Judgment Enforcement

Judgments are not eternal. In most jurisdictions, they have a statutory lifespan, typically ten years. If the collection is not completed within this timeframe, the judgment expires and the debt is legally extinguished. However, the law allows for the renewal of judgments.

We maintain a strict docketing system to ensure that no judgment under our care lapses. Renewal not only extends the life of the judgment but also adds the accrued interest to the principal amount. In many cases, the interest can eventually exceed the original collection amount. Failing to file the proper renewal paperwork is a malpractice-level error that lets the debtor off the hook permanently.

Sophisticated debtors rarely keep money in a checking account under their own name once a lawsuit is filed. They employ a variety of tactics to make themselves appear judgment proof. This includes working under the table to avoid wage garnishment, using shell companies to hold assets or putting property in the name of a spouse or child.

We anticipate these moves. A debtor claiming poverty while driving a luxury car or living in a high-end neighborhood is a red flag that triggers our forensic investigation. We do not accept the debtor’s word that they have no money. We demand proof through rigorous discovery procedures.

You are likely not the only person the debtor owes money to. There may be tax liens, child support arrears or other civil judgments competing for the same limited pool of assets. The law of judgment enforcement generally rewards the diligent. The first creditor to file an abstract of judgment or serve a writ of execution typically establishes priority.

This means that waiting even a few days to file paperwork can result in losing out on a major asset recovery. We move immediately upon the entry of judgment to record liens in every county where the debtor might own property, securing our client’s place at the front of the line.

One of the most powerful tools at our disposal is the Judgment Debtor Examination. We obtain a court order requiring the debtor to appear in court and answer questions under oath regarding their finances. This is not a polite conversation. It is a rigorous deposition where the debtor must disclose where they bank, who pays them and what property they own.

Failure to appear can result in the issuance of a bench warrant for their arrest. During these exams, we often compel the debtor to empty their pockets, turning over cash, watches or keys to safe deposit boxes immediately. It puts immense pressure on the debtor to settle the debt to avoid further scrutiny and humiliation.

Debtors lie, but their banks and employers generally do not. We bypass the debtor by issuing subpoenas directly to third parties. We subpoena bank records to see where money is coming from and where it is going.

If we see regular payments to a landlord or a credit card company, we can trace those funds. We subpoena employers to determine salary structures and bonuses. We also subpoena spouses or business partners who may be holding assets for the debtor. This third-party discovery often reveals the assets that the debtor conveniently forgot to mention during their examination.

When dealing with complex commercial debtors, money is often hidden in a maze of LLCs and corporations. We work with forensic accountants to analyze the flow of funds. We look for commingling of personal and business assets which allows us to pierce the corporate veil.

If the debtor is using a company bank account to pay for their personal mortgage or groceries, we can argue that the company is a sham and seize its assets to satisfy the personal judgment. Tracing funds through multiple transfers requires a sophisticated understanding of accounting principles and legal tracing rules.

A writ of execution allows us to instruct the sheriff to levy a debtor’s bank account. When the bank receives the levy, they must immediately freeze the funds up to the amount of the judgment. The money is then turned over to the sheriff and eventually to the client.

We often issue blanket levies to all major banks in the area if we suspect the debtor is moving money around. Even if we only catch a small amount, the freezing of the account disrupts the debtor’s business and daily life, often forcing them to come to the table to negotiate a payment plan for the remainder.

If the debtor is a W-2 employee, we can garnish their wages. This is a court order sent to the employer requiring them to withhold a portion of the debtor’s paycheck and send it directly to the sheriff. Federal and state laws limit the amount that can be garnished, typically around 25% of disposable earnings.

While this may be a slow way to collect a large judgment, it provides a steady stream of payments and keeps the pressure on the debtor. It also embarrasses the debtor in front of their employer, which acts as a strong psychological motivator to settle the debt.

For debtors who own cash-based businesses like restaurants or retail stores, we utilize till taps and keepers. A till tap involves the sheriff going into the business and taking all the cash and checks from the register at that moment.

A keeper is more intensive; the sheriff remains at the business for an entire day or more, seizing all funds as they come in. This effectively shuts down the business’s cash flow. The presence of a uniformed deputy collecting money from customers is devastating to the business’s reputation and usually prompts an immediate call from the debtor’s attorney to resolve the judgment.

The first step in any enforcement action is recording an Abstract of Judgment in every county where the debtor owns or might buy real estate. This creates an immediate lien on the property. Even if we do not force a sale immediately, the lien prevents the debtor from selling or refinancing the property without paying off the judgment.

It effectively clouds the title. Many judgments are paid years later when the debtor tries to sell their home and realizes they cannot close the deal until our client is paid in full with interest.

If the judgment is large enough and there is significant equity in the property, we can petition the court to sell the debtor’s property to satisfy the debt. This is known as a judicial foreclosure on a judgment lien.

It is a long and expensive process, requiring the appointment of a receiver and strict adherence to notice requirements. We must also account for homestead exemptions which protect a certain amount of equity in a primary residence. Despite the difficulty, the mere filing of a motion for sale is often enough to compel a settlement because no debtor wants to lose their home.

We can also seize personal property such as vehicles, boats, artwork and jewelry. This requires instructing the sheriff to physically take the items into custody. The items are then sold at a public auction.

We are strategic about this. We check for prior liens, such as car loans, before seizing an asset. There is no point in seizing a Mercedes if the bank owns 90% of it. We focus on assets that are owned free and clear. The threat of losing a prized collection or a luxury vehicle is a potent leverage point.

Most states have adopted the Uniform Voidable Transactions Act. This statute allows creditors to sue the recipient of the asset to return it or pay its value. We do not need to prove the debtor intended to defraud us if we can show they transferred the asset without receiving reasonably equivalent value while they were insolvent.

This expands the pool of defendants. We can sue the brother, the spouse or the shell company that received the asset. This puts pressure on the debtor’s personal relationships and closes the escape routes they thought they had established.

Debtors often try to hide behind the liability protection of corporations or LLCs. However, this protection is not absolute. If the debtor treats the company as their personal piggy bank, failing to follow corporate formalities or commingling funds, we can pierce the corporate veil.

This allows us to hold the individual personally liable for company debts or, conversely, seize company assets to pay a personal debt. We rely on the alter ego theory to show that the debtor and the company are one and the same, dismantling the legal fiction they are using to hide money.

The ultimate evasion tactic is filing for bankruptcy. This triggers an automatic stay which stops all collection efforts immediately. However, this is not always the end of the road.

If the bankruptcy was filed in bad faith or if the debt involves fraud, we can file an adversary proceeding to have the debt declared non-dischargeable. This means the judgment survives the bankruptcy. We also monitor the bankruptcy to ensure the trustee liquidates assets properly. If the debtor fails to disclose assets in their bankruptcy schedules, they commit federal perjury, which gives us immense leverage.