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Recovering From the Debtor Post-Judgement

So, you have a judgment, now what? Ideally, the prevailing party—the judgment creditor—will have vetted the judgment debtor’s assets before filing and during the suit. If so, the judgment creditor should have some idea of the debtor’s assets that could be used to satisfy the judgment. This knowledge will increase the likelihood of recovery, assist counsel and make the post-judgment recovery process easier and less expensive. If not, the judgment creditor may still obtain payment, but it will likely be more expensive, take a little creativity and require counsel with experience in post-judgment collections. The following discussion serves as a basic, non-exclusive list of tools the judgment creditor can use to recover from the debtor. These remedies can be useful for both the creditor who thoroughly vetted the debtor and those who have not.

A judgment must be final before a creditor can enforce post-judgment remedies. A judgment is final thirty-days after the date the judge signed the judgment. A judgment is generally enforceable for ten years. After the initial ten-year period, a judgment may be renewed.

The first step in enforcing a judgment is to issue an abstract of judgment and writ of execution. A properly recorded abstract of judgment creates a lien on the judgment debtor’s non-exempt real property within the county or counties where the abstract is recorded. The abstract should be recorded in every county where the judgment debtor owns real property in order to enforce the lien on all the judgment debtor’s property. The recorded abstract provides notice of the judgment to subsequent purchasers.

The abstract must be correctly indexed, or the lien will fail. Even minor mistakes can destroy the lien. After the abstract has been recorded and if the debtor satisfies the judgment, any and all outstanding judgment liens must be released. A judgment debtor that satisfies the judgment may have a cause of action for slander of title if the creditor fails to file a release of the judgment lien.

A writ of execution authorizes and orders a peace officer to enforce the judgment. The writ is enforceable for thirty, sixty or ninety days. The officer must proceed without delay to levy on the judgment debtor’s nonexempt property within the officer’s county or precinct. The officer can levy on real property, personal property, shares of stock and goods pledged, assigned or mortgaged as security as well as livestock.

If the judgment debtor appeals the judgment, generally, enforcement of the judgment is suspended. The appeal does not stop the accumulation of interest on the judgment, though. And, the abstract may still be issued and recorded, but the lien will be suspended during the appeal. The court will not issue a writ if the debtor files a supersedeas bond or notice of appeal. If the writ has already been issued, the clerk must immediately suspend further proceedings, including the writ.

The next step in enforcement is a garnishment of the debtor’s funds held by a third-party. Creditors initiate garnishment by filing a new lawsuit against a third-party. Usually, a creditor will garnish the debtor’s bank account, but safety deposit boxes, shares of stock, promissory notes and revenues from a trust fund are also subject to garnishment. The creditor must have a final judgment to file a writ of garnishment. The writ of garnishment must be verified and include an affidavit of the creditor. After the writ of garnishment is filed, an officer must serve the writ on the garnishee. The debtor must also receive a copy. After service, the creditor should contact the garnishee in order to negotiate the garnishment of the debtor’s funds.

Post-judgment discovery is used to identify the debtor’s assets. Interrogatories and requests for production are the primary discovery tools. Depositions may help to identify specific information, and admissions are valuable in proving up turnover relief. If the debtor does not respond to discovery, a writ of attachment may be used to have the debtor arrested and brought before the court. This may lead to a negotiation or contempt for the debtor. For obvious reasons, creditors will be wise to carefully consider this option.

Finally, turnover relief provides the creditor with aid from the court. The court appoints a receiver, who is granted rights to reach the creditor’s property to satisfy the judgment, including attorney’s fees, interest and costs. With the court’s appointment, the receiver has greater authority than the creditor to reach the debtor’s assets. And, ideally, a receiver will have specialized experience, knowledge and skills in recovering assets. Creditors should know that the costs associated with receivers differ depending on the judge, and the creditor must post bond before the court will appoint a receiver. The judgment does not have to be final to file a motion for turnover relief.

Although a judgment creditor may not think it is possible to recover from the debtor, with a little due diligence and the assistance of an experienced attorney, creditors stand a fighting chance at recovering from their debtor.

This blog is not legal advice. If you have a judgment or are thinking of filing a lawsuit, you should seek legal advice.

The lawyers at Hayes, Berry, White & Vanzant would be happy to answer any questions you may have regarding post-judgment remedies or factors that impact the likelihood of your recovery from the debtor. Feel free to contact us here.

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