by Mark A. Cobb
Question: An owner, a general contractor or a subcontractor owed us money so we sued them in our state (not Georgia!); the court awarded a judgment in our favor, but the defendant – debtor now resides or transacts business in Georgia. How can I enforce the judgment lien from another state in Georgia?
Short Answer: With the mobility of people, we get this question rather often. A person or an entity loses a lawsuit in one area of the the country, then moves its business operations or assets to another state to avoid the collectors. Thankfully for judgment creditors, however, generally speaking it is a relatively easy process to enforce another state’s judgment in Georgia. First, the judgment creditor must domesticate the foreign judgment in Georgia. Second, the judgment can be collected by such common post-judgment activities as a garnishment of a bank account or a wage, post-judgment interrogatories, post-judgment deposition, or foreclosure of the judgment lien. For a more detailed answer, please keep reading:
How is an Out-of-State Judgment Domesticated in Georgia?
Georgia adopted the Uniform Enforcement of Foreign Judgment Act (the “UEFJ Act”); if the judgment seeking to be recognized in Georgia is from a state that has also adopted the UEFJ Act, then the process for domestication is relatively streamlined. The UEFJ Act was instituted to prevent parties from moving their business or their asset to avoid creditors, and a copy of it may be found by clicking here > >
In order to avail themselves of the UEFJ Act, a judgment creditor needs to give notice to the judgment debtor that the judgment is being domesticated in Georgia; a petition or affidavit is filed with the clerk of court in the county where the foreign judgment is to be domesticated; finally, unless there is an objection, the court will issue an order recognizing the other state’s judgment.
If the judgment hails from a state which has not adopted the UEFJ Act, then the process is a little different. The judgment creditor will need to file a lawsuit to enforce the foreign judgment which is a simplified lawsuit to help-out in situations such as this.
What are the Advantages of Domesticating a Foreign Judgment in Georgia?
“Full Faith and Credit”.
That means that the judicial system in Georgia will recognize another state’s decision equal to a decision made by a Georgia court. From a practical standpoint, this means that a domesticated foreign judgment may be enforced exactly as a Georgia judgment.
After the Foreign Judgment has been Domesticated, How Can I Enforce the Judgment?
Georgia affords judgment creditors with many useful collection techniques. First and foremost, the judgement creditor should ask the court which domesticated the out-of-state judgment to issue a Writ of Fieri Facias which is commonly referred to as a “FiFa”. The FiFa should be recorded in the county where the original judgment was domesticated, and it should be recorded in each and every county where the judgment debtor resides, transacts significant business or has any assets. The FiFa is the “judgment lien”, and it will remain of record for 7 years (it can also be renewed). The recorded judgment lien gives the world notice that money is owed to you, and it can lead to payment in full in the event that the judgment debtor tries to sell any real estate or obtain a loan. This is an economical, easy course to follow which may help you get paid.
In addition to recording the FiFa, the judgment creditor has an arsenal of techniques at its disposal which may lead to collection of the money which is owed.
Garnishments tend to be successful if a current bank account can be located or, for an individual, a current employer can be located.
PRACTICAL TIP: If your judgment is against a general contractor, subcontractor or supplier, and if you can identify its current project, then you may garnish the draws (or retainage) made to the judgment debtor.
If a creditor cannot locate a garnishable asset, then many judgment creditors should attempt some form of post-judgment discovery. They may send the debtor post-judgment interrogatories with questions that may identify a garnishment opportunity (such as “Who is your employer?”, Where do you bank?” or “Do you own any real estate?”) Similarly, a creditor may send the debtor a post-judgment request for documents to obtain pertinent financial information (e.g., a copy of their recent tax returns, bank statements, or pay-stub).
Although more expensive, post-judgment depositions are also a great way to obtain a judgment debtor’s full financial history and asset identification particularly if there is concern that the debtor may have fraudulently conveyed its assets in order to avoid its creditors. Furthermore, they place the judgement creditor face-to-face with your attorney and may more-likely result in payment of the debt or an establishment of a payment plan.
Although there is a myriad of other collection techniques, this article is intended to cover the most useful. If you have any questions about collection your judgment across state lines, please feel free to contact us.
The Cobb Law Group is pleased to announce the publication of its latest handbook–the Georgia Material Supplier Collection Handbook! This long-overdue collection guide will help credit managers, business owners, and material owners collect the money they are owed on construction projects in Georgia by providing essential tips for filing and enforcing mechanics and materialman’s liens, payment bond claims and other issues related to construction commercial collections. It is particularly helpful for construction material suppliers who deliver building materials to project sites anywhere in Georgia.
To download your free copy of the Georgia Material Supplier’s Collection Handbook, please click here > >
What Does the Free Guide to Georgia Materialmen Law Cover?
Although its impossible to cover every aspect of Georgia law in a single volume, this free handbook provides useful summaries of Georgia law and practical tips for credit managers and business owners. The topics included in this guide for collections includes the following:
- Summary of Important Deadlines for Notices, Affidavits, Lien and Payment Bond Claims;
- Checklists for Credit Managers to Consider before they Open Accounts for New Customers;
- Georgia’s Statutory Notice Scheme (Does it apply to you?);
- Georgia’s Lien Waivers (including unconditional waivers vs. conditional waivers);
- Georgia’s Prompt Payment Act;
- Using Preliminary Liens in Georgia to Help You Collect;
- A Summary of Georgia’s Mechanics and Materialmen’s lien laws;
- The Basics of Payment Bond Claims (Claim Against the Surety);
- How to Handle your case in Magistrate Court (Georgia’s small claims court); and
- Post-Judgment Collection Tips
Who Needs a Copy of their Free Guide to Georgia Construction Collection Law?
Anyone who has supplied materials or preformed services or labor on a construction site in Georgia needs to read this great guide. Using this resource as a guild, it can help you prevent collection issues before they arise, and it can help you enforce your rights to file a construction lien or make a payment bond claim to recover the money they are owed including the following:
- Credit Managers;
- Credit Analysts;
- Business Owners;
- CFOs and Comptrollers;
- Manufacturers of Building Materials;
- Account Receivable professionals;
- Building Supply Companies such as electrical supply, roofing materials, truss and framing supply companies, irrigation and plumbing supply companies, and many, many others;
- Potential Lien Claimants;
- Potential Payment Bond Claimants;
- Anyone who is owed money on a Georgia construction project; and
- many others
What is Included in this Guide to Georgia Construction Lien Law?
We include a long list of potential deadlines which can mean the difference between getting paid for your services and not including the deadlines for the following:
- Filing of a Notice of Commencement by a General Contractor
- Notices to Owners and Notices to Contractors
- Affidavits of Nonpayment
- Georgia Preliminary Construction Liens
- Mechanics and Materialmen’s Liens
- Payment Bond Claims (Miller Act Claims)
- Lawsuit Filing Deadlines to Enforce Lien Rights
- Notice of Contest of Lien
- Bond Claim Lawsuits
- Notice of Action of Filing Suit
In addition, this free guide to commercial collections for the construction industry includes the following, practical checklist to help you improve your rate of recovery almost instantly:
- Items to Add to you Credit Application
- Useful (time-saving and cost-saving) Contract Terms
- Personal Guarantees
- Georgia’s Statutory Notice Scheme (Pre-construction Notices)
- Internal Accounting Procedure Summary
- Suppliers Obligations
- Practical Tips for Credit Managers
- Options if Lien Waiver is Signed but Payment is Not Received
- Checklist for Filing Preliminary Liens
- Important Considerations for Georgia’s Construction Liens
- Statutory Requirements for Mechanics Liens
- Payment Bonds Covering Public Works
- Payment Bonds Covering Private Works
- Litigation Tips
- Post-Judgment Collection Resources
- Construction Legal Services
Download Your Free Copy Today!
To get your own copy of this important resource on Georgia construction law, please click here > >
Order Your Free Printed Copy of this Handbook for Georgia Materialmen:
In addition to the free download, we are also giving away printed versions of the Georgia Material Supplier Collection Handbook (while supplies last). To request a copy of this great summary of Georgia’s lien and payment bond law, please send an email request to us at either email@example.com or through our contact us page. Please be sure to include the number of copies you want and a valid mailing address.
If you find this Guide to Georgia’s Mechanics and Materialmen’s Lien useful, then you may also want to schedule a specialized training session for your staff or professional organization. Our construction law attorneys have helped to educate credit departments and business owners all about their rights and obligations under Georgia’s lien laws. We have helped to train the credit departments of some of the largest building material suppliers in the country, and, when we train your employees, we will customize our presentation to your specific industry using your common credit scenarios. For more information on our training and lecturing opportunities, please click here > >
by Mark A. Cobb
Isn’t it generally true that the best time to ask for something from someone is when they want something from you in return. It doesn’t matter whether it’s your spouse, your neighbor or your boss, if they need a favor from you, they are more likely to grant your favor in return. Thus, the best time to get pertinent information from a customer is when they want to purchase something on credit from you! And yes, by utilizing materialman’s liens and payment bonds laws you can substantially reduce your exposure. However, getting the right information in the beginning can help you immeasurably.
Look at it this way, when a potential customer contacts you and requests to purchase materials for use on a construction project, use this opportunity to get information which will make collection faster and easier in case you have future payment issues with this customer. Similarly, when an existing customer contacts you and requests an increase in their credit line, guess what? It’s another opportunity to (i) add useful information to their credit file and (ii) update the borrower’s information in their file.
As the (recent) recession has taught us so well, even the best customers can become credit risks. In this day-and-age, even one bad construction project can topple an otherwise good company.
What Kind of Credit Information Should A Material Supply Company (or Equipment Rental Company) Request:
Written Credit Application: Credit Applications are an easy and ideal way to collect all of the information used to determine a customer’s credit worthiness to your firm and to assist you in pursuing bad-debt. Standard forms can be uploaded to your company’s website which allow prospective purchasers to easily assess your forms. Although there are some very good, useful template credit application forms available, it is worth the investment to use the template as a starting point–use it to build an application based upon (i) your specific industry and (ii) real-life situations your company has experienced. Also, don’t let the form become static; instead, mend the form every time you think about or learn about additional, useful information.
Yes, you are likely already asking the question “What Information is Important to Know to Determine Credit Worthiness?”, but you should also be asking the question, “What Information Will Help Us Collect Our Money If The Borrower Defaults?” Adding this perspective can make the difference between collecting your open accounts and forfeiting your money.
Since we are a law firm focusing on Georgia construction law, and more to the point Subcontractor Law, we regularly have to file, enforce and foreclose upon liens to get our client’s their recovery. A very common scenario exists where our client received a monetary judgment for the amount the are owed, but the judgment must be collected. Frequently, the first (and most useful) information comes from the judgment-debtor’s (your customer’s) application for credit. Consequently, we have seen countless credit applications, and we encourage that at a minimum your credit application includes the following:
- the Customer’s full, legal name (a step which is almost always omitted but very important is the credit analysis’ verification of the name with the Georgia Secretary of State’s business registration records);
- Entity type (corporation, LLC, partnership, sole proprietorship); if it is a partnership, follow-up with the customer prior to extending credit to get the names, addresses and social security numbers for EVERY partner;
- the Customer’s tax ID number (do not confuse this with the owner’s or guarantor’s social security number);
- the business owner(s) full name and Mailing address;
- the business owner(s) physical, Residential address; in Georgia, service of process is accomplished through the Sheriff or other court-approved process server physically providing service on the individual names in the lawsuit; thus, having (and confirming) the residential address can save a lot of time and money (this means street address only–not a post office box and, more importantly, not a fictitious business location with a mail-box drop);
- the business owner(s) Social security number (in addition to the business’s tax ID number);
- the owner(s) Spouse’s name and social security number;
- Current bank account information;
- require your customers to update their credit applications regularly to keep the information current; and
- make sure it is LEGIBLE! When it comes down to locating a customer, nothing is more frustrating than an illegible social security number!
Written Account Terms: Depending upon the nature of your agreement (such as open account or written contract), you should always have every customer sign an agreement of your written terms. Having your customer’s consent to your terms is invaluable to asking a court for recovery-in-full. For example, seeking attorney’s fees on collection matters can be much easier to get if your customer has agreed (in writing) to paying for your attorney’s fees. Please consider including the following terms on your contract or open account agreement:
- a Joint-check provision to allow you to request a Joint Check from the general contractor; if payment from a particular project is not flowing-down to you, this provision can give you some authority (and the GC some firmer ground) to circumvent your client and seek payment directly for the prime contractor; this can give you easier access to the project’s retainage;
- Jurisdiction and venue consents can save you money as it can allow your collection lawyer to file all suits in the same convenient location; this promotes lower fees and a more predictable (dare we say favorable?) court;
- jury trials can add expense and delay recovery; Waiver of jury trial can be an effective way to avoid these problems;
- include provisions that allow you to collect Interest, Attorney’s fees and collection costs;
- Liability for theft, inclement weather, of other loss to your materials on the jobsite; this provision clears up any gray area as to whom is responsible for your materials after delivery; and
- periodically have your customer update their consent to your terms (you don’t really want to try and enforce a provision signed in 1981!)
Personal Guarantees: Most customers are willing to provide personal guarantees prior to receiving the materials which you are able to provide them, but it’s almost impossible to obtain a PG after credit has been extended. Pursuant to Georgia’s Statute of Frauds, a personal guaranty MUST be in writing in order to be enforceable. Here are some ideas which you should consider adding to your PG:
- make sure your guarantee meets Current legal requirements to be an enforceable guarantee; during the recession there was a great deal of litigation surrounding PGs and your document should reflect some of the changes in the laws;
- although you don’t want to be onerous, there is no legal limit on how many personal guarantees you are allowed to require in order to extend credit;thus, it is OK to require More than one person to submit a guarantee; this is particularly helpful in situations where your customer is a partnership (get all of the partners to submit to a credit check and a PG) or where the owner of the business has moved his or her assets into a spouse’s name to avoid collection of their debts;
- obtain the Guarantor’s social security number, mailing address and physical, residential address; and, like the credit app recommendation above, verify that this information is legible;
- get a copy of the guarantor(s) Drivers license; this contains useful information including (i) driver’s license number, an example signature, and a photograph (we shouldn’t have to remind you, but check to make certain the photo ID and signature match with your account app, contract terms, PG, etc.;
- get the personal guarantee Witnessed by someone who can later testify that the guarantee personally signed it;
- UPDATE the guarantees and re-verify the credit worthiness of your personal guarantees.
Use Georgia’s Statutory Construction Notice Scheme for your Benefit: As you likely know, third-tier subcontractors (which are generally sub-subcontractors and material suppliers to subcontractors) must comply with Georgia’s statutory construction notice scheme; although it may seem cumbersome because it may require you to send notices to the project owner and the general contractor, there are advantages to compliance; when you supply at a third tier level, it is important to meet all of your notice obligations; although your customer may not have all of the necessary information, you should try to get the following from them before you supply to them (or extend them credit):
- Keep in mind that in order to file a valid materialmen’s lien or payment bond claim, you must demonstrate that the materials, labor or services which you provided were used on the project against which you claim a lien (or payment bond claim); thus, you must get the information necessary for your construction notice compliance on each “purchase” or “rental”;
- You need to know the project’s name;
- the project’s location;
- the prime contractor’s name and address;
- the project owner’s name and address;
- your customer’s payment bond information (if applicable);
- the general contractor’s payment bond information (remember that payment bonds are required on most municipal, state and federal projects, but many private construction projects are ALSO covered by a payment bond);
- a copy of the Notice of Commencement.
Don’t Forget! In order to take advantage of some of the useful collection techniques permitted by your industry, you must make certain that your internal accounting procedures comply:
- keep track of supplies by customer and project
- apply payments properly
- have a calendaring system which alerts you to deadlines
by Mark A. Cobb
It doesn’t matter whether you are a material supplier delivering products to a subcontractor, a subcontractor performing work directly for a GC, or a GC building a structure for an owner, you expect to be paid for the labor, materials, and equipment which you provided. In fact, without payment, it could send your business plummeting downward if you cannot pay your own bills.
We highly recommend that before entering into any construction contract, you perform proper due diligence and protect yourself as much as possible. No matter how thorough you are, however, as the project continues, one of the parties involved with the project might experience a material change in their business or their cash-flow which can directly impact you and make recovery of the money you are owed more difficult. Thus, you want to keep evaluating each customer’s credit-worthiness.
For over 20 years, clients have shared with us some of the early-warning signs (which they largely ignored) which indicated that their customer might be a payment risk after the initial credit-check, and we thought our readers might like to see this list (and add to it themselves!) The following is a checklist of situations which may indicate that you are working with a potentially distressed party:
1. A change in your customer’s bank account may indicate many things including accounts closed, banking problems, a garnishment, etc.
2. Your customer pays you from different bank accounts (unless its accounts are separated by project, escrow, etc.); this is unprofessional and may indicate spreading out their assets to avoid garnishment or to rely upon the float by the banks.
3. Significant fluctuations in your customer’s inventory may indicate volatile business practices, changes in credit with other vendors, etc.
4. An unusually large order may indicate that the customer has undertaken a project larger than its capabilities.
5. Unexpected / unplanned growth of your customer’s business; great businesses maintain and update business plans; unplanned growth can cripple a business, overextend its employees and assets, and cause the business to fail to meet its new obligations.
6. High debt to equity ratio; customers in this position are a credit risk.
7. When your customer loses a major job or client; if too much business comes from one relationship, then the loss of that business can be devastating.
8. A generally disorganized approach to its business, accounts payable, accounts receivable is scary; likely, that business does not understand the extent of their liabilities, realistic expectations of income, etc. and that could put you in a dangerous position if you need to implement collection procedures.
9. Rumors; my Mother always told me that “where there is smoke, there is fire.”
10. If you hear comments from other construction industry professionals that your customer isn’t charging enough, then it might indicate that your customer is trying to get business on any terms in order to improve its panic for cash-flow; inevitably, they will run out of money and someone (hopefully not you!) will be left holding the bag.
11. Requests to extend payment terms may indicate that your customer needs more time to “shuffle” its assets to pay you.
12. Liens (including state and federal tax liens which are all public record); a 10-second check on-line can indicate the fiscal health of your customers.
13. Slow payments: creditors and debtors typically establish a billing and payment practice over time, when they deviate, it may indicate a potential problem.
14. Employee layoffs; if possible, visit your customer at their office, a reduction in their workforce could hint of problems to come.
15. Key employee changes dramatically alter the bottom-line and the business practices; when changes in management occur, they may use other vendors (forgetting to pay you), may emphasis other payment policies, could indicate that top management was receiving their paychecks or benefits.
16. Family and health issues related to owner or key employee (or their families) such as divorce, death or serious illness can greatly impact a business relationship.
17. Excessive downtime may indicate unexpected reduction in your customer’s revenues.
18. You customer’s business is for sale or sold; there may be ways for a new purchaser to avoid debt incurred prior to the sale; it can also indicate financial or industry-specific problems; also, it may result in a new corporate atmosphere which may make collection more difficult; frequently, the new owners tell you the former owner is responsible for the debt, but the old owner tells you that the new owner assumed the obligations.
19. You receive excessive inquiries for credit references for your customer; this might be a customer who is trying to expand their credit in order to generate funds to pays others (“borrow-from-Peter-to-pay-Paul syndrome).
20. Excuses for nonpayment or slow payment (lost invoices, “check is in the mail”, skipped invoices, unsigned checks, NSF checks, “no one is available to sign the check”, etc.); excuses are never a good sign.
Good credit management means vigilance. Do not agree to extend credit, perform work, or supply materials unequivocally on a long-term project without some follow-up to see if your customer’s financial position has changed. If it changes, and if you react promptly enough, it will make recovery of your money easier and reduce your exposure. Fortunately, you have several options including filing a preliminary lien, obtaining personal guarantees, and requiring stricter terms. In next week’s blog we will explore some of the options you may want to consider when you see indicators that a customer may become a credit-risk to you.
If you have other early-warning signs that alert you to potential payment issues, please leave a comment below.
by: Mark A. Cobb
Over the weekend, I was speaking with an older gentleman who had held a prominent job in sales. He had served in that capacity for decades despite changes in technology, product and the opening of foreign markets. What were his secrets to longevity? This question became even more pertinent after he shared with me that his sales were always 10 to 20 percent below the other salesmen who worked for his firm. His secret? His collection rate was virtually 100%!!
Frequently, today’s business are divided between sales departments and credit departments, but this gentlemen has been trained in a prior period when salesmen were also directly responsible for collecting on their accounts. Thus, he shared, he would sell on (i) cash terms to anyone but (ii) credit was reserved for those who had a reputation or character for being honest and trustworthy. In addition, if bills were not paid promptly (usually at the time of delivery!), he wouldn’t sell to them anymore. This may sound harsh or contravene the call to sell, sell, sell. But while other salesmen had quarterly sales of $1M, the company only received revenues of around $650,000, he claimed; whereas, his sales were only $850,000 but his collected revenue was also $850,000. Thus, his bottom-line margins were much superior to his peers.
This insightful conversation reminded me of all the great things that anyone selling on credit can do to help make sure they get paid. These suggestions are generally applicable to any business which supplies items on credit, however, they are written particularly with Georgia subcontractor and suppliers in mind! Here are some ideas to consider and implement before issuing credit:
- Obtain a signed credit application and credit agreement
- Obtain useful information such as the debtor’s tax id number, social security number, home physical address, spouse’s name, bank account information, etc.
- Require a personal guaranty agreement
- Obtain useful information about the guarantor including correct spelling of his/her name, social security number, driver’s license, home physical address, bank account, spouse’s name, etc.
- Make sure your credit terms include interest and attorney’s fees
- If you are a third tier supplier or sub-subcontractor, make certain that you send a Georgia Notice to Owner and a Notice to Contractor (sometimes called a Notice of Furnishing) within 30 days of the first day in which you begin work on the job site
- If you are working on or selling materials to construction projects, you must separate your billing (and invoicing) by project
- Internally, make sure that you consistently use your customer’s full, legal name
- Invoice your customer consistently and timely
- Keep copies of delivery tickets or emails confirming receipt of your labor or materials
- Require any changes in product or costs to be in writing and signed by the party who will be paying you
- When payments are not made (or are NSF), consider re-evaluating the amount of credit your are willing to extend to your customer
- If you are a specialty subcontractor or material supplier working on a Georgia construction project, make sure that your materialmen’s lien and/or payment bond claims are made within 90 days of the last day in which you worked (or within 60 days if you signed a Georgia lien waiver or bond release).
- Contact a reputable Georgia construction collection attorney as soon as possible as “the early bird get the worm”
If your salesman and credit managers work together to recognize the importance of collecting proper information from customer up-front, then your collection rate should improve substantially. If you need an experienced Georgia construction collection lawyer to review your credit application, credit agreement, personal guaranty or any other document, please feel free to call us at (866) 960-9539 or email us today.
So many people contact us regarding nonpayment issues on Georgia construction projects, and I thought you might appreciate reading a summary of options we usually discuss during our first conference with our clients:
First, we assess some fundamental issues by asking the following questions:
• What type of services, labor or supplies did you provide?
• What was the last day you actually provided services, labor or supplies to the project?
• Have you been given any notices regarding failure to perform, defects, or other notices?
• Were you providing services, labor or supplies on a privately-owned project, a project owned by a governmental entity (local, State of Georgia or federal project)?
• Are they payment bonds covering the project?
• Was your contract written or oral?
• With whom was your contract (what tier are you)?
• Did you have a personal guaranty from someone guaranteeing payment of the amounts you are owed?
Assuming that you were a general contractor, subcontractor or supplier who provided quality services, materials and labor in a timely fashion, then whomever you contracted with probably owes you the money you are due. And, that is great. However, Georgia construction laws, when correctly applied, may allow you to seek recovery of the debt from a third party. Thus, our next assessment is whether there is any viable third-party who may also be liable for the debt. This can get very technical and complex, but here are some of the common areas we explore:
• Can a materialmen or mechanic’s lien be filed (which may make the real estate where your services, materials or labor was provided liable for the debt)? Click here for more information on this topic!
• Can you make a payment bond claim (which may make a third-party insurer liable for the debt)?
• Can a Constructive Trust be claimed (which may make retainage or other monies owed to a higher tier) which may make provide a source of recovery for your debt?
• Are there circumstances which allow a quantum meruit claim (which may make a third party liable for the debt based upon “fairness” issues)?
• Is there a guarantor which can be pursued?
Needless to say, the more opportunities there are for recovery, then (i) the more likely the recovery will be made, (ii) the higher the recovery is likely to be, (iii) the more quickly the recovery will occur, and (iv) the lower your costs of collection will be.
Ultimately, then, how do you and your Georgia construction lawyer work to improve your recovery?
• Periodically, review your contracts to make sure they comply with current regulations and statutes;
• Obtain a personal guarantee and other useful information (click here for details!);
• Learn all the various deadlines in Georgia for filing Lien Claims and for making payment bond claims (click here for some important Georgia Lien & Bond deadlines);
• Learn the statute of limitations for filing suits to perfect your Georgia Mechanic’s Lien Claims, your private project payment bond claims, your local municipality, State or Georgia and federal government payment bond claims;
If you are looking for a Georgia Construction Law Firm who can handle your files anywhere in the State of Georgia and who understand Georgia’s Construction Lien Laws, Subcontractor Laws, Miller Act and Miller Act Claims, please contact the Cobb Law Group to see how we can improve your collection rate!
Question: I have a judgment against someone who owes me money; how can I collection on this judgment?
That’s a question we hear almost daily around here. Many law firms will handle a commercial collection matter through judgment, but then they don’t know what to do. In other words, the typical lawyer will make sure you “win” your lawsuit, but he or she won’t do much to help you collection on the judgment. To us at the Cobb Law Group, that’s not much of a victory.
We’re different. We assist our clients will every aspect of their collection issues–from filing mechanic’s liens or making a payment bond claim to filing a lawsuit, preparing a foreclosure, securing a judgment, and pursuing post-judgment collection activities.
Even if we didn’t represent you in the law suit you won, we also help those with outstanding judgments collect against those judgments throughout the State of Georgia.
There are several steps a creditor a creditor should consider if they have a judgment.
First, if you have been awarded a judgment against another party in Georgia, it is vital to make sure that the court has issued (and recorded) a Writ of Fieri Facias which is commonly referred as a FiFa in Georgia. This Writ or FiFa is a judgment lien which attaches to all of the defendant’s property in the State of Georgia. Some courts issue a FiFa immediately upon granting judgment; however, many require a written request and a $5.00 or $7.00 fee. Thus, if you have a Georgia judgment, make sure the FiFa has been issued.
Second, record the original FiFa in each and every county where you think the entity who owes you money owns any assets. For our clients, for example, we search real estate ownership throughout Georgia and record the FiFa in every county where the debtor owns real estate. That way, if the debtor attempts to transfer any real estate or attempts to refinance any real estate, then your recorded FiFa may lead to payment of the debt.
Third, if you can identify a bank account which is owned by the debtor, then it may be possible to file a Summons of Garnishment against that bank account; similarly, if the debtor is an individual who is employed, then you may be able to garnish up to 25% of his or her wages. Garnishments in Georgia can be a very effective means of collection your judgment. Lately, we have been fortunate to garnish current construction projects in order to collect judgments rendered against subcontractors. Remeber to think creatively as garnishments can often be filed against anyone who owes your debtor money (including credit card companies, employers, tenants, etc.) ; be careful, however, as Georgia does not allow garnishment against all assets (such as retirement account, child suppert, etc.) so check with your lawyer before filing attempting a garnishment.
In addition to gerniahsment, there are several other great options available to the post-judgment creditor. For example, we frequently, use post-judgment discovery to assist us with locating and identifying a debtor’s assets. We use such techniques as depositions, written interrogatories, and third-party discovery to help us locate assets in Georgia and collection on the judgment.
If you have a judgment against somebody, don’t let it sit there gathering dust; contact us to see if we can help you find the money that you are owed.
The Cobb Law Group is pleased to announce the addition of Paul A. Rogers to its staff of attorneys. Paul comes to the Cobb Law Group with extensive experience with creditors’ rights in bankruptcy. He has worked for major Atlanta law firms and has served as a Chapter 7 United State Trustee for Bankruptcy, Paul’s legal experience adds a significant dimension to our practice which will offer our clients greater options for commercial collections.
In 2002, Paul received his juris doctor from the University of Nebraska; prior to that, he had a double-degree in history and religion from the University of Georgia. He is admitted to practice in multiple state and federal courts throughout Georgia and has published several significant articles in his field. Paul practice concentrates in Commercial Collections, Commercial Litigation Creditors’ Rights and Bankruptcy including representation of financial institutions, asset-based lenders, and commercial leasing companies. He represents secured creditors, committees of unsecured creditors, and trustees.
Because of his vast experience, Paul will assist Cobb Law Group clients regarding collection matters, commercial workouts, receiverships, bankruptcy and commercial litigation issues in state and federal courts. Paul has substantial experience with Chapter 7 Liquidation cases, and with the confirmation process in Chapter 11 Reorganization cases; in addition, he has served as lead counsel in numerous contested hearings in bankruptcy courts. Paul has also served on the Private Panel of Trustees for the United States Bankruptcy Court for the Northern District of Georgia.
We are very excited that Paul will be working with us and helping to increase our client’s recovery in our collection matters.
There is a fact about commercial collections that we think only credit managers and commercial collection lawyers truly understand: collection of account begin before any materials, product or labor are supplied!
What does that really mean? When a customer wants to purchase your product on credit, that customer is probably the friendliest and most forthcoming that he will ever be. So, here’s your chance to ask for information that will help you in the collection process in the event the customer’s bill is not paid.
Complete Application: In consultation with your commercial collection attorney, prepare a comprehensive application for credit. Then, when a prospective customer asks to purchase your materials, your first step should be to require the prospective customer to completely fill-out an application.
Guaranty: Collection of accounts can be difficult–customers with assets tend to pay their bills, but those without assets are typically sent to collections. While you may be able to obtain a court judgment against this customer, the judgment will be meaningless unless you are able to find some asset of the customer against which to collect. One way to increase the odds of recovery is to obtain a personal guaranty of one or more individual(s) who is willing to guaranty the customer’s debt. A business may be collapsed or put in bankruptcy with ease, but individuals are less likely to do so. Practical Tip: Look beyond the company’s owner for a guaranty: try to get a personal guaranty from the owner’s spouse, parent or child (where assets may be hidden).
Gather Information: Both the application and the guaranty form should be used as an opportunity gather information about the debtor. Be creative, but at a minimum get such information as:
- the customer’s legal name, type of entity, and jurisdiction where formed;
- the customers, EIN, physical addresses (not just post office box), and banking information;
- the guarantor’s full legal name and any aliases; and
- the guarantor’s physical address (not post office box), and social security number, and date of birth.
Make it Legible: None of the foregoing ideas will help you at all unless it can be read. It is amazing how many times a credit application is faxed, scanned and photocopied before it makes its way onto the collection lawyer’s desk. If a social security number is not legible or a name is not clear, then that information is useless. Before processing the customer’s application, please make sure it can be clearly and easily read.
Liens: There are all types of liens available to creditors in Georgia including UCC-1’s, security agreements, collateral pledges, mechanics liens, materialmen’s liens, etc. Contact your Georgia commercial collection lawyer to understand which liens may be appropriate for your type of business.
There are a lot of other things that can be done to help in the collection process prior to extending credit. We plan to discuss more of these in future posts. In the meantime, please share with us your ideas and success (or failure) stories!