POST-JUDGMENT REMEDY TACTICS AND STRATEGIES
There is a saying in the collection industry that “it is easy to obtain a Judgment – the hard part is satisfying the Judgment.” In reality, a Judgment is simply a piece of paper. It is an Order from the court confirming that a debt is due and payable. The Judgment gives the creditor the right to pursue remedies to satisfy the Judgment. Accordingly, there are a number of weapons in our arsenal that we can use to secure payment for a client to satisfy a Judgment.
Each state has its own rules about the specific Judgment remedies available to a creditor. Some of those remedies are Bank Garnishments, Wage Garnishments, Asset Attachments, Sheriff’s Auctions, Debtor’s Examinations, and Judgment Liens. More are available in some states, and less in others. For example, if a Judgment has been secured in the state of California, a “Keeper” can be installed. In certain high profile situations, it is very effective to have a “Keeper” behind the retail store counter taking in money before it reaches the cash register.
It is standard operating procedure for the attorneys in the Williams and Williams, Inc. Network to utilize a Bank Garnishment action, when available. Of course, this is an exercise in futility if sufficient funds are unavailable. On the other hand, if the timing is right, a Judgment can be satisfied all at once. This can create financial havoc on a debtor’s bank account; however, our sole objective is to have your Judgment satisfied. The debtor is responsible for the repercussions, and has had previous opportunities to satisfy the Judgment on a voluntary basis. Most of our clients are unaware that, after a Judgment is rendered, a 30 day period must elapse before it becomes “Final.” When we generically refer to a Judgment, we mean “Final Judgment,” which is necessary before the remedy phase can begin. Typically, banking information is listed on a credit report. It is always a good idea to make copies of the checks used by a debtor as a reference source for garnishment.
If a Judgment is obtained against an individual resulting from personal liability, a wage garnishment can be effective, but please bear in mind that if a debtor is working for wages, there will usually not be substantial cash flow to make a significant difference towards satisfying the Judgment. However, a debtor’s desire to avoid embarrassing employer-employee relations often motivates the individual to secure a personal loan. In some states, wage garnishments are not allowed, while in others, a debtor is allowed to keep a very large percentage of a paycheck as a hand-to-mouth stipend.
All asset executions are only as effective as the competence of a sheriff or constable who must enforce them. It follows that when a Writ is issued, the sheriff is directed to seize all non-exempt property at the debtor’s location and hold it for sale. In areas where sheriffs do not perceive this duty as an important part of their job, the results can be zero. It is not uncommon to encounter a situation where a sheriff or constable personally knows a debtor; consequently, the Writ may sit around in an office gathering dust.
A debtor examination is a court-supervised process of having the officers and principals of a company testify under oath regarding the company’s finances and assets. The court allows a Judgment creditor to subpoena financial records, inquire about bank accounts, examine tax returns, and specifically probe into balance sheets and operating statements. In the event a debtor does not cooperate, then a warrant is obtained for the debtor’s arrest. The sheriff or the local police department must serve this warrant. In our county, which by no means is a huge metropolis, there is a room of 70,000 warrants not served. The success of this strategy is based on how efficient the legal agencies are in serving warrants. In many cases, an outside private process server can be utilized; however, this type of individual must be bonded and recognized by the courts as being able to carry out certain “police” functions.
In itself, “Recording the Judgment” is a collection weapon. In states where allowed, when the Judgment is recorded, we have your attorney convert it to a “Judgment Lien.” This means that there is a Judgment Lien placed on all property in the debtor’s name in the county where the debtor is located. This also includes property that would be in the name of a Judgment debtor corporation. A creditor then has the right to foreclose on the “liened” property; however, one must be careful here. Typically, there are lien holders ahead of you and most of the time, those Lien holders are “secured.” It is a misnomer to think that a Judgment lien elevates an unsecured debt to a secured obligation. One must remember, once unsecured, always unsecured. Nothing changes the category of a debt.
You have the right to have a Judgment Lien satisfied; however, if the party holding the Lien takes the initiative, should there be a shortfall after assets have been liquidated, then it is the responsibility of the party initiating the action to satisfy, in full, all secured parties of record that hold a superior position. Many times it is best to allow the Judgment Lien to remain intact. This means that if property is sold, regardless of your unsecured status, the seller, being of course, the debtor, would have to satisfy the Judgment Lien in order for the buyer to receive “clear title.” Once or twice a month, we receive notification from a debtor’s attorney that a Judgment Lien is an obstacle that a debtor now wants to deal with in order to sell a piece of property or equipment.
Every step along the way, we check for “laziness.” For example, if a Bank Garnishment was “denied” with a reference to an “offset,” then we instruct your attorney to make sure the debtor’s bank proves that the actual offset has occurred. In other words, a bank cannot deny a bank garnishment simply because of the debtor’s loan relationship with the bank. We force the bank to physically offset and set the money aside. The party requesting the garnishment has the right to request proof that the bank formally offset the debtor’s account, which of course, eliminates the possibility that the debtor will use funds in the account for cash flow purposes. If the bank fails to provide us with the appropriate proof, then the Bank President or CEO can be held in Contempt.