How does a landlord go about collecting a money judgment from a tenant who's gone bad? Contrary to popular belief, these judgments can be collected, leaving you with more than just a tax write-off, but it will take a little effort and perseverance.

First of all, the term “money judgment” can be defined as a court mandate that one party is legally entitled to collect a certain amount of money from another, but the collection is up to the winning party.

This is about the time when I should warn you that each state does have their own regulations when it comes to collecting judgments, so landlords should consult with a local collection agency or attorney to determine their own state's laws. There are many ways to collect a judgment, some more expensive (and sometimes effective) than others, so it helps to do a little homework.

That all being said, there are some recurring themes in the judgment collection process. It begins with the winning party recording the judgment among the public records of your jurisdiction, which you can do yourself or hire an attorney to handle for you. Once recorded, you have to apply through the court for what's called a Writ (or Order) of Execution, which will make the judgment appear on the tenants' credit report. As you're probably aware, judgments can ruin your credit, so this is sometimes enough to compel the tenant to pay up.

Sometimes, judgments can attach as liens against tenants' property, such as a car, or real estate (in the unlikely event they own any), and sometimes even their wages. There's a catch, though: you have to know what their assets are!

So, the trick is discover their assets BEFORE you even have a problem with them, by having them disclose them when they fill out a rental application (if you don't have one, see the Resources Box below for a free rental application). You can hire someone to sniff out a tenant's assets, but it's expensive and usually not cost effective for a small rent judgment.

As long as the tenant does not fall into bankruptcy, a judgment will stay on public record for ten years, but creditors can apply to extend the judgment for an additional ten years if the tenant doesn't pay. So, landlords have up to twenty years to collect judgments, provided they file for an extension before the judgment expires.

Landlords can collect these judgments themselves, or they can hire a collection agency or an attorney to do it for them, depending on their budget and time availability. However you choose to do it, make sure you collect the money that tenants owe you, and collect your judgments!