When a debt goes unpaid then the courts can get involved and render a judgment to the lender; however, the court cannot force the debtor to pay the amount owed –.it is therefore smart to understand the methods used by those awarded judgments to collect the money awarded. These methods include the garnishment of declared wages, the seizure of property to be sold at auction, the forfeiture of assets held in banking accounts or the creation of a legal lien on a home or business. All of these methods are used to force those who do not wish to repay defaulted loans to pay back their debt.

When a defaulted loan case is brought before a court of law, the judge renders a judgment based on the facts of the case. This means that the judge decides how much an individual can feasibly pay back on a loan or mortgage. However, the court has no ability to actually force the decision on the debtor. A debtor can hide assets, claim that they cannot afford to repay the loan, or simply go declare bankruptcy. It is therefore the responsibility of the lender to prove that the debtor can repay the extended money. Once this has been done, then the court and/or law enforcement can assist in the judgment collection.

Garnishment of declared wages is probably the most common and easiest way to force payment. In this process, the debtor never sees his or her money before it is taken by the collection agency. The money is simply deducted from an individual’s paycheck. However, this method is not always the most efficient manner in which to collect funds. Many people do not have jobs and therefore do not have wages to garnish. Another possibility is that the debtor is paid by cash transactions or is a small business owner. Both situations do not necessitate a pay check which can then be garnished.

Another option is to seize the assets of the person who is in debt. These assets could be a car or a boat or even a checking or saving account at a local bank. If private property is seized, then it is quickly placed for sale through an auction to recoup the lost money. If a banking account is seized, then the funds are simply deducted from the account before the debtor can move or withdraw those funds.

If all else fails, then the lender can place a lien against a house or business. This means that before the owner can do anything with his or her property he or she has to pay the judgment. The property cannot be sold, refinanced, or rented until the judgment has been settled. The Internal Revenue Service routinely uses this method to force individuals who owe back taxes to pay.

While it may be a happy day when the judge awards you a judgment, it is usually short lived. A judge deciding in your favor is only the beginning of a long process that will ultimately force you to take some dramatic steps to insure that your money is repaid to you.