment debtor's employer will be paid first. Judgment creditors that levy wage garnishment orders subsequently must wait until the first wage garnishment is satisfied in full before any monies will be deducted on account of their wage garnishment. If an employer, who has been served with a wage garnishment order, fails to comply with the garnishment order and to make appropriate deductions of the judgment debtor's wages, then that employer may be held responsible by the judgment creditor for monies that should have been withheld from the judgment debtor's paycheck.

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Is all property of the judgment debtor subject to execution, or is some property exempt?
Not all property of the judgment debtor is subject to execution and levy. Some States, such as Florida and Texas, have wide-ranging exemption laws which prohibit certain property from being subjected to levy by a judgment creditor. Those laws typically prohibit a levy on the judgment debtor's home and/or wages. In New Jersey, the exemption laws are narrowly drawn, and almost all property of the judgment debtor can be subjected to levy of a Writ of Execution.

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Can a judgment from one State be enforced in another State?
If a judgment creditor recovers a judgment against a judgment debtor in one State, for example, in New York State, and the judgment debtor thereafter moves himself or his assets to a second State, such as New Jersey, the procedure by which the "foreign" New York judgment can be "domesticated" in New Jersey is fairly simple: Under provisions of NJSA 2A:49A-25, "The Uniform Enforcement of Foreign Judgments Act", the "foreign" judgment can be docketed with the Clerk of the Superior Court of New Jersey, in Trenton, New Jersey, and, upon docketing, becomes a lien against all real estate owned by the judgment debtor that is located in New Jersey. In addition, once the foreign judgment has been docketed, the judgment creditor can take whatever action is necessary and/or appropriate under New Jersey law to effect satisfaction of the judgment.

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Can a money judgment from a foreign country be enforced in New Jersey?
If a judgment creditor recovers a money judgment against a judgment debtor in a foreign country, for example, in Canada, France or Mexico, and the judgment debtor thereafter moves himself or his assets to New Jersey, the procedure by which the foreign country money judgment can be "domesticated" in New Jersey is fairly simple: Under provisions of the Foreign Country Money-Judgment Recognition Act, NJSA 2A:49A-16, the foreign country money judgment can be docketed with the Clerk of the Superior Court of New Jersey, in Trenton, New Jersey, and, upon docketing, becomes a lien against all real estate owned by the judgment debtor that is located in New Jersey. In addition, once the foreign country money judgment has been docketed, the judgment creditor can take whatever action is necessary and/or appropriate under New Jersey law to effect satisfaction of the judgment, including the issuance of Information Subpoenas, Orders for Discovery, and/or Writs of Execution.

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If you have any questions that are not covered above, please do not hesitate to contact us directly. Our law firm represents corporate creditors, homeowners, and debtors in a wide range of collections disputes. Contact a New Jersey collections law attorney.

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