CREDITOR DEBTOR LAW
An Overview of Creditor-Debtor Law and
Judgment Enforcement Techniques
CAUTION STATE LAW VARIANCES
Judgment enforcement law is notoriously non-uniform between the various states.
Form of Judgment for Collection
Most of the time, litigators who are pursuing a debtor are concerned enough about just getting a judgment against the debtor, without worrying too much what that judgment looks like. The form of a judgment can, however, have dramatic implications for post-judgment enforcement activity. Follows are some helpful hints.
First, if you state has a standard form to be used for a judgment, attempt to use that form first before drafting your own from scratch. The reason is that a good deal of post-judgment activity involves the clerk and the sheriff, and using a standard form judgment makes it easier for them in determining what they need to do. By contrast, a long and complicated judgment form might languish for weeks in the clerk's or sheriff's office as somebody finds the time to decipher it.
Second, if you have to draft your own judgment, then follow the KISS principle -- Keep It Simple, Stupid. Too many judgments are overly complex and, while it may makes sense for counsel who have lived with the case for several years, makes little immediate sense to those approaching it for the first time. Again, much of the time in post-judgment enforcement, you'll be dealing with the clerk's and sheriff's offices, and generally they have no Professor Kingsfield to explain the judgment to them. Short, clear, and concise is how to draft a judgment if you want it enforced without problems arising from the language of the judgment.
Third, make sure that it is crystal clear what amount of the judgment is attributable to each debtor, and if there is joint and several liability. Debtor's counsel often gum up the works by showing that there is an ambiguity in the judgment as to who is responsible for what, or for how much, thus requiring the creditor to go back into court and amend the judgment, which can take some months depending on the court's docket.
Fourth, if there is an initial judgment for liability, and then other things are added later, such as attorney's fees and costs, etc., consider going back into court for a "Final Amended Judgment" that rolls everything together into a single document.
Fifth, if you are in a community property state, try to get the court to specify that the judgment is also against the community of the debtor and spouse (or both if they are joint debtors). While the community property should be liable for the debt anyway, this can help in certain situations, such as dealing with the sheriff's office or if you have to domesticate the judgment in another state.
Sixth, have a process server personally serve the judgment on each debtor. Occasionally, a debtor will argue that "my attorney never told me that a judgment was entered against me", and sometimes a particular bench officer will have a weak moment, buy into this argument, and give the debtor a chance to argue that the judgment is somehow invalid (these attempts almost work, but they do cause delays). If there is a Proof of Service in the file that says that on January 16, the process server slapped the debtor upside the head with the judgment, you can avoid that particular charade. This is a must if you are dealing with a default judgment, since the debtor will inevitably feign ignorance of the judgment altogether.
Suffice it to say that much of this is simply common sense, but take if you are drafting a judgment, think ahead to post-judgment enforcement and how the judgment should be look for that purpose.
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MAJOR SECTIONS OF WEBSITE
ABOUT JUDGMENTS - Overview of judgments as they relate to judgment enforcement.
Collecting Default Judgments - Special considerations for default judgments.
Form of Judgment for Collection - Getting the form of judgment right can make collection easier, and getting it wrong more difficult.
Judgments On Appeal - Is a judgment enforceable when it is being appealed? Maybe. Appeal bonds a/k/a supercedeas bonds also discussed.
JUDGMENT ENFORCEMENT DISCOVERY - It's difficult to collect against the debtor's assets unless you find them, and it can be difficult to find them.
Private Investigation - Non-judicial methods of investigating the debtor's assets and affairs, including database searches and the use of private investigators.
Written Discovery - Some states allow for written discovery to be propounded to a debtor, which is a good way to start accumulating information from the debtor, or at least what the debtor claims is his assets.
Debtor Examinations - The traditional way of obtaining information from a debtor, which is to haul them into court, sit them down at a table, and ask questions point-blank about assets and income.
Third-Party Examinations - Means of obtaining discovery from third-parties about the debtor's assets and affairs.
JUDGMENT ENFORCEMENT REMEDIES - The primary methods for taking assets and income away from the debtor.
Judgment Liens and Abstracts of Judgment - Ways of freezing assets so that they cannot be easily transferred away pending execution.
Writ of Execution - This document authorizes the Sheriff to make collections on behalf of the debtor, and some other stuff.
Writ of Garnishment - Used to collect wages and against income streams in some states.
Federal Wage Garnishment Law (FWGL) - 15 U.S.C. sec. 1671 provides nationwide wage exemption.
Writ of Levy - The remedy that allows the Sheriff to grab the asset and auction it off on the courthouse steps.
Charging Orders - The "exclusive" remedy against a debtor/member's interest in a partnership, limited partnership, or limited liability company.
Assignment Orders - An order used to intercept income streams, such as advertising revenues, royalty payments, etc.
Creditor Suits - Actions taken against a third-party who has possession of an asset that is still titled in the name of a debtor, or who has violated some other enforcement process.
Receivers - Often the end-game strategy to take a difficult debtor down, by having the court appoint a neutral with all the powers of the debtor, such as to sell season football tickets, or dissolve corporations.
OTHER JUDGMENT ENFORCEMENT THEORIES - While technically not "remedies", these bodies of law are often used in judgment enforcement proceedings.
Alter Ego and Veil Piercing - Cutting through corporations, trusts, and LLCs which are simply the debtor himself in another form.
Voidable Transactions (was Fraudulent Transfer and Fraudulent Conveyances) - Used where title has been transferred to a third-party.
OPINIONS -- Interesting opinions in creditor-debtor law.
Kyne v. Eustice, 215 Cal.App.2d 627, 30 Cal.Rptr. 391 (1963).
In re Foster, 556 B.R. 233 (Bk.E.D.Va., 2016).
Church Joint Venture, L.P. v. Blasingame, 2020 WL 284527 (6th Cir., Jan. 21, 2020).
LAGNIAPPE - A potpourri of stuff.
OTHER INFORMATIONAL WEBSITES
BY JAY ADKISSON
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© 2020 by Jay D. Adkisson. All Rights Reserved. No claim to original government works. The information contained in this website is for general educational purposes only, does not constitute any legal advice or opinion, and should not be relied upon in relation to particular cases. Use this information at your own peril; it is no substitute for the legal advice or opinion of an attorney licensed to practice law in the appropriate jurisdiction. This site https://creditordebtor.com Contact Jay Adkisson by phone to 702-953-9617, by fax to 877-698-0678, or by e-mail to jay [at] creditordebtor.com