Collecting Out-of-State Judgments in New Jersey

When considering collecting a judgment obtained in another state against a New Jersey state resident or a corporation doing business in New Jersey, it is relatively easy to obtain a docketed New Jersey judgment by virtue of N.J.S.A. 2A:49A-25, et. (the “Act”). The process only takes three to four weeks, but it does involve notice to the defendant. On the rare occasion that the defendant objects, the process becomes only slightly more complicated.

Once a judgment has been docketed in New Jersey, pursuant to the Act, the collection process begins in earnest. A law firm that is armed with collection resources, years of experience, and a thorough understanding of the collection practices will have a number of available remedies, including the following:

  1. The levy. Once a judgment has been properly docketed, if the defendant entity or individual has any personal items of any value (including bank accounts), the Sheriff can levy upon these. Once the levy has been perfected, the items are either sold at auction or, if the levy is upon funds, the creditor may file a motion for turnover with the court. A hearing is then conducted resulting in the payment of those funds to the creditor.
  2. Wage execution. If the judgment was against an individual, the most certain and effective way of collecting the debt is usually by way of wage execution. If a defendant fails to object after notice is served an order is entered. The order is then served upon the employer. The employer then must remit 10% of gross wages each and every payday to the Sheriff, provided the wages are above a certain minimal level.
  3. Receivership. If the entity is not paying other creditors it owes, it may be possible to have a court ordered receiver appointed. It would be his/her duty to liquidate the assets of the corporation and make payments to all creditors.
  4. Charging order. If the defendant individual or entity is a member of a New Jersey Limited Liability Corporation (LLC), a motion can be filed in Superior Court against the LLC seeking an accounting of any amounts paid or payable to the defendant, and also seeking supporting orders restraining those payments and/or directing them to the creditor.
  5. Information subpoena. Once a judgment has been docketed in New Jersey the creditor may serve an information subpoena. There is one for an individual and one for business entities. After the information subpoenas have been served the defendant has 10 days to respond. If they fail to fully complete the subpoena, the creditor may make an application to have the individual or the principal of the entity held in contempt, sanctioned and/or arrested. The information contained in these information subpoenas is very helpful for purposes of the other collection strategies noted above.
  6. Post judgment deposition. Once the judgment has been docketed in New Jersey the creditor can seek a post judgment deposition of the debtor, the debtor’s related entities and other third parties, including accountants, suppliers, and customers.

While the above list is not all-inclusive, it suggests post judgment procedures available once an out-of-state judgment is docketed in the state of New Jersey. It can be highly frustrating for a creditor to chase down a defendant into another jurisdiction; however, in the hands of proper collection counsel, New Jersey has an adequate arsenal of remedies to collect an out-of-state judgment’s balance.