Your tenant has already vacated your rental unit – so there is no need to file an eviction action — but they left owing you money. Is it worth your time and effort to sue them in order to obtain a money judgment? This is probably the third most frequently asked question that I receive when talking to landlords (the first two most asked questions in case you are curious are (1) which notice do I use when? and (2) how do I evict my tenant?).
There is not a simple answer to this question. It depends . . . on many things. Many variables need to be taken into consideration before deciding to spend the time and effort to sue an ex-tenant. Let’s consider what some of those variables are.
1. How much money does the tenant owe you?
Is the amount that is owed to you worth the time, energy, and cost to attempt to collect it? You will need to purchase a small claims summons which will cost you approximately $100. You will need to personally serve the ex-tenant with the assistance of the Sheriff or a private process server — typical cost between $35-$100. If you are representing yourself you will spend time away from work and therefore lose some wages. If you opt to hire a lawyer to represent you, you need to consider how much you will have to pay the lawyer.
There is no magic dollar amount that makes suing a tenant worth it or not worth it. The “breaking point” as I like to call it, will be different for different people.
2. Do you have the necessary information to sue the ex-tenant?
Do you have a fully completed rental application fro the tenant and have you updated the information contained in the application since the tenant first moved in? To assist with a potentail collections issue in the future, a good application should at least contain the name and address of the applicant’s employer, the name and address of the applicant’s bank, and emergency contact information for the tenant’s relatives or close friends. If your rental application contains the above then you will already have some of the information that may assist you in collecting the debt that is owed you.
Other information that you will need is the current address of the ex-tenant. Did s/he leave you a forwarding address? If not, you will need to find him or her so that they can be served with the lawsuit. Check CCAP and/or the Milwaukee Municipal Court site to see if they have recently been sued or received a traffic ticket which may provide you with a current address. Contact your postman/woman and see if the ex-tenant has forwarded their mail to a new address. If so, see if they will provide that new address to you (typically the answer is “no”). You can also hire a skip-tracer to locate the whereabouts of the tenant, but typically you will need to wait a period of time for the ex-tenant to become established at their new address before tht data will become available. Consider contacting the emergency contact person/s listed on the ex-tenant’s rental application to see if they know where you can reach the debtor.
If you do not have a current address for your ex-tenant, you will end up having to serve them at their last-known address (which is your rental unit) and becasue your process server will not be able to personally serve them since they do not live there any longer, you will end up needing to publish notice against them (this is when you pay a local newspapaerr to publish notice of the court date ) – in Milwaukee the cost to do this is $60.
3. Is the ex-tenant collectible?
When you obtain a money judgment against a person, you essentially receive a piece of paper which is called a “judgment.” Having a judgment against someone does not mean the same as getting paid on that judgment. I have yet to encounter any ex-tenant that came knocking on my door begging me to take the money that they owe me. Usually they require a little prodding. So, after obtaining a judgment you will often need to spend additional time and money to collect on that judgment. If your ex-tenant is not “collectible” then it may not even be worth it to sue them
There are numerous factors that you should consider when determining if a person is collectible or not. Are they employed? Do they have a bank account? Are they receiving need-based public assistance? Are they self-employed? Does their household income fall below the federal poverty line? Are their wages already being garnished? Have they been employed at the same job for a significant period of time? Do they have good credit? Are they currently paying child support? If so, how many children are they paying child support for and how old are the children? Are they incarcerated? Did they move out of state? These are only a few of the factors that you should consider when deciding how to proceed.
If the person is employed then you might be able to collect the judgment by filing a garnishment of their wages. A garnishment action is a separate lawsuit that requires you to purchase another summons. Even if the person is employed there are several exemptions that may prevent you from garnishing his/her wages. If the ex-tenant’s houshold income is below the federal poverty line then they are exempt from garnishment. If the ex-tenant is receiving any state-based aid then their wages are exempt. 80% of a debtor’s disposable earnings are exempt from garnishment, leaving only 20% that can be garnished at one time. If your ex-tenant is currently being garnished by another creditor you will have to wait in line until that garnishment is completed — garnishments last for 13 weeks. If your ex-tenant is self-employed you can bet that they will not voluntarily garnish their own wages – so that option will be closed to you. If the debtor is paying child support for one child (typically 17% of their gross wages) there will not be much money left over for you to garnish. If the ex-tenant is paying child support for 2 children (typically 25% of their gross wages) there will be no money left for you to garnish. You will be forced to wait until these children reach the age of 18 or the child support orders are terminated. Even if you are fortunate enough to be able to garnish your ex-tenant’s wages, if that individual should decide to leave their job or get fired, your garnishment will end.
Keep in mind that you are not allowed to intercept an individual’s tax refund — only the government can do that. If your ex-tenant is incarcerated s/he will not have any wages to garnish. If your ex-tenant has horrible credit already they will not care that you took another judgment against them.
You can also garnish a person’s bank account. However, there are many exemptions that can apply here as well. For instance, the first $1,000 in the account is exempt from garnishment. Most tenant’s that I have rented to do not have more than $1K in the bank. Any money in the account that is derived from government benefits is also exempt. If the garnishment exemptions do not apply, and you are lucky enough to be able to go forward, make sure that you do not make the mistake of serving the debtor before you serve the bank so that the debtor has time to drain his/her account.
If you do not possess the necessary information to evaluate whether or not a person is “collectible,” you are able to serve the debtor with what is referred to as a Financial Disclosure Statement. This is a document that is signed by a judge or court commissioner and requires a debtor to divulge any assets, jobs, and bank accounts. The debtor rarely returns this document and therefore the landlord in once again placed in the position of deciding whether or not s/he should spend more time, energy and money to compel the debtor to provide the information.
4. Is there a chance that the ex-tenant may end up purchasing real estate in the future?
If you think there is a possibility that your ex-tenant will purchase a home within the next 10 years then it may be worth it to at least take a judgment against them and then docket the judgment. Docketing a judgment is very simple and only costs $5. By docketing a judgment a lien will be placed on any property owned by the debtor or acquired by the debtor within the next 10 years in the county in which it was docketed. The judgment will also accumulate interest at the rate of 12% per year. Because of this some landlords will choose to sue the tenant, obtain a judgment, docket the judgment, and then just sit and wait.
If you are stuck in a position where it just doesn’t make sense to sue your ex-tenant because the amount owed is too little or the tenant is not collectible you should consider a new service offerred by Rent Recovery Service. For a small fee, Rent Recovery Service will report your ex-tenant’s debt to the 3 credit bureas even if you do not have a judgment. By using RRS you will at the very least create havoc with the debtor’s credit and will also alert any future landlords (that are smart enough to run a credit report) that the tenant owes money to a prior landlord. Who knows, that could be enough of a push to make the tenant pay you what is owed. For more information on Rent Recovery Service please see my prior post.
The decision to sue an ex-tenant for past due rent and damages is not always an easy decision. A lot of information and knowledge needs to be sifted through to determine if it is worth your time, effort, and money to initiate a lawsuit. I would enjoy hearing what other factors you consider when making this important decision — please let me know by posting a comment.
#1 by John (Dr Rent) Fischer on September 1st, 2009
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Great post…
The only possible consideration you missed is principal.
There have been times where I have taken someone to court for $50 they owed me… The final judgment was closer to $150 once court costs were figured in… normally for $50, I will just take it as a cost of doing business but these guys were REAL JERKS… so I did it just because I could…
#2 by Tristan R. Pettit, Esq. on September 2nd, 2009
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Thanks John. Principal is definitely something to consider.
#3 by Bill Gray on September 12th, 2009
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Great article! May I repost this on my blog Tristan?
Bill Gray
Bill@thelandlorddoctor.com
#4 by Tristan R. Pettit, Esq. on September 14th, 2009
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Go right ahead Bill. See you on Wednesday at the AASEW Tradeshow
T
#5 by taken advantage on September 19th, 2009
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This is the best most clear information out there! Thanks so much!
#6 by Tristan R. Pettit, Esq. on September 21st, 2009
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Thanks very much — I sincerely appreciate the feedback.
T
#7 by Cindy Lauren on November 10th, 2009
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This is very informative, thank you for posting it!
Do you have experience using Writ of fieri facias to claim personal belongings of tenant against whom you’ve already won a judgement? We do not know the address of the ex-tenant nor her bank information.
#8 by Tristan R. Pettit, Esq. on November 10th, 2009
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Thank you for your comment and I am glad that you found the post helpful.
In Wisconsin, which is where I practice, we do not have “Writ of fieri facias.” Based on your comment I believe it might be similar to an “attachment” here in Wisconsin. If you are referring to “distrain” – i.e. holding a tenant’s belongings until they pay rent – that was outlawed in Wisconsin a long time ago.
I would suggest that you contact a lawyer in your area to discuss this with.
In Wisconsin if you have a judgment and would like to collect on it you are limited to (1) garnishment of bank account, (2) garnishment of earnings, (3) attachment. Under any of those options you do need to serve the debtor so knowing where they live is important.
#9 by Ceilidh on September 13th, 2010
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Good advice even tho I am in Canada. I am sure much the same goes on here. Looking everywhere for advice on this subject!
#10 by Tristan R. Pettit, Esq. on September 13th, 2010
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Glad you found it helpful!
#11 by Kevin Rogers on September 14th, 2010
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Hi There. Great Blog. Even though I’ve been in LE for 21 years and a PI for 10 years I’m still ignorant in other areas of law. This one is a personal matter. We’ve been renting now for 4 years years and sharing the same electricity meter and fuel with the other unit. We’ve just found out from another landlord that this is illegal due to the electricity and fuel being in our name and we having to collect the utility money from the other tenants. We were turned onto the State Utility Commission, which in turn caused the landlord to raise our lease fee considerably. Is there any recourse we can take, possibly compensated for the past four years? We’ve had in the past discrepancies with the landlord and other tenants regarding the utilities, and have been shorted. I’m grateful for finding this law: Wisconsin statute 196.643 (2)
Thank you,
Kevin R
#12 by Tristan R. Pettit, Esq. on September 15th, 2010
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Hi Kevin — I cannot give legal advice via this blog so I cannot answer your question. If you and your landlord are unable to resolve the dispute over money that you paid in the past then you should consult with an attorney.
Good Luck
#13 by Becky on April 17th, 2011
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Tristian…. I am a tenant who rents from a slumlord of a landlord. I have never been late with rent or given them any sort of problems. I recenetly signed anither lease with them bc the only other choice was to rent month to month for an extra 100 bucks a month. I have now found a house I want to buy and I called my landlord to see if I could work out a way of getting out of the lease, even to pay the extra monthly going back to when I signed the lease and also the extra every month until I move and they refuse to work with me at all… Is there anything at all I can do to legally get out of this. I have rented from the 2 years, this was my 3rd time of signin a year lease. I live in Texas and I realize u dont, but I cant find any answers anywhere else. Also, there is mold in the home that I reported to them and they only come out and screwed wood over the mold and done nothing about it. I have 4 kids and feel thats unsafe. Not sure what to do here, Can u pls help?
#14 by Tristan R. Pettit, Esq. on April 18th, 2011
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Becky — I cannot give legal advice via this blog. As you also alluded to I am a Wisconsin lawyer and therefore I am not licensed to practice law in Texas. I would suggecst that you locate a lawyer who specializes in L-T law who is licensed to practice law in Texas and pay for a consultation with them.
You probably have already realized this — since hindsight is 20-20 — but if you were unhappy with your current landlord you should not have signed a renewal with him/her. You indicated that your only other option other then to sign a 12 month renewal was to opt for a month to month tenancy at a higher monthly rate — actually you had a third option — to move and rent from a different landlord. I realize that is a lot of work for you but if you were that unhappy with your landlord then it would have been worth it.
Nontheless even if you had entered into a 12 month lease with a different landlord, you would still have the same dilemna now that you want to purchase a house and break the lease.
In Wisconsin you would remain liable for all rent under the lease subject to the landlord’s duty to mitigate your damages by trying to re-rent the unit. So if the landlord could find a new renter to take the unit, and as long as the monthly rent obtained from the new renter was equal to your rent, you would then be off the hook. This mitigation stattue doesn’t allow you to break your lease but rather it puts a requirement on the landlord to try and re-rent the unit for you. Many landlords do not like this mitigation statute, as they feel a contract is a contract and that you should be held responsible for the full term of the lease. Regardless of your views on that issue, meeting with a L-T lawyer in TX would assist you in determining if such a statute exists in TX.
#15 by Michael Rodriguez on August 11th, 2011
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Do you know if I plave a judgement in Nevada and the tenant moves to a different state if it will follow them there?
#16 by Tristan R. Pettit, Esq. on August 12th, 2011
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Michael: When a jodgment is docketed it becomes a lien on any property owned by the debtor in the county in which it was docketd (as well as any property purchased by the debtor in that same county within 10 years of the docketing date). The judgment is also reported to the credit bureaus.
The lien on the property will not move with the debtor. If you want that lien to remain in place where the debtor now lives you will need to transfer the judgment to the county in which the debtor has moved. So you should call the clerk of courts in the county where the debtor now lives and find out what their requirements are to transfer a judgment. You will then most likely need to obtain a certified copy of the judgement from the originating county and forward it to the new county as well as following whatever additional requirements the new county requires — yes, a fee is usually required.
#17 by Michael Rodriguez on August 12th, 2011
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Thank you very much for the information. Would I be able to garnish wages in the state they moved or would I have to wait and see if they move back to Nevada? Also do you know if they file for bankruptcy is my judgement able to be discharged?
#18 by Tristan R. Pettit, Esq. on August 12th, 2011
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Michael — With regard to garnishment, ite depends on the county in which you are in. In Wisconsin, you can only garnish wages in the county in which the judgment occurred. So if the defendatn works in County X and the Judgement was taken in County Y, then you would need to transfer the judgment to County X before you could file a garnishment. I’m not sure how other states do it – you should talk to a lawyer in that specific state and county.
Yes, judgments are often dischargeable in a bankruptcy. If you dont yet have a the judgment, a debtor filing bankruptcy may also prevent you from attempting to obtain a judgment (its referred to as a “stay”) until you ask the bankruptcy court to lift the stay, if applicable.
T
#19 by S Jones on September 9th, 2011
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Do you have any suggestions on collections agencies? Is this different from filing for garnishment? Our ex-tenants left without provider us a telephone # to contact them, and their cell phones are disconnected; do we need to locate them first before any of this can be done?
Thanks
#20 by Tristan R. Pettit, Esq. on September 14th, 2011
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Dear S Jones. — Collection agencies can get involved either before you obtain a judgment in court or afterwards. A garnishment action is a separate type of lawsuit that can only occur after you have obtained a judgment in court. So which avenue you pursue really depends on where in the process you are and what the chances of collection are.
I would really need to know more about the specifics to offer any suggestions. There are also other options like Rent Recovery Services out of Florida.
#21 by Johannes Vanderburgt on December 20th, 2011
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Tenant moved out the end of this last June, 2011 leaving without paying for that month. Is there a time limit before we take them to court?
#22 by Tristan R. Pettit, Esq. on December 22nd, 2011
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I’m assuming this occurred in Wisconsin. If a tenant owes a landlord money that is a breach of contract action. The statute of limitations for breach of contract in Wisconsin is 6 years from the date of the breach. So any suit to recover the money in Wisconsin owed would need to be brought by the landlord within 6 years of the breach.
#23 by adi on January 17th, 2012
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teant owes me rent past due $258+678 +$20 daily late fee for 2 month she dont want to leave gave 30 days 3 days notice she still lives in house almost end of month should i sue her or evitcion her iam in fl please please help she never flow the lease with security deposite payment
#24 by Tristan R. Pettit, Esq. on January 17th, 2012
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Adi — Yes, if you have given a tenant a notice that they breached the lease (either for failure to pay rent or something else) and they fail to cure the breach within the required time frame, the next step would be the filing of an eviction action to have them forcibly removed.