Judgment Enforcement

In many jurisdictions, a judgment automatically creates a lien on real property, but these liens are not perpetual and require active renewal to remain enforceable. If a creditor fails to record the judgment in the county where the property is located, they lose their priority status to subsequent lenders and other judgment creditors. The expiration of these statutory protections can render a multi-million dollar award uncollectible if the debtor sells the property before the lien is properly perfected.

The illusion of a "good faith" settlement often serves as a delay tactic used by debtors to avoid the immediate freezing of their bank accounts. By promising to pay in installments or requesting additional time to "liquidate assets," the debtor keeps the creditor from seeking a writ of execution. During this period, the debtor frequently moves funds to offshore jurisdictions or pays off friendly creditors, leaving the original judgment creditor with an empty shell of a corporation.

Debtors often utilize frivolous post-trial motions and appeals to stay the execution of a judgment. While an appeal does not always automatically stop enforcement, it creates a cloud of uncertainty that can discourage aggressive collection. A veteran litigator must move to require the debtor to post a supersedeas bond, which ensures that the funds are secured by a third-party insurance company while the appeal is pending.

The judgment debtor examination is a powerful judicial tool that forces the debtor to appear in court and answer questions under oath regarding their assets and income. This is not a polite inquiry; it is a cross-examination where the debtor must provide tax returns, bank statements and deeds for inspection. If the debtor provides false information, they are subject to perjury charges and if they fail to appear, the court can issue a bench warrant for their arrest.

Often, the most reliable information regarding a debtor’s assets comes from third parties who have no incentive to lie for the debtor. Subpoenaing the debtor’s banks and accountants provides a clear history of every transaction and transfer made during the litigation. These records are essential for identifying the "badges of fraud" necessary to overturn fraudulent transfers and for locating the specific branches where liquid cash is currently held.

Debtors frequently hide their personal wealth inside limited liability companies and corporations to make themselves appear judgment-proof. Forensic asset tracing involves analyzing these entities to determine if they are merely alter egos of the debtor. If the creditor can prove that the entities do not follow corporate formalities and are used solely to evade creditors, the court may allow the creditor to seize the assets of the company to satisfy the personal judgment against the owner.

A successful bank levy can satisfy a judgment in a single day, provided the creditor has correctly identified the timing of the debtor’s deposits. For business debtors, the timing of the levy should coincide with the receipt of large accounts receivable or the processing of payroll funds. The sudden loss of access to operating capital creates an immediate crisis for the debtor, often forcing them to the settlement table with a cash offer to restore their business operations.

For individual debtors, wage garnishment provides a steady, albeit slower, method of recovery by directing the debtor’s employer to withhold a portion of their earnings (typically up to 25% of net pay) until the judgment is satisfied. This is a persistent and embarrassing encumbrance that remains in place regardless of where the debtor is employed. In the American legal system, a wage garnishment is an administrative order that requires the employer’s compliance under threat of legal liability.

While bank accounts and wages are the primary targets, a writ of execution also allows for the seizure and public sale of tangible assets such as vehicles, equipment, jewelry and art. The sheriff is authorized to physically enter the debtor’s place of business or residence to take possession of these items. The proceeds from the subsequent auction are applied to the judgment, providing a secondary source of recovery for high-value claims.

A judgment lien can remain in place for ten years or more and can be renewed indefinitely in many states. This means that even if the debtor has no liquid cash today, the creditor remains a silent partner in their real estate wealth. When the debtor eventually tries to sell the house or get a new mortgage, the title company will require that the judgment be paid in full at the closing, ensuring the creditor is the first to be paid from the proceeds.

If the debtor owns property that is not protected by a homestead exemption—such as a vacation home, an investment property or a commercial building—the creditor can move for a judicial foreclosure. This involves a court order to sell the property at a public auction to satisfy the judgment. While the process is procedurally complex, it is a devastating tool against a debtor who is attempting to sit on significant equity while claiming they have no money to pay their debts.

In several jurisdictions, a properly recorded judgment lien also attaches to any real property the debtor acquires in the future. This ensures that the creditor’s claim follows the debtor as they move or invest in new ventures. This "blanket" effect on the debtor’s future real estate acquisitions makes the judgment a permanent obstacle to their financial growth until the obligation is satisfied.

The UVTA provides the legal framework for identifying and overturning these deceptive transfers. To prevail, the creditor must demonstrate "badges of fraud," such as the debtor retaining control of the property after the transfer, the transfer being made in secret or the transfer occurring shortly after a large judgment was entered. Once these elements are proven, the court can enter a judgment against the person who received the property, making them personally liable for the debt.

When a business debtor "closes" their shop only to reopen the next day under a different name with the same employees and equipment, they are attempting to commit successor liability fraud. We litigate these cases to prove that the new company is merely a continuation of the old one. If the court finds that the "new" entity is an alter ego, the creditor can enforce the original judgment against the new company’s bank accounts and assets.

If an individual debtor hides behind a series of LLCs to avoid personal liability, the creditor can move to "pierce the corporate veil." This requires proving that the debtor did not maintain separate accounts, commingled personal and corporate funds and used the corporate structure as a mere shell for their personal financial activities. Once the veil is pierced, the individual's personal assets—including their home and personal savings—become fair game for the enforcement of the corporate judgment.

The United States Constitution requires that every state respect the judicial proceedings of every other state. This means that once a judgment is final in the original state, the new state must recognize it as valid. However, the debtor still has the right to challenge the domestication if they were never properly served in the original case or if the original court lacked jurisdiction. A veteran enforcement attorney ensures that the initial case was procedurally perfect to withstand these cross-border challenges.

When a debtor moves their wealth to a foreign country, the enforcement process moves into the realm of international law. This involves the use of letters rogatory—formal requests from a U.S. court to a foreign court—to assist in the discovery and seizure of assets. While many tax havens are resistant to these requests, sophisticated international treaties allow for the recovery of funds in cases involving clear evidence of fraud or money laundering.

For high net worth debtors with properties in multiple states, the creditor must manage several domestication actions simultaneously. If the creditor domesticates the judgment in one state but waits to do so in another, the debtor will have the chance to move their assets from the "safe" state to the "dangerous" one. SJKP LLP coordinates these filings to create a "pincer movement" that traps the debtor’s assets across all identified jurisdictions at the same time.