Debtor Examinations

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Debtor Examinations

"While the relevance of some of the questions may seem remote, the purpose of a judgment debtor examination is to leave no stone unturned in the search for assets which might be used to satisfy the judgment." Troy v. Superior Court, 186 Cal. App. 3d 1006, 1014 (1986).

A debtor's examination is the creditor's chance to ask the debtor questions about the debtor's assets, and receive live responses. A debtor's examination seems an awful lot like a deposition, i.e., there is usually a court reporter present, and the examination is conducted outside the courtroom. However, a debtor's examination is technically a "hearing", the proceedings can move back into the courtroom and be immediately heard by the judge if there is some issue, the debtor can be ordered right then and there to turn over assets to the levying officer (read: sheriff), and the debtor can be sent to the pokie to spend the night, or longer*, if the debtor refuses to answer questions.
*The record-holder for the longest U.S. contempt incarceration is believed to belong to H. Beatty Chadwick, ironically an attorney, who refused to repatriate $2.5 million from overseas to satisfy a divorce judgment in favor of his ex-wife, and sat in jail from 1995 to 2009 -- nearly 14 years!

The Debtor Examination Process

While the debtor examination process various from state-to-state by, well, about as much as any legal procedure that exists in U.S. law, generally the process begins with the creditor applying for an Order of Examination ("OEX") from the court that sets a date and time certain for the examination, along with an Order to Appear ("ORAP") that the creditor then has served on the judgment debtor. It is common that the ORAP be served along with a (long) list of documents that the debtor is required to bring to the examination, such as bank statements, deeds, titles to cars, trust documents, corporate shares, partnership agreements, and you-name-it.
In many states, and in the federal courts, debtor examinations are conducted as depositions at locations away from the courthouse. If there are objections, or a debtor refuses the answer, the parties will then have later file the appropriate motions with the court.
In states where the debtor is required to show up at the courthouse, the debtor will appear at the specified courtroom as required, and is sworn in as a witness. The debtor, debtor's attorney, creditor's attorney, and court reporter (if the creditor's attorney brought one), then go out into whatever place is available in the courthouse (frequently, just a bench in the hall outside the courtroom, an unused jury room, or about as often the courthouse cafeteria) and the examination commences. In heavily populated counties, debtor's examinations are assigned to a specific judge who holds all debtor examinations one day a week -- I've been to these rodeos when there were as many as eighty (80) debtor examinations going on at the same time. If there is an objection, the court is immediately available to resolve objections and compel the debtor to answer as appropriate.
The creditor's attorney asks questions; the debtor responds. While the debtor's attorney can make objections, in post-judgment proceedings there are frankly not many types of objections that are available. If there is a dispute, and the debtor refuses to answer the question, then the parties march back into the courtroom and the judge sorts it all out. If the judge determines that the debtor should answer the question, and the debtor continues to refuse, then the court's deputy will take the debtor into custody and hold the debtor in jail until the debtor either (1) decides to answer, or (2) is successful with an emergency appeal.
In Kyne v. Eustace, a 1963 California case, a creditor who was owed $353.50 demanded from a music teacher the list of her students, on the grounds that they might owe her money. The teacher refused to turn over the list, fearing that the creditor would call the students' parents and embarrass her. The Court held the teacher in contempt, confined her to jail, and after four hours she thought better of the situation and turned over the list. The teacher then sued the creditor for abuse of process; but the case was dismissed, because the creditor had both the right to obtain the list and to call the students' parents.

The Debtor Exam Turnover Order

Another very significant thing distinguishes a debtor examination from a deposition: At the end of the debtor's examination, the creditor can ask the court to order the debtor to turnover any assets identified during the examination to the levying officer, which means either the courtroom deputy (if the debtor has possession of the asset), or require the asset to be turned over within X days to the levying officer.
For instance, in the O.J. Simpson civil case, the judge ordered Simpson in the courtroom to turn over his expensive-looking Rolex submariner, which the creditor did believing that it was worth at least $12,000. Simpson did so with a smile on his face; it later turned out to be a $125 fake.
The Turnover Order can be used for any asset that the debtor has in its possession or control, even if the debtor doesn't have the asset immediately handy. For instance, it is common for the court to order debtors to turn over their cars, keys, title and registration to the levying officer within five days. Company share certificates, deeds to real estate, and the money in bank accounts are all common subjects of turnover orders.
The Turnover Order can also reach property that is outside the state. Assume that a debtor has $10,000 in a bank in Switzerland; even though the Court doesn't have jurisdiction over that account, it does have jurisdiction over the debtor, and if the debtor refuses to bring the overseas money back and turn it over to the levying officer, the contempt order will likely follow (see the story of H. Beatty Chadwick, above).

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