CAUTION STATE LAW VARIANCES
Judgment enforcement law is notoriously non-uniform between the various states.
In addition to examining the debtor, in most states a creditor can also examine any third-parties that the creditor reasonably believes might have information about the debtor's assets.
Suffice it to say that third-party examinations may have the ancillary effect of putting pressure on a debtor, who might not want friends, family and business contacts to be subjected to interrogation by the creditor. I have had numerous cases where the case settled just because the debtor didn't want to see somebody else (usually a spouse) hauled into court and examined. My friend and colleague, creditors' rights attorney Richard Evanns, once famously had an excellent result in a case where he found out that the debtor had a mistress, and set the examinations of both the mistress and the debtor's wife at the courthouse on the same date and at the same time.
Here, the most susceptible debtors are when the debtor is a business. No business wants its customers, vendors, lenders, and other key relationships messed with by outsiders, particularly a creditor. About the time that a creditor starts to send out subpoenas to any of these folks, the business debtor will have to make the painful choice whether to settle with the creditor, or jump from the frying pan into the frier by declaring Chapter 11 bankruptcy.
Third-party examinations are actually just a different variety of a debtor's examination, with a key difference being that the debtor is already subject to the personal jurisdiction of the court, and thus the court can simply order the debtor to appear, whereas the court does not yet have personal jurisdiction over the third-party, and the creditor must establish that by way of a subpoena served on the third-party. Otherwise, the process is largely the same: The third-party is required to show up (and sometimes to bring documents as well), and if the third-party doesn't comply, then it is jail time.
If there are reasons why the third-party should not fully comply -- say the creditor asks for all sorts of records that unreasonably invade the third-party's privacy -- the third-party may attempt to quash the subpoena by filing a motion with the court in advance of the examination.
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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