What Happens if You Win a Lawsuit and They Can’t Pay: Navigating Judgment Recovery

Winning a lawsuit can be a significant victory, but what happens when the defendant cannot pay the awarded amount? This scenario can be frustrating and disheartening for the victorious party who has invested time, money, and energy into their legal battle. Therefore, knowing the legal ramifications and strategies for debt recovery is essential to better understand the outcomes and options available in such situations.

A judgment is issued when a court rules for a plaintiff and orders the defendant to pay a specific amount. This legal document is binding, but there’s no guarantee that the defendant will have the necessary funds or assets to comply with the judgment. In cases where the debtor refuses or cannot pay, the burden is often on the plaintiff to pursue further legal action to collect the debt, which can be a complex and time-consuming process.

Various methods exist for plaintiffs to enforce a judgment and recover the funds, including wage garnishment, property seizing or liens, and bank account levies. However, it’s crucial to recognize that these measures have limitations and require additional legal proceedings. Ultimately, the plaintiff may need to evaluate the feasibility of further action based on the debtor’s financial situation and the potential return on investment.

Understanding Judgments

Types of Judgments

Several types of judgments can result from a lawsuit. Some common types include:

  • Default Judgment: If the defendant fails to respond to a lawsuit, the judge may issue a default judgment in the plaintiff’s favor.
  • Consent Judgment: Both parties agree to a specific outcome, and the judge approves it.
  • Summary Judgment: If there is no dispute about the facts, the judge can decide without a trial.
  • Final Judgment: After a trial, the judge determines the outcome.

It’s important to understand that a judgment is a legal determination made by a court or a judge that resolves a dispute between parties in a lawsuit.

Judgment Execution Process

Once a judgment has been issued, the winning party (the plaintiff) faces collecting on the judgment. The following steps outline the general execution process:

  1. Locate Assets: The plaintiff needs to locate the defendant’s assets. This can be done through various methods such as asset searches, discovery, and debtor examinations.
  2. Obtain Writ of Execution: The plaintiff should request a writ of execution from the court. This court order grants the plaintiff the authority to collect on the judgment.
  3. Levy Assets: With the writ of execution, the plaintiff can levy the defendant’s assets, such as bank accounts and personal property. It’s important to note that certain assets may be exempt from levy, such as Social Security or disability benefits.

However, in cases where the defendant cannot afford to pay the judgment, the plaintiff faces several challenges. Some options for the plaintiff in this situation include the following:

  • Installment Payments: Negotiate with the defendant for installment payments.
  • Wage Garnishment: If the defendant has a steady income, the plaintiff can request wage garnishment, where a portion of the defendant’s wages are withheld and paid directly to the plaintiff.
  • Judgment Liens: The plaintiff can file a judgment lien on the defendant’s real property, which can force a sale of the property to satisfy the judgment.

Both parties must understand their rights and responsibilities throughout the judgment execution process. In some cases, if the defendant cannot pay, their financial situation may change, and the plaintiff can attempt to collect the judgment later. However, it’s crucial to be aware of the statute of limitations in your jurisdiction, as there may be a time limit on how long a judgment remains enforceable.

Methods of Collection

Wage Garnishment

Wage garnishment is a common collection method when a debtor cannot pay a court judgment. In this process, the creditor files a request with the court to have the debtor’s employer withhold a portion of their income to satisfy the debt. Federal and state laws typically limit the garnishment amount to prevent undue hardship on the debtor. Employers who fail to comply with a wage garnishment order may face penalties or legal actions.

Bank Levies

Another collection method is a bank levy, which allows the creditor to seize the debtor’s assets in financial institutions. To initiate a bank levy, the creditor must obtain a court order or a writ of execution authorizing the bank to freeze the debtor’s accounts and transfer the funds to the creditor. Bank levies can impact checking and savings accounts and sometimes joint accounts with non-debtor individuals.

Property Lien

A property lien is a legal claim that creditors can attach to real estate owned by the debtor. This collection method is useful when the debtor owns valuable real estate, such as a home or business property. The creditor files a lien with the county recorder’s office, providing public notice of the claim. While the lien does not immediately transfer ownership, it acts as a security interest, ensuring the creditor’s payment when the property is later sold or refinanced.

Debt Collection Lawsuits

In some situations, creditors may file debt collection lawsuits against the debtor. This method involves suing the debtor for the outstanding balance of the money judgment, which may include principal, interest, and court costs. During the legal proceedings, the debtor may negotiate a payment plan or settle with the creditor. If the debtor loses the lawsuit, the court may order various forms of execution, such as wage garnishment, bank levies, or property liens to collect the remaining debt.

In summary, creditors may utilize several collection methods, including wage garnishment, bank levies, property liens, and debt collection lawsuits when a debtor cannot pay a court judgment. These lawful actions ensure that creditors are adequately compensated for the debts owed by the debtor.

Bankruptcy and Judgment-Proof Debtors

Chapter 7 Bankruptcy

If you win a lawsuit and the debtor cannot pay the awarded amount, they may choose to file for Chapter 7 bankruptcy. In this process, a debtor’s assets are liquidated, and the proceeds are used to pay off their creditors. However, not all assets are liquidated under Chapter 7 bankruptcy. Certain personal property items are exempt from liquidation, which means the debtor can keep them.


Exemptions are crucial in protecting a debtor’s essential personal property during bankruptcy. Each state has its own set of exemptions that may include the debtor’s home, car, household items, and tools necessary for their trade or profession. Additionally, federal bankruptcy exemptions are available for some debtors who can choose between federal and state exemptions. It is important to note that the exemption amount varies from state to state.

Some common exemption categories are:

  • Homestead exemption: Protects a certain amount of equity in the debtor’s home.
  • Motor vehicle exemption: Covers a certain value of the debtor’s automobile.
  • Household items exemption: Allows the debtor to keep a certain value of personal belongings such as furniture, appliances, and clothing.
  • Tools of the trade exemption: Applies to the tools and equipment necessary for the debtor’s trade or profession.

Judgment-Proof Status

A debtor may be considered “judgment-proof” if their income and assets are exempt from seizure to satisfy the debt. This often includes social security benefits, unemployment benefits, and certain exempt income sources. If someone is judgment-proof, even if they lose a lawsuit, their exempt assets, and income cannot be taken to satisfy the judgment.

A creditor may find it challenging to collect money from a judgment-proof debtor. Bank accounts containing only exempt funds are generally protected from garnishment. However, judgment-proof individuals must keep accurate records and separate their exempt and non-exempt funds to avoid complications.

In conclusion, winning a lawsuit against a debtor who cannot pay, files for bankruptcy, or has judgment-proof status may result in limited or no collection of the awarded amount. Therefore, understanding bankruptcy and judgment-proof debtors could help creditors make informed decisions when pursuing legal action.

Challenges of Collecting a Judgment

Defendant Does Not Pay a Judgment

One common challenge that plaintiffs may face when they win a lawsuit is when the defendant does not pay the judgment. It can be challenging to collect the funds owed, regardless of the judgment’s legal certainty. Judgment creditors often need to take additional steps to enforce the judgment, which can be time-consuming and costly.

For example, the judgment creditor may need to locate the defendant’s assets before taking any collection actions. Sometimes, the debtor may have transferred assets to another party or even filed for bankruptcy, making it more complicated for the creditor to recover the funds.

If the defendant cannot or will not pay, the involvement of third parties may be necessary. For example, judgment creditors may want to consult with an attorney to explore their options. In some cases, they may need to involve a sheriff, constable, or process server to enforce the judgment.

Stipulated Judgment

A stipulated judgment is an agreement between the debtor and the creditor that states a specific amount of money will be paid to settle the case, often through an agreed-upon payment plan. This judgment can make the enforcement process more straightforward as both parties have already agreed on the terms.

However, collecting the stipulated judgment can still present challenges. If the defendant intentionally does not pay, the judgment creditor may need to return to court to enforce the agreement. If the judgment debtor is a corporation, they may face additional obstacles, as a corporate debtor can be more difficult to locate and take legal action against.

To successfully collect from a judgment debtor, the judgment creditor needs to stay aware of the statute of limitations on judgment enforcement. Each state has laws governing the time limit a judgment must be enforced. The judgment may no longer be collectible if the statute of limitations expires. Therefore, it is crucial to act diligently to collect on a stipulated judgment or any other type of judgment.

It is important to remember that legal advice from qualified professionals is essential when navigating the challenges of collecting a judgment. In addition, judgment creditors should avoid making exaggerated or false claims and ensure they have reliable legal support.

Additional Resources and Legal Help


Seeking Professional Legal Assistance

If you are considering professional legal assistance to enforce your judgment, it is crucial to evaluate your opIn addition, thiss. In cases where the debtor is unable or unwilling to pay, involving a licensed attorney may increase the likelihood of collecting the judgment. Key steps to consider include:

  • Identifying debtor’s assets: Working with an attorney, you can investigate the real property, bank accounts, and other assets the debtor holds.
  • Assessing insurance coverage: It is essential to determine whether the debtor has any insurance covering the judgment amount.
  • Levy on property: By working with an attorney, the plaintiff may be able to levy the debtor’s property to enforce the judgment.
  • Reviewing public records: An experienced attorney will assist in accessing public records to identify the debtor’s assets and potential claims.

In addition to these services, professional legal help can ensure that you act within the law’s boundaries while pursuing your claim. Navigating the complexities of your case with a knowledgeable attorney by your side can provide the support needed to enforce the judgment and collect the amount owed by the debtor.


What happens if the defendant cannot pay the judgment?

If the defendant cannot pay the judgment amount, the plaintiff may seek other means to collect the money owed. This can include wage garnishment, liens on property, or seizing assets. Sometimes, the court may establish a payment plan for the defendant, allowing them to pay the judgment in installments.

Can the defendant declare bankruptcy to avoid paying the judgment?

A defendant can file for bankruptcy protection, which may discharge or restructure the debt. However, certain judgments, such as those related to child support, alimony, or criminal restitution, may not be dischargeable.

Is there a statute of limitations on collecting a judgment?

The time limit for collecting a judgment varies by jurisdiction. Generally, the statute of limitations ranges from 5 to 20 years. However, some states allow for the renewal of a judgment, effectively extending the collection period.

What if the judgment debtor moves to another state?

The plaintiff can enforce the judgment in the debtor’s new state by domesticating the judgment. This typically involves filing a copy of the original judgment in the new state’s court system and following the required procedures to enforce collections.

Can legal fees be included in the judgment amount?

Sometimes, the court may award legal fees to the prevailing party. This generally depends on the type of case and the applicable laws in the jurisdiction. Discussing this possibility with a lawyer is important to determine if legal fees can be included in the judgment.