Rental Collections

 

Collections can be handled in one of two ways. First, when someone is evicted, you can pursue past due rent and damages through a “Second Cause Hearing” (the first cause being the eviction). If no eviction took place, you can sue for damages in small claims Court. In either case, this is where you go to Court and present your case to the magistrate and request judgment in your favor.

You can obtain past due rent and damages to the premises at a Second Cause Hearing or Small Claims Hearing. Past due rent can be awarded. You cannot get the full lease amount unless the tenant stayed in the premises for the entire duration of the lease. You can only get rent for the months the tenant lived in the unit and the months the unit remained vacant while trying to re-lease it. There is a duty to use best efforts to re-let the premises. You can also obtain judgment for any damage to the premises. The damage must be beyond ordinary wear and tear and we must prove that in Court. Typically you prove this through pictures of the damage along with invoices and testimony of the property manager as to the condition of the premises. You cannot collect for labor that is self-performed. Therefore it makes sense to use a maintenance person to perform your repairs. After all the evidence is presented the Magistrate will make a decision as to whether the amount requested is truly damage above and beyond ordinary wear and tear.

If judgment is granted, you then have to obtain information to collect on the judgment. You do this by requesting a Judgment Debtor Examination.  The Court sends out notice of the Judgment Debtor Examination, and a Court date is scheduled. If the Defendant shows up for the hearing, you then question the Debtor regarding their assets and income. If they have non-exempted income or assets (for instance, social security income is exempt, as are other government assistance programs) they can be garnished via bank garnishment or wage garnishment. If there is no money in the bank account at the time of the garnishment, you have to try again. For this reason, wage garnishment is a better choice. You can garnish up to 25% of a Debtor’s take home pay per period.

Many times, a Defendant is uncollectible. This means they either only have exempted income or you do not have information on their income and assets at all (for instance, if they fail to appear at the Judgment Debtor Examination). For this reason, the only good time to actually pursue a Second Cause Hearing is when we know for sure ahead of time that the Defendant has garnishable income/assets and we have their bank account or employment information ahead of time. This is very rare. For that reason, the best avenue for most cases is to turn the debt over to a Collection Agency.

A collection agency will do everything including cold calling and reporting to credit bureaus to collect the debt.  A person may still be uncollectible, so the collection agency is not always successful.