Articles Posted in Collections

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Sometimes, achieving a favorable ruling on liability and damages, while an enormously important step, isn’t always the end of the line for getting the compensation you deserve. In certain circumstances, you may need to undertake additional legal actions to collect the money you deserve, including filing garnishment actions against other entities. Sometimes, it also involves seeking default judgments. To make sure you have access to all of the procedural techniques available to get the money owed to you, make sure you have retained a skilled Georgia collections attorney.

One example of a case in which the award of damages was only the beginning was the litigation undertaken by a lien services company. The lien services company sued a health care and logistics services provider. The lien services company achieved success in that case, obtaining a money judgment. To seek out the money it was owed, the lien services company filed a garnishment action against a different corporation.

In this garnishment case, the defendant took no action in response to the lien services company’s initial filing. Due to the defendant’s inaction, the lien services company asked the trial judge to issue a default judgment. A default judgment means that the defaulted party failed to take the required steps within the mandatory time period established by the law. Generally, for a defendant in Georgia, the law allows 30 days to file an answer. After those 30 days, if the defense has submitted no answer, it is in default. After a defendant is in default for 15 days, the trial court can enter a default judgment. Once that happens, the default judgment carries the same impact as a judgment on the merits.

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Sometimes, getting the compensation your business deserves for a breach of a contract simply involves filing legal action and then presenting a persuasive argument and getting a judgment in your favor. In other circumstances, this step is the first in a multi-faceted process. Whether your needs are related to commercial litigation or judgment collection, you need to make sure that you have the sort of experienced Georgia business counsel that your case demands.

A matter recently decided by the Court of Appeals is an example of how elaborate such disputes can be, and how very minute errors can have major consequences. The first legal case was a contractor firm’s commercial litigation action in California. The contractor won that lawsuit and obtained a judgment that included a $1 million damages award. Of course, getting the compensation you’re owed sometimes involves more than winning your case. This is particularly true if you believe that the entity that owes you damages is engaging in improper conduct, such as making fraudulent conveyances, to evade paying the judgment. When that happens, you may need to litigate in multiple different jurisdictions to get the benefit of your damages award.

This contractor firm allegedly found itself in that type of situation. The defendant in the California case had, according to the contractor firm, provided another entity with the funds needed to acquire a piece of real estate in Roswell. Allegedly, this was all a part of a scheme to shelter the California defendant’s assets from the judgment creditor.

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As a creditor, your objective is to pursue any legal means allowable to obtain payment on the debt owed to you. Sometimes, those involved in the entity that owes you a debt may engage in improper activities to try to hide money or avoid paying you. As a judgment creditor, you need skilled and determined Georgia debt collection counsel on your side fighting for what’s duly owed to you.

A recent example of a judgment creditor that had to take multiple steps came from a dispute over an insolvent company’s large transfer of LLC funds. The insolvent LLC was an Atlanta area-based real estate business. The LLC’s managing member was also the individual who handled the LLC’s daily operations. In 2012, the insolvent LLC faced foreclosure on all of its assets. According to the judgment creditor, despite the LLC’s problematic financial condition, the managing member nevertheless authorized the company to make a $239,000 preferential payment…to the managing member. That transfer was a repayment of an unsecured loan that the managing member had previously made to the LLC.

In 2013, the LLC stopped making lease payments to the plaintiff, although the lease was not yet complete. This led the plaintiff to obtain a judgment against the LLC. Unable to collect from the insolvent LLC, the plaintiff took this additional step and went after the managing member for the payment he made to himself in 2012. The plaintiff’s argument was that, by making the preferential payment to himself while the LLC was insolvent, the managing member breached its fiduciary duty to it.

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Recently, a federal court de­clared Georgia’s garnishment stat­ute unconstitutional leaving the short-term future of garnishments uncertain. While the decision tech­nically affects only the Clerk of Gwinnett County, other clerks in Georgia have already taken action to halt garnishments. Likewise, at­torneys and creditors have now lost the defense of complying in good faith with existing law after the publication of this decision. Finally, credit unions could also be liable for complying with garnishments.


The decision in Strickland v. Alexan­der held that Georgia’s garnishment statute is unconstitutional for three reasons: (1) it fails to require no­tice to debtors of certain state and federal exemptions to garnishment (like Social Security exemptions); (2) it fails to provide notice of a proce­dure to claim an exemption; and (3) it fails to require a timely hearing to decide exemption claims. The court enjoined Gwinnett County’s State Court Clerk from issuing summons of garnishment using current forms and procedures that were ruled uncon­stitutional. The facts of the case cre­ate a compelling story for the debtor.

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