Collections 101: What you need to know

Congratulations! You have successfully navigated the small claims court process and have been able to secure a Judgment against that tenant who stopped paying the rent, the homeowner who called you to perform work in the dark of night after a terrible storm, or the patient who assured you that she would bring payment to her next visit. Although many business owners think the toughest part of the collection process is now behind them, most are surprised to learn that collecting the Judgment is a much more difficult and tedious task than expected.  

Because the collection process can be overwhelming, we are providing a general overview of the process of collecting a Judgment. As you begin to navigate the process of collecting a Judgment, keep in mind that Indiana Small Claims Rule 8 requires Indiana corporations to be represented by counsel in Small Claims Court if the amount in controversy exceeds $1,500.  

1. Docket the Judgment. After securing the Judgment, register the Judgment in any county where the Defendant owns real property. If the Defendant is an individual, owns a home in Marion County, and a lake house in Brown County, Indiana, be sure to get a copy of the Judgment to both county Clerks for recording on the Foreign Judgment docket. This will protect your rights as a creditor in the event that the Defendant tries to sell either home.  

2. Prepare the Verified Petition for Proceedings Supplemental (the “Petition”). Although the title of this document is complicated, the document itself is fairly straightforward— let the Court know that you are the owner of a Judgment, you do not believe the Defendant will make payments, and ask the Court to require the Defendant to appear to answer questions about any assets that exist. 

3. Garnishments to the Bank. If you know where the Defendant banks, be sure to tender draft Garnishment Orders to the Court when you file the Petition. The Court may issue an ex parte Order that freezes the Defendant’s bank accounts and preserves your right to petition the Court to require the bank to release some or all of the funds to you until the Judgment is satisfied. 

4. Proceedings Supplemental Hearing. This is your chance to ask the Defendant questions about any assets that he has that could be used to satisfy the Judgment. The questions should include questions about any real estate, jewelry, boats, cars, or other assets owned by the Defendant. 

5. After the Hearing. Based on the information learned during the Proceedings Supplemental process, carefully consider whether any assets exist which could be used to satisfy any remaining balance on the Judgment, including a final order in garnishment which could require a bank to release some of the Defendant’s funds to you, or to an employer to garnish a certain amount of the Defendant’s wages. Based on the information learned during the Proceedings Supplemental hearing, you may also pursue a process with the local Sheriff Department to seize any personal or real property owned by the Defendant so that it can be sold to pay the balance of the Judgment. These procedures vary from county to county, so be sure to check with the local Sheriff about the process.  

For assistance with your questions about the collections process or collecting amounts due to you, please contact Sarah MacGill Marr, Riley Bennett Egloff, LLP.

Sarah MacGill Marr

Sarah MacGill Marr


Author Sarah MacGill Marr

Sarah represents local, regional, and national companies in commercial litigation in Indiana and around the country. She represents clients in all stages of the litigation process, including trial, and has successfully defended claims for breach of contract, tortious interference with contractual and business relationships, alleged product defects, and premises liability.

Sarah concentrates her practice on commercial cases involving business torts and claims for breach of contract, but also often works with product manufacturers to defend claims. Sarah has a particular interest in structured negotiations and other strategies which may help clients avoid litigation. She regularly counsels clients regarding best practices to avoid litigation, including tips for negotiating and drafting their contracts.

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Disclaimer: Article is made available for educational purposes only and is not intended as legal advice. If you have questions about any matters in this article, please contact the author directly.

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Posted on Jan. 04, 2016, by Sarah MacGill Marr