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How do I collect on a judgement against a debtor who is all cash? They have no bank account and rent everything or pay other people for things.

The only options I can see are:

  1. Follow them home from work EVERY DAY with a police officer to take their pay.
  2. Enter their house and take their financed furniture.
  3. Take their worthless financed cars.

Is there anything else I can do? Judgment is 10k. Garnishment doesn't work because they understate income. I have reported them for tax evasion and drug use but police don't care.

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user30113
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    If you are reporting them to the police for tax evasion, you are reporting them to the wrong body - the IRS would be much more interested in them and their employer. –  Feb 24 '20 at 01:06
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    Not sure about Nevada, but in most jurisdictions you can't take their financed stuff because legally it still belongs to the finance company. – Paul Johnson Feb 24 '20 at 08:20
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    Help the guy to find a regular job, then go for his income :) – notananswer Feb 25 '20 at 02:29
  • @PaulJohnson Maybe in some. Not necessarily in all. That completely depends on the financing conditions. – glglgl Feb 25 '20 at 11:46
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    You question shows that you don't understand what garnishment means. Garnishment is forcing someone who owes money to a judgment debtor to pay you instead. The police do not enforce tax evasion, that is enforced by the IRS and state and local taxing authorities. Not all debts are collectable immediately. One reason people get judgments against them it because they are unable to pay. – ohwilleke Feb 26 '20 at 08:04
  • Are you sure they have no bank account? I don't know much about Nevada but everywhere I've been in first world countries you get paid straight to a bank account. Maybe they take it out as cash straight away but there is usually an account somewhere. – Lio Elbammalf Feb 26 '20 at 09:03
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    @LioElbammalf In my experience, most companies try to set up direct deposits, but if you aren't able, they can often pay you by cheque. – JMac Feb 26 '20 at 13:35

4 Answers4

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To add to user6726's answer:

In general, you can only collect a judgement if there are assets or income available to be collected (i.e., owned by the debtor, and not protected from collection, such as personal items or part of the wages).

If you suspect the debtor has assets you do not know about, you can formally ask the debtor to declare their assets. In Nevada (and in many other US states), this is called an Examination of Judgment Debtor (or just Debtor's examination).

The basic idea is:

  • You ask the court to order a debtor's examination.
  • The court (after checking your judgement) orders a hearing where the debtor must appear (or they may be imprisoned for contempt of court).
  • In the hearing, you can ask the debtor about their assets, and they must answer truthfully (usually under oath).

Details vary, as usual. See for example this page from the Las Vegas Justice Court: Examination of a Judgment Debtor.

As a practical note:

The whole process, as usual, means additional work and possibly legal cost for the creditor - so it only makes sense if there is a realistic possibility of finding previously unknown assets. As usual, this is a decision the creditor must make.

sleske
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  • So somebody can have a 20k a month illegal income and be judgment proof – user30113 Feb 24 '20 at 19:37
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    If you report their "illegal income" and the IRS claims a load of back taxes, what are your debtor's assets likely to be? – Andrew Leach Feb 24 '20 at 22:24
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    @AndrewLeach: Well, hopefully enough for your claims. Even back taxes will usually not be 100% of earnings, so something may remain :-). – sleske Feb 24 '20 at 23:00
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    @user30113 no, they aren't judgement proof, they are breaking the law - thats a huge difference. Its not the courts place to prosecute the other things the debtor is doing, just to pass judgement in your particular claim - and they will only do that based on lawfully established income. Feel free to report the debtor to the IRS or other bodies, but its not this particular courts jurisdiction. –  Feb 24 '20 at 23:57
  • @sleske It all depends on how many years of back taxes. Your income tax rate times 5 years (plus penalties) could easily be 100% of your yearly income. – JimmyJames Feb 25 '20 at 18:31
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    If you put the debtor in a position where they have to either admit under oath to their unreported income or to commit perjury to continue to hide it, I would imagine they would suddenly become quite eager to pay off the debt quietly before it gets that far. A 10K debt sounds far cheaper than either of those options. – bta Feb 25 '20 at 22:18
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    @sleske Presumably they have not kept all their previous years income saved up in a nice pile somewhere though. Those back dated taxes (plus penalties/interest) will come out of their liquid cash that they have right now, which could be all of it or even more. – JBentley Feb 26 '20 at 14:40
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1 is not an option – you can't steal a person's pay, and the police won't help you. You only recourse there is legal wage garnishment, and I will take your word that their (reported) income is low enough that they are garnishment-proof. If you have petitioned for and been granted a writ of execution, the sheriff will have been ordered to collect, shifting the burden to the police (meaning, they will have to care at least about the debt). Furniture is exempt; a vehicle might be subject to collection depending on the person's equity in the vehicles. You can look at the list of things seizeable under the law in that link to see if it mentions anything you didn't think of, but it could be that there is nothing you can do presently.

user6726
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    Yup, sometimes its pointless chasing a debt because the debtor has no means of payment - you can't get blood out of a stone. –  Feb 24 '20 at 01:54
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    At least you have a "title" for seizing any money they will have - for the next 30 or so years .. depending on the judges ruling – eagle275 Feb 24 '20 at 12:13
  • as an aiside, wouldn't it be easier just writing the debt off as a loss, and wouldnt you essentially be getting the full amount back? – DatsunZ1 Feb 24 '20 at 18:39
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    @DatsunZ1 Get the full amount back from whom? The IRS? I'm pretty sure losses only reduce your taxable income, so at best you'd be getting back a fraction of what you lost. – Andy Feb 24 '20 at 22:37
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    @Moo : it's not always that. I've seen people who are officially poor (and are even receiving financial aid due to their low official income) while they live a luxurious cash-only lifestyle and openly brag about it. And they are very difficult to collect against if all their assets are under the names of other people (family members, underlings). Of course, the long-term sustainability of such a lifestyle is questionable, heavily depending on the place you live. – vsz Feb 25 '20 at 05:45
  • You can levy upon currency and the equivalent (e.g. casino chips) with a writ of execution in coordination with the civil division of the sheriff's office (I once bid legal fees to have that done in the case of a professional poker player in Nevada with no other accessible assets, but never did it). Once it is paid and becomes cash, it ceases to be wages and becomes mere cash which is not subject to any exemption from execution on a judgment. – ohwilleke Feb 26 '20 at 08:00
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Just to put it more clearly: You probably won't get your money, unless that debtor is really hiding a lot of money in stupid ways and gets caught.

There is probably some paperwork you can do now and again to prevent the debt from lapsing. Maybe at some point in the future the person would like to lead a normal, debt-free life again, and then you might get some money - but it's very likely this is going to be a negotiation, i.e. the debtor offers to go on a payment plan, but if they stick to it you agree to get only, say, 50% (or less) of the money originally owed.

A while ago I read a guide (for another, but probably similar jurisdiction) about how to legally live a nice enough (though materially basic) life without ever paying your debts (even accumulating them intentionally), and it's quite possible.

feetwet
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Nobody
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    I served in the Navy with a guy who ran a similar scam. He'd get transferred somewhere, impress the command with his dedication/competence/etc, and in the meantime run up a load of debt - new cars, clothes, all kinds of stuff. Then he'd put in for a transfer. He was seen as a good sailor so his request would be granted and he'd ship out before the debt collectors came knocking. Except when he got to us. Guy's there about six months, requests transfer - our command calls his previous command and asks "What's with him?". Sh*t, meet fan. Busted, restricted, half-pay, and had to pay debts. – Bob Jarvis - Слава Україні Feb 25 '20 at 14:29
  • @BobJarvis-ReinstateMonica Yeah, I wouldn't expect any military to like soldiers like that. The guide I read was written by well educated lawyer/political activist types who certainly won't serve time in any military. – Nobody Feb 25 '20 at 21:52
  • Seems that a lot of people (hey, me too!) want to live like a king without having to, y'know, get out of bed and go to work most days. I'm just too stupid to figure out the why's and how's and wherefore's, so I have to keep going to work every day to satisfy my addictions to food and shelter. So I try to figure out the best way to do things I have to do - I figure "Do it right, or fix it to be right, and then I don't have to do that again". And if anyone's noticed I don't do a lick of work, they're too polite to mention it. – Bob Jarvis - Слава Україні Feb 25 '20 at 23:01
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If the person has a stable employer, you go after the employer, and garnish the wages. It doesn't matter if the employer pays the debtor cash, they must give you the amount instead - that's what garnishment is. If the employer steadfastly refuses, they can risk a till tap being ordered, or even being held in contempt of court.

Of course the person can quit the job, and then you would have no wages to garnish.

Further, if the employer or debtor is obviously doing something illegal, like paying someone under the table or employing illegal workers, they have all the more reason to try to avoid judicial scrutiny, so it can spur them to cooperate.

You need to go through the rigmarole of getting to a wage garnishment. On the road to that, it is fairly likely the debtor does something stupid, like get caught obstructing the process, claiming an unbelievably low wage, etc. That may increase your legal options or place them in more legal jeopardy.

Harper - Reinstate Monica
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  • Debtor writes of all income as business expense and hides the rest, it is not on their 1099 – user30113 Feb 26 '20 at 01:03
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    An employer who doesn't cooperate with a garnishment generally gets a money judgment entered against it, not contempt of court or jail. The judge is also highly unlikely to refer the matter to authorities for prosecution. If the person is 1099'd the entire amount rather than the limited percentage allowed for wages can be taken as garnishment. Often someone who is garnished is just terminated from employment or quits, however. – ohwilleke Feb 26 '20 at 07:55
  • @ohwilleke good points, edited. – Harper - Reinstate Monica Oct 13 '22 at 22:01