After you win a lawsuit and obtain a judgment against a defendant, you may face a second battle getting the defendant to pay up. Fortunately, New York law provides several options for judgment creditors to collect money owed to them by judgment debtors. These include the right to intervene in a judgment debtor’s lawsuit against a third party and to levy on any money the judgment debtor may recover through that lawsuit.
Intervening in a lawsuit
It is fairly common for a judgment debtor to have disputes with other parties in addition to you. Your judgment debtor may be in the process of suing another party based on any number of grounds. Say you have a judgment against the debtor for $150,000, and the judgment debtor recently filed a lawsuit against a third party for $1 million. New York law allows you to bring a special proceeding for a court order requiring the third party to pay you the first $150,000 of any settlement or other payment that the third party makes to the judgment debtor.
Special Proceeding
As a judgment creditor, you can bring a special proceeding under either CPLR 5225(b) or CPLR 5227 or, more commonly, both. CPLR 5225(b) concerns money or property belonging to a debtor that is in possession of a third party, while CPLR 5227 involves debts owed to the debtor by a third party. Upon filing the special proceeding, you must provide notice of the proceeding to the judgment debtor, who has the right to request to intervene in the proceeding. Similarly, other parties who believe they have an interest in the money in dispute can also ask to intervene. It’s up to the court to decide whether to permit or bar any of these parties to intervene and to determine their rights in accordance with CPLR 5239.
Work with an experienced attorney
Special proceedings are complex and require parties to follow specific legal processes. Speak to an attorney with expertise in judgment enforcement in New York to determine if commencing a special proceeding is recommended in your situation.
With vast experience in judgment enforcement matters, the attorneys at Katz Melinger PLLC represent individuals and businesses in state and federal courts throughout New York. Contact Katz Melinger PLLC at 212-460-0047 or online.
