Ways to Collect on Your Judgment in Colorado

Do you have a debt to collect? Are you concerned about the difficulty of claiming your debt and getting into legal battles with the person who owes you money? Our Colorado collections attorneys discuss the various ways that creditors can collect what is owed them.

1. Obtaining a Lien on Real Property

If the debtor is not complying with a court order and making payments, your attorney can file a Transcript of Judgment to obtain a lien on their property so that it can be used in collection proceedings. Once you’ve obtained the lien, you may get paid once they refinance or sell the property. Note that if the debtor owns property in more than one county, you need to record the Abstract of Judgment in every county where property is owned. The judgment lien will attach to all of the judgment debtor’s real estate located in the county or counties where the transcript is filed. After you and your attorney get a judgment lien against the judgment debtor’s real property, the judgment creditor may seek a writ of execution and file a certificate of levy to execute on the property.

Your attorney can check with the county assessor’s office to determine whether or not the debtor owns property in any particular county. Many of the Colorado counties provide this information on their websites.

2. Collecting from debtor’s wages (wage garnishment)

You can obtain a Writ of Continuing Garnishment to garnish the debtor’s wages until you are paid what you are owed. Note that you may only garnish up to 25 percent of the amount over the federal minimum wage that the debtor earns. Colorado authorizes garnishment to support attachment and execution in both county and district courts; see the sections below for more about attachment and execution.

Payments from pension and retirement plans are exempt from garnishment, except for child support purposes. Many more things qualify as earnings for the purposes of garnishment for child support. For these purposes “earnings” also includes the following:

  • Workers’ compensation benefits
  • Pension and retirement benefits
  • Compensation paid or payable to an individual employee or independent contractor for personal labor or services
  • Dividends, interest, trust income, annuities and capital gains
  • Severance pay
  • Royalties
  • Monetary gifts & monetary prizes (excluding certain Colorado Lottery prizes)
  • Taxable distributions from general and limited partnerships, closely- held corporations and limited liability companie
  • Rents
  • Funds held in or payable from health, accident, disability, or casualty insurance to the extent that it replaces wages or provides income in lieu of wages, and tips

3. Collecting money from debtor’s bank account

You and your attorney can levy the debtor’s bank account by asking the court to issue a Writ of Garnishment. There are several required court forms that must be completed in order to complete a Writ of Garnishment. If you decide to take this enforcement route, you would be wise to retain an attorney as this process is procedurally intensive.

Sometimes, getting the Judgment or Court Order is only half the battle. In cases where the debtor is hiding assets and/or refusing to pay, considering meeting with the experienced litigation team at Robinson & Henry to help you with collection. To schedule a legal strategy session, click here: (insert link).

4. Attachments

Attachment is a process that allows a creditor to access the debtor’s property and take it into legal custody so that the property can be used to satisfy the debt. Attachment is a time-sensitive process which is available from the time a claim is filed until the court’s judgment is entered. Like a writ of execution, attachment is a process that requires strict adherence to rules and procedures.

According to Colorado law, attachment is generally only available when the debtor has fled or is about to flee with or squander his assets. The principal purpose of attachment is to prevent the debtor from disposing of or diminishing the value of property which might be used to satisfy a possible future court order against them. Attachment allows the court to obtain jurisdiction against non-residents or others who cannot be personally served in Colorado. In this way, a court may assert jurisdiction when there are several parties vying for the property.

Attachment allows a creditor to obtain significant leverage over a debtor. Attachment, however, can also pose hazards. Firstly, the creditor must post an attachment bond to protect the debtor from damages inflicted if the attachment is wrongful. The creditor may also be liable to the debtor for any damages caused by the attachment, and must reimburse the sheriff for storage and levying expenses (see below). Thus, while attachment may provide significant leverage against the defendant, caution and strict compliance with attachment procedures are essential.

5. Garnishment, sale and levy.

  • Garnishment. A writ of garnishment is the most commonly used method of enforcing a final money judgment. The court issues a writ of garnishment stating the debt of the debtor to the creditor and commanding a the business that is holding the debtors money (for example a bank account or employer) to pay the creditor.
  • Sale. The policy of Colorado law is to subject all the property of a judgment debtor not specifically exempt to the payment of his debts. All goods, lands, and real estate of every person against whom any judgment is obtained in any court for any debt or damages are liable to be sold.
  • Levy. A levy is the way a money judgment is imposed. A creditor may decide which property to levy upon to satisfy his debt, so long as the property is not exempt.

No execution is valid until 14 days after it is submitted to the court (this does not apply to county court judgments). If a judgment is not suspended, by an appropriate order of the court, even if an appeal is pending, the creditor may execute on the judgment, selling and levying the property.

6. Charging Order

When the person who you money owns an interest in a partnership, you may “charge” the partnership to pay what it owes to that person to you. A charging order is obtained by applying to the court which issued the judgment, or to any other court.

The charging order itself should include provisions on the following subjects:

  • Requiring the partnership to pay to you (the creditor) the partner’s full share of any distribution from the partnership, whether or not the partner normally draws his full due.
  • Prohibiting the partnership from making any loans until the judgment is fully satisfied. This prevents the partnership from getting around the charging order by making loans to the partner and from making indirect distributions to the partner through loans to other partners or related parties.
  • Prohibiting the partnership from acquiring any capital assets, preventing the squandering of cash which might otherwise be paid to the partners and their creditors. It also prevents the partnership from acquiring the debtor/partner’s house and assuming his mortgage obligation.
  • Prohibiting the partnership from selling or hiding any partnership property.
  • Requiring the partnership to deliver important documents and reports such as tax returns, the partnership agreement, and books of account to the judgment creditor.

The court also has the power to appoint a receiver of the judgment debtor/partner’s share of the profits and other money due or to become due to him in respect of the partnership. In all events, however, the partner’s rights under the exemption laws as regards his partnership interest are preserved.

Contact Us for Help

These rules for collecting your judgement are complex, and the time limitations and restrictions are very specific. A collection attorney from Robinson & Henry can help you work out a detailed plan to recover your money. Contact us for a free, no obligation consultation at (303) 688-0944.