Judgment Enforcement & Collection
STAY OF EXECUTION ON JUDGMENT
Following entry of a judgment, there is an automatic stay (stop) whereby the prevailing party (judgment-creditor) cannot begin collection efforts until the expiration of the statutory period. For example, in Maryland the statutory period is ten days:
Maryland Rule 2-632(b) & 3-632(a): Except as otherwise provided in this Rule, enforcement of a money judgment is automatically stayed until the expiration of ten days after its entry.
Following the expiration of the automatic stay period the judgment-creditor can begin collection efforts unless the court orders otherwise. The court may extend a stay on collections under a number of circumstances. Maryland Rule 2-632 [Stay of Enforcement] provides, in part, as follows:
(c) Discretionary Stay of Judgment. In its discretion and on such conditions for the security of the adverse party as are proper, the court may stay enforcement of a judgment pending the disposition of a motion for a new trial filed pursuant to Rule 2-533, a motion to alter or amend a judgment filed pursuant to Rule 2-534, a motion to revise a judgment filed pursuant to Rule 2-535, or a motion for judgment notwithstanding the verdict filed pursuant to Rule 2-532.
(d) Multiple Claims. When a court has entered a final judgment under the conditions stated in Rule 2-602, the court may stay enforcement of that judgment until the entering of a subsequent judgment and may prescribe such conditions as are necessary to secure the benefit of the judgment to the party in whose favor the judgment is entered.
(e) Pending Appeal. Except as provided in this section and in section (f) of this Rule, a stay pending appeal is governed by Rules 8-422 through 8-424. If the court determines that because of the nature of the action enforcement of the judgment should not be stayed by the filing of a supersedeas bond or other security, it may enter an order denying a stay or permitting a stay only on the terms stated in the order.
Maryland, Virginia and the District of Columbia each have different rules regarding the automatic stay of enforcement of a judgment.
DISCOVERY IN AID OF ENFORCEMENT
If the judgment-creditor does not know where the judgment-debtor is employed, or where the debtor’s assets are located, there are court rules that allow the creditor to engage in “discovery in aid of enforcement” on the judgment. In Maryland, these discovery mechanisms are governed by Maryland Rule 2-633 [Discovery in Aid of Enforcement] providing, in part, as follows:
(a) Methods. A judgment creditor may obtain discovery to aid enforcement of a money judgment (1) by use of depositions, interrogatories, and requests for documents, and (2) by examination before a judge or an examiner as provided in section (b) of this Rule.
(b) Examination Before a Judge or an Examiner. Subject to section (c) of this Rule, on request of a judgment creditor, filed no earlier than 30 days after entry of a money judgment, the court where the judgment was entered or recorded shall issue an order requiring the appearance for examination under oath before a judge or examiner of (1) the judgment debtor, or (2) any other person who may have property of the judgment debtor, be indebted for a sum certain to the judgment debtor, or have knowledge of any concealment, fraudulent transfer, or withholding of any assets belonging to the judgment debtor. The order shall specify when, where, and before whom the examination will be held and that failure to appear may result in the person served being held in contempt. The order shall be served upon the judgment debtor or other person in the manner provided by Rule 2-121. The judge or examiner may sequester persons to be examined, with the exception of the judgment debtor.
Therefore, a judgment-creditor without knowledge of the location of a debtor’s assets may issue interrogatories (written questions), requests for production of documents, depositions and/or an oral examination of the debtor as a way to discover the nature and extent of the debtor’s assets in order to collect on the judgment. Once the creditor locates an asset of the debtor, the court rules allow the creditor to engage in a variety of enforcement mechanisms to collect.
Maryland, Virginia and the District of Columbia each have different procedural rules regarding post-judgment discovery in aid of enforcement of a judgment.
GARNISHMENT OF PROPERTY (OTHER THAN WAGES)
One of the most common methods to enforce a judgment is by issuing a garnishment to the debtor’s banking institution. In Maryland, once the judgment-creditor knows where the debtor banks the creditor can file a request with the court for issuance of a writ of garnishment of property other than wages. The bank (or any other individual or entity holding property of the debtor) is referred to as the “garnishee.” The court will process the request and issue the writ of garnishment. Maryland Rule 3-645 governs writs of garnishment of property and provides as follows:
(a) Availability. Subject to the provisions of Rule 3-645.1, this Rule governs garnishment of any property of the judgment debtor, other than wages subject to Rule 3-646 and a partnership interest subject to a charging order, in the hands of a third person for the purpose of satisfying a money judgment. Property includes any debt owed to the judgment debtor, whether immediately payable or unmatured.
(b) Issuance of Writ. The judgment creditor may obtain issuance of a writ of garnishment by filing in the same action in which the judgment was entered a request that contains (1) the caption of the action, (2) the amount owed under the judgment, (3) the name and last known address of each judgment debtor with respect to whom a writ is requested, and (4) the name and address of the garnishee. Upon the filing of the request, the clerk shall issue a writ of garnishment directed to the garnishee.
(c) Content. The writ of garnishment shall:
(1) contain the information in the request, the name and address of the person requesting the writ, and the date of issue,
(2) direct the garnishee to hold, subject to further proceedings, the property of each judgment debtor in the possession of the garnishee at the time of service of the writ and all property of each debtor that may come into the garnishee’s possession after service of the writ,
(3) notify the garnishee of the time within which the answer must be filed and that failure to do so may result in judgment by default against the garnishee,
(4) notify the judgment debtor and garnishee that federal and state exemptions may be available,
(5) notify the judgment debtor of the right to contest the garnishment by filing a motion asserting a defense or objection.
After the court issues the writ it must be served on the bank. Service must be effectuated on the bank in accordance with the Maryland rules or it is invalid:
Maryland Rule 3-645(d): The writ shall be served on the garnishee in the manner provided by Chapter 100 of this Title for service of process to obtain personal jurisdiction and may be served in or outside the county. Promptly after service upon the garnishee, the person making service shall mail a copy of the writ to the judgment debtor’s last known address. Proof of service and mailing shall be filed as provided in Rule 3-126. Subsequent pleadings and papers shall be served on the creditor, debtor, and garnishee in the manner provided by Rule 1-321.
Once properly served, the bank (or other garnishee) is required to file an Answer with the court within 30 days after service disclosing whether and to what extent it is holding any money (or other property) of the debtor.
Maryland Rule 3-645(g) [When Answer Filed]: If the garnishee files a timely answer, the matters set forth in the answer shall be treated as established for the purpose of the garnishment proceeding unless the judgment creditor files a reply contesting the answer within 30 days after its service. If a timely reply is not filed, the court may enter judgment upon request of the judgment creditor, the judgment debtor, or the garnishee. If a timely reply is filed to the answer of the garnishee, the matter shall proceed as if it were an original action between the judgment creditor as plaintiff and the garnishee as defendant and shall be governed by the rules applicable to civil actions.
If the garnishee fails to file an Answer, the creditor may request that a judgment by default be entered against the garnishee. This rule compels the garnishee to file a timely answer.
Maryland Rule 3-645(f) [When No Answer Filed]: If the garnishee fails to file a timely answer, the judgment creditor may proceed pursuant to Rule 3-509 for a judgment by default against the garnishee.
Once the garnishee files an Answer stating that it holds property of the debtor, the judgment-creditor files a motion to release funds asking the court to order the garnishee to directly pay the creditor the money or property held by the garnishee.
GARNISHMENT OF WAGES:
If the judgment-debtor is employed, the creditor may request a writ of garnishment of wages to be served upon the debtor’s employer. In Maryland, the judgment-creditor will file a request with the court to issue a writ of garnishment of wages. The court will then issue the writ for service upon the employer (garnishee). Maryland Rule 3-646 governs writs of garnishment of wages:
Maryland Rule 3-646(b) [Issuance of Writ]: The judgment creditor may obtain issuance of a writ of garnishment by filing in the same action in which the judgment was obtained a request that contains (1) the caption of the action, (2) the amount owed under the judgment, (3) the name and last known address of the judgment debtor, and (4) the name and address of the garnishee. Upon filing of the request, the clerk shall issue a writ of garnishment directed to the garnishee together with a blank answer form provided by the clerk.
(c) Content. The writ of garnishment shall:
(1) contain the information in the request, the name and address of the person requesting the writ, and the date of issue,
(2) notify the garnishee of the time within which the answer must be filed and that failure to do so may result in the garnishee being held in contempt,
(3) notify the judgment debtor and garnishee that federal and state exemptions may be available,
(4) notify the judgment debtor of the right to contest the garnishment of wages by filing a motion asserting a defense or objection.
The employer/garnishee must be properly served with the writ of garnishment of wages:
Maryland Rule 3-646(d) Service. The writ and answer form shall be served on the garnishee in the manner provided by Chapter 100 of this Title for service of process to obtain personal jurisdiction and may be served in or outside the county. Upon issuance of the writ, a copy of the writ shall be mailed to the debtor’s last known address. Subsequent pleadings and papers shall be served on the creditor, debtor, and garnishee in the manner provided by Rule 1-321.
Once served, the employer/garnishee must file an Answer with the court to the garnishment stating whether the debtor is currently an employee, and if so, the debtor’s rate of pay and whether there are any prior liens against the debtor’s earnings.
Maryland Rule 3-646(e) Response of Garnishee and Debtor. The garnishee shall file an answer within 30 days after service of the writ. The answer shall state whether the debtor is an employee of the garnishee and, if so, the rate of pay and the existence of prior liens. The garnishee may assert any defense that the garnishee may have to the garnishment, as well as any defense that the debtor could assert. The debtor may file a motion at any time asserting a defense or objection.
If the employer/garnishee employs the judgment-debtor, once the court enters an order the employer must garnish (withhold) a portion of the debtor’s wages each pay period to be paid directly to the judgment-creditor to be applied to the judgment balance.
Maryland Rule 3-646(i) [Withholding and Remitting of Wages] While the garnishment is in effect, the garnishee shall withhold all garnishable wages payable to the debtor. If the garnishee has asserted a defense or is notified that the debtor has done so, the garnishee shall remit the withheld wages to the court. Otherwise, the garnishee shall remit them to the creditor or the creditor’s attorney within 15 days after the close of the debtor’s last pay period in each month. The garnishee shall notify the debtor of the amount withheld each pay period and the method used to determine the amount. If the garnishee is served with more than one writ for the same debtor, the writs shall be satisfied in the order in which served.
MD Code, Commercial Law, § 15-602(a): When an attachment is levied against the wages of a judgment debtor, it shall constitute a lien on all attachable wages that are payable at the time the attachment is served or which become payable until the judgment, interest, and costs, as specified in the attachment, are satisfied.
Federal law limits the amount of earnings that may be garnished to 25% of the debtor’s disposable income per pay period. For debtors who earn minimum wage or near minimum wage the law further limits the amount that can be garnished from the debtor’s wages.
An employer may not fire an employee/debtor on grounds that the employer was served with a writ of garnishment of wages.
MD Code, Commercial Law, § 15-606(a): An employer may not discharge his employee because the employee’s wages are subjected to attachment for any one indebtedness within a calendar year.
JUDGMENT LIEN
When a money judgment is entered in Maryland it acts a lien against any real property of the judgment-debtor located in the county where the judgment is entered. If a judgment is entered in circuit court (claims over $30,000.00), the judgment lien automatically attaches to the real property of the debtor located in that county. Pursuant to Maryland Rule 2-621 [Lien of Money Judgment]:
Maryland Rule 2-621(a)[County of Entry]: Except as otherwise provided by law, a money judgment that is recorded and indexed in the county of entry constitutes a lien from the date of entry in the amount of the judgment and post-judgment interest on the defendant’s interest in land located in that county.
If the judgment is entered in district court (generally, claims under $30,000.00), the creditor must enroll the judgment in circuit court for it to act as a lien on the real property of the debtor in that county. To do so the creditor must file a “Notice of Lien” in the circuit court. Maryland Rule 3-621 [Lien of Money Judgment] provides in relevant part as follows:
(c) In Counties Other Than Baltimore City.
(1) Notice of Lien. A person holding a money judgment entered in a county other than Baltimore City may file with the clerk of the court of entry a request that a certified Notice of Lien of Judgment be transmitted for recording to the clerk of the circuit court for that county or any other county. Within 24 hours after the filing of the request, the clerk shall transmit the Notice of Lien. If the Notice of Lien is transmitted to another county, the clerk at the same time shall transmit a certified copy of the judgment to the clerk of the District Court sitting in that county. The clerk shall maintain a record of all transmittals.
(2) Content of Notice. A Notice of Lien shall contain: (A) the names of the parties, designating each judgment creditor as a plaintiff and each judgment debtor as a defendant; (B) the name of the court and assigned docket reference; (C) the date of the judgment; and (D) the amount of the judgment.
(3) Date of Lien. When a Notice of Lien is recorded and indexed in the circuit court, the judgment constitutes a lien from the date of recording.
Further, Maryland Rule Pursuant to Maryland Rule 2-621(b) states:
- District Court Notice of Lien. Upon receiving a certified copy of a Notice of Lien from the District Court pursuant to Rule 3-621, the clerk shall record and index the notice in the same manner as a judgment.
With respect to judgment liens generally, MD Code, Courts and Judicial Proceedings, § 11-402 provides as follows:
Land defined
(a) In this section, “land” means real property or any interest in or appurtenant to real property.
Land located in county in which judgment rendered
(b) If indexed and recorded as prescribed by the Maryland Rules, a money judgment of a court constitutes a lien to the amount and from the date of the judgment on the judgment debtor’s interest in land located in the county in which the judgment was rendered except a lease from year to year or for a term of not more than five years and not renewable.
Land located outside county in which judgment rendered
(c) If indexed and recorded as prescribed by the Maryland Rules, a money judgment constitutes a lien on the judgment debtor’s interest in land located in a county other than the county in which the judgment was originally entered, except a lease from year to year or for a term not more than five years and not renewable.
Satisfaction of judgment
(d) Promptly after the entry of an order of satisfaction or the filing of a written statement by a judgment creditor with the clerk of the court that a judgment of a court has been satisfied, the clerk of the court shall make an entry of the word “satisfied” on the horizontal line in the judgment record where the lien is indexed.
CHARGING ORDER
When a judgment-debtor owns an interest in a partnership, limited liability company, corporation or other business entity, the judgment-creditor may request a “charging order” be issued against the debtor’s interest. It is a statutory means by which the creditor may reach the partnership interest of the debtor. If the business made distributions to the partners/members of the company, the charging order could order that the debtor’s portion be disbursed directly to the creditor.
Maryland 3-649(a) Issuance of Order. Upon the written request of a judgment creditor of a partner, the court where the judgment was entered or recorded may issue an order charging the partnership interest of the judgment debtor with payment of all amounts due on the judgment. The court may order such other relief as it deems necessary and appropriate, including the appointment of a receiver for the judgment debtor’s share of the partnership profits and any other money that is or becomes due to the judgment debtor by reason of the partnership interest.
(b) Service. The order shall be served on the partnership in the manner provided by Chapter 100 of this Title for service of process to obtain personal jurisdiction. The order may be served in or outside the county. Promptly after service of the order upon the partnership, the person making service shall mail a copy of the request and order to the judgment debtor’s last known address. Proof of service and mailing shall be filed as provided in Rule 3-126. Subsequent pleadings and papers shall be served on the creditor, debtor, and partnership in the manner provided by Rule 1-321.
WRIT OF EXECUTION
2-641 [Writ of Execution – Issuance and Content]
- Generally. Upon the written request of a judgment creditor, the clerk of a court where the judgment was entered or is recorded shall issue a writ of execution directing the sheriff to levy upon property of the judgment debtor to satisfy a money judgment. The writ shall contain a notice advising the debtor that federal and state exemptions may be available and that there is a right to move for release of the property from the levy. The request shall be accompanied by instructions to the sheriff that shall specify (1) the judgment debtor’s last known address, (2) the judgment and the amount owed under the judgment, (3) the property to be levied upon and its location, and (4) whether the sheriff is to leave the levied property where found, or to exclude others from access to it or use of it, or to remove it from the premises. The judgment creditor may file additional instructions as necessary and appropriate and deliver a copy to the sheriff. More than one writ may be issued on a judgment, but only one satisfaction of a judgment may be had.
Maryland Rule 2-642 [Writ of Execution – Levy]
(a) Levy Upon Real Property. Except as otherwise provided by law, the sheriff shall levy upon a judgment debtor’s interest in real property pursuant to a writ of execution by entering a description of the property upon a schedule and by posting a copy of the writ and the schedule in a prominent place on the property.
(b) Levy Upon Personal Property. Except as otherwise provided by law, the sheriff shall levy upon a judgment debtor’s interest in personal property pursuant to a writ of execution by obtaining actual view of the property, entering a description of the property upon a schedule, and (1) removing the property from the premises, or (2) affixing a copy of the writ and schedule to the property, or (3) posting a copy of the writ and schedule in a prominent place in the immediate vicinity of the property and affixing to each item of property a label denoting that the property has been levied upon by the sheriff, or (4) posting a copy of the writ and schedule in a prominent place in the immediate vicinity of the property without affixing a label to each item of property if affixing a label to each item of property is possible but not practical.
(c) Possession of Personal Property by Third Person. When the sheriff has been instructed to remove the property from the premises or exclude others from access or use and finds the property in the possession of a person, other than the judgment debtor, who asserts entitlement to possession and objects to the sheriff’s removal of it or exclusion of that person from access or use, the sheriff may levy and leave the property where found.
(d) Notice of Levy. The sheriff shall furnish a copy of the writ of execution and schedule to any person found by the sheriff to be in possession of the property, and, if that person is not the judgment debtor, the sheriff shall promptly mail a copy of the writ and schedule to the judgment debtor’s last known address.
(e) Return. Following a levy, the sheriff shall promptly file a return together with the schedule. If the writ of execution was received from another county under Rule 2-641(b), a copy of the return and schedule shall also be filed in the county where the judgment was entered.