CAUTION STATE LAW VARIANCES
Judgment enforcement law is notoriously non-uniform between the various states.
Non-Judicial Investigations Of Debtor
Very often, the most valuable information gathered about a debtor's assets comes outside of the judgment enforcement process, through private investigations. In fact, there is an old saw that goes around among creditors' rights attorneys that you learn about the debtor's assets outside the courthouse, and the primary purpose of post-judgment discovery is to establish that the debtor is lying about assets. This isn't exactly true -- goodness knows that in complex cases the only way for a creditor to get the complete information it needs is through judicial discovery -- but there is not just a little truth in this old saw. A smart creditor will gather as much information as possible outside the court process, before starting post-judgment discovery. The following is by no means an inclusive list of the things that creditors will do to search for assets outside of the court discovery process.
When I get a case for enforcement, the very first thing that I will do is to run a Google search of the debtor. Usually, debtors who have money are engaged in things, whether for business or just socially, and reports of these will show up on the internet. There might also be references to places the debtor has lived (and may continue to own properties), business associates of the debtor who themselves might be researched to see if they are in partnership with the debtor, and many other things.
I will also set up a Google alert for my debtor, which will send me an e-mail anytime the debtor's name pops up new. This can be useful to learn that the debtor has been the subject of a new job announcement, that somebody has died and the debtor was listed as a surviving heir, or that the debtor was mentioned at some social gathering. For example, I once found out through this method that the debtor had attended a meeting of a yacht club, which lead to the discovery of the debtor's yacht held in the name of a shell company.
The Case File
There is often nuggets of useful information found in the file of the case leading to the judgment, such as depositions where the debtor was asked about employment information, business subsidiaries and affiliates, etc. Often, debtors will file reams of documents to try to stave off summary judgment, and these may yield useful leads to a debtor's assets.
Creditors have access to a variety of commercial database services, not the least of which being LexisNexis and Microbilt, that can -- literally in seconds and just for a few bucks -- generate hundreds of pages of reports on the debtor, including existing and old bank account information, credit applications, credit card information, property records, utility providers, and various public records. This information will start to fill in the picture of the debtor and give the creditor an idea of the liquid assets to execute upon first.
These are the legal database services; there are also commercial database services outside the U.S. which, well, suffice it to say may be able to provide information that isn't available from the U.S. providers. Many of these offshore database services get their information from hackers of banks and other financial institutions, and can frequently reveal undisclosed funds in offshore banks and records of financial transactions between borders.
If a case has any significant value, the creditor will usually hire a private investigator to track down the debtor and its assets. While there is a great variety in the quality of private investigators (some will merely print off data they can find on the internet or through the databases and charge you for what you can easily do yourself), the good private investigators will get out into the field, do "trash pulls" by stealing the debtor's garbage to look for letters and receipts, hide a real-time GPS tracker on the debtor's car, use drones to survey the debtor's property, and -- most importantly -- interview folks who might know the whereabout of the debtor's assets and also don't like the debtor (think ex-spouses, ex-employees, and ex-business partners here). Good private investigators also use database services quite heavily, of course, but they will also follow up on the leads generated by what those databases reveal, such as rooting through the property records for signs of a fraudulent transfer, contacting businesses that have recently pulled a credit report on the debtor to see what happened, and numerous other things.
The truth is that a creditors' rights attorney will often hire a private investigator specifically because they will push the envelope and do things for which the attorney might get called on the carpet by the state bar; private investigators introduce "plausible deniability" into the collection process for the creditors' rights attorney, who can use the information while disclaiming specific knowledge of where it came from. Very often, private investigators will do their work sight-unseen, and the debtor never gets wind of it. Because a debtor has no right to discovery against the creditor in post-judgment enforcement proceedings, there is little that debtor can do to ferret out overly-aggressive conduct by a private investigator unless it is otherwise brought to the debtor's attention.
All of which is why private investigators are frequently used, and the best ones are worth their weight in gold.
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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
Contact Jay Adkisson:
Phone: 702-953-9617 Fax: 877-698-0678 jay [at] jayad.com
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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