To Settle, or Not To Settle, That is the Question:
Collectability of the Judgment in South Carolina
I was recently in a mediation where I, my client, and our mediator all felt that we had a very strong case; however, my client and I were perplexed by the fact that the settlement offers coming from our opposition were only 15-20% of our demand. This issue that came up in the mediation was collectability of any judgment we would be able to obtain at trial. It is unfortunate, but this is a situation many of my clients become faced with from time to time. The fact is, you can oftentimes have a very real choice between taking a settlement that is far less than you deserve or having a judgment that claims you are owed $1,000,000.00 but is truly worth no more than the paper it is written on due to the fact that the judgment is uncollectible or the defendant is judgment-proof.
The following factors are things that should be considered when determining if you should take a settlement offer, or go to trial:
- South Carolina is NOT a wage garnishment state. Therefore, the debtor must have assets that can be attached for a judgment to have real value. While personal property such as furniture, or even vehicles are subject to attachment, it is often cost-prohibitive to attach personal property due to the lack of substantial value to these types of assets. A debtor must own real estate or financial assets such as bank accounts, stocks or bonds for there to be any real value to attach a judgment to.
- Beware of the exemptions. Judgments in South Carolina are subject to certain exemptions, such as the primary residence exemption ($50,000.00 on a primary residence). When looking to real property, also be cognizant of the priority of your claim. A previously recorded mortgage will take priority, therefore, if you have a $75,000.00 judgment against someone who owns a home valued at $150,000.00, but they have a $100,000.00 mortgage, you will collect nothing after taking into account their SC exemption on primary residences.
- Finding hidden assets. You have your judgment, hire an investigator and find out that on the surface, the debtor owns no property. Many times debtors who know they are up to no good title their assets in their spouse’s name, thereby making them uncollectible in reality. You may file a supplemental proceeding to “find” hidden assets, but this often increases you expenses by way of legal fees and can offer little to no results against savvy debtor.
- Time constraints. You first have to file with the County Sheriff and ask that they search for and seize any assets they find. When that’s complete and turns up nothing of any real value, you may now file your supplemental proceeding. Theoretically, you could chase this money down for years. Judgments are only viable in South Carolina for 10 years, so you must act quickly.
It is not completely dire. A judgment will often hurt a debtor’s credit making it impossible to buy property or get a loan. Also, if they have property, the judgment must be satisfied from the gain realized after the sale. This will often make it preferable to negotiate a satisfaction of a judgment that may be in excess of the initial settlement offer. These are all things to be carefully considered by you and your attorney.
You are faced with a collection issue, please feel free to contact us at (843) 903-1212.
Dennis J. DiSabato, Jr.
The Law Office of Dennis J. DiSabato, Jr., LLC
3888 Renee Drive, Suite 201
Myrtle Beach, SC 29579