Judgments are decisions by the court, and in many cases, they involve a court stating with finality that one person owes another person money. Judgments most commonly arises as results of lawsuits, regardless of whether it is a personal injury case, defamation case, business case, or otherwise. However, having a judgment against someone and collecting on the judgment are two separate things. Different terms are used to describe “collecting” on a judgment, and these terms include “executing” and “enforcing.” Ultimately, regardless of which term is used, a lawyer is generally referring to the process of turning a piece of paper called a judgment into money in his client’s bank account.
Judgments in South Carolina Expire
Collecting on a judgment is more difficult than people realize. First, judgments do not last forever. While the law is a little unclear, it is generally recognized in South Carolina that if a person who is owed money (also called a judgment creditor) does not begin court action to execute the judgment within 10 years from the date the judgment is entered, then the judgment will be deemed to have expired.
When Debtors Don’t Have Assets
Sometimes the people who owe the money (also called judgment debtors) don’t have any assets to collect from. South Carolina is not a wage garnishment state, so a debtor needs more than just income to collect from. The debtor must actually own property. Although personal property counts, such as furnishings and personal items, this personal property often does not present enough value. The debtor really needs to own real property or have financial assets, such as stocks and bonds, for it to be worth the time and money to attempt to execute a judgment.
Exemptions to Collecting Judgments in South Carolina
Even if the debtor has assets, judgments are subject to exemptions in South Carolina. For example, there is approximately a $50,000 “exemption” on someone’s primary residence. The first $50,000 equity cannot be touched by a creditor. So, if someone has a $200,000 home and they owe $180,000 on the mortgage, they only have $20,000 in equity. In this example, the debtor would have to gain another $30,000 in equity before the creditor can begin going after this property. Even if the creditor believes that eventually such will happen, the creditor still has to consider the 10-year time span that will eventually expire.
When Debtors Judgment Debtors Hide Assets
Debtors sometimes hide assets, such as cash, off-shore accounts, or holding silent interests in businesses. The court can’t seize or sell an asset that it doesn’t know exists. Debtors can also protect assets in less discrete ways. For example, a lot of savvy businessmen put everything in their spouses’ names. That way, the businessman assume all of risk of liability, and the spouse either works his or her salaried job without any real exposure of having a judgment filed against him or her or does not work at all. In most cases, a creditor cannot touch the assets of a debtor’s spouse.
Procedure for Collecting Judgments in South Carolina
Judgments may also be difficult to collect because of the process. First, the creditor has to apply for an execution by the Sheriff. These executions rarely create any benefits. After the Sheriff returns the execution uncollected (also called Nulla Bona), then the creditor must file an action called Supplemental Proceedings with the Master-in-Equity. This process can be just as confusing as a normal lawsuit. It is highly recommended to at least consult with an attorney before attempting this process.
The Good News About Collecting Judgments in South Carolina
Despite all of the difficulties associated with judgment collection, there are some things in the creditor’s favor. One such advantage is that the judgment can affect someone’s credit and will likely prohibit them from being able to obtain a loan from a bank. For these reasons, sometimes and debtor will attempt to negotiate a satisfaction of the judgment. Judgments create automatic liens on real property if filed correctly. Therefore, the debtor will not be able to sell real estate that has a judgment attached to it. There is law known as the Statute of Elizabeth that can hamper a debtor’s ability to use a fraudulent conveyance to get property out of his name and into the name of a family member. Also, during Supplemental Proceedings, the court can force the debtor to appear before the court and give live, sworn testimony regarding his assets. This procedure can be very effective in finding out whether the debtor has assets. Finally, judgments can be domesticated in other states. So, if a debtor has property outside of South Carolina, that property is not immune from execution.
As simple as judgments seem, the body of law governing them in South Carolina is complex. If you hold a judgment against another person, you should consult with an attorney to determine if it is worth your time and money to go after it.