This Guide may be of assistance to a Judgment Creditor in evaluating how to collect on a money judgment in Texas.
The Money Judgment: The Judge reduces all claims between the parties to this Document.
You won your case in a Texas Court, or one of the Federal Courts from one of the four Texas Districts. After a jury trial, or bench trial, or motion for judgment, the Judge signed a judgment in your favor, "ordering" "adjudging" or "decreeing" that you recover money from a party or parties to your case. When certain deadlines expired, you obtained a "final" money judgment out of a court in Texas.
Not all judgments are enforceable. Make sure your Judgment is enforceable.
This Guide assumes that your judgment is final, valid, and subsisting. However, the issue of whether your judgment is "final" can be complicated, and could be the subject of a lengthy guide of its own. The importance of "finality" of judgment effects whether a judgment creditor can enforce a money judgment using certain collection methods. Sometimes, seemingly small matters about the content of a judgment prevent its finality. See, e.g. Smith v. Rhodes Props., 2010 Tex. App. LEXIS 5907 (Tex. App.--Dallas July 27, 2010, no pet.)). An appeal may also keep you from enforcing your judgment for a period of time. See In re Longview Energy Co., 464 S.W.3d 353, 355 (Tex. 2015) (Orig. proceeding) (" To suspend execution of a money judgment on appeal, a judgment debtor must post security..."). My Firm will usually not undertake an engagement for collection of a money judgment unless the Client represents that the Judgment is valid (as opposed to void - which means that it must have been based on proper service, return and notice), is not subject to claims of setoff or payment (unless those amounts are identified in advance), and that the judgment debtor was not in bankruptcy when the Judgment was obtained, and is not currently in Bankruptcy).
Having an enforceable money judgment does not mean you'll get paid anything.
Courts expect judgment debtors to pay the Courts' judgments. But even though you have a money judgment, the judgment debtor (usually a defendant - but sometimes a losing plaintiff) does not voluntarily have to pay you. Perhaps the judgment debtor brazenly says "I'm not paying, come and get it," directing you to Texas' generous Homestead Exemption and Texas Property Code (which provides exemptions for up to $100,000 of certain categories of personal property). You are further discouraged by the possible protection for all the judgment debtor's retirement funds and the absolute protection for cash in bank accounts that come from social security, unemployment or worker's compensation benefits.
Having an enforceable money judgment does not necessarily mean your attorney is going to do anything to collect it.
Check your fee agreement carefully to see if your original attorney is obligated to assist you with collecting a judgment. Most original fee agreements (such as the one you have with the attorney who obtained a judgment) do not include reference to collection efforts. The issues in your Case are over and have been reduced to the relief awarded in the money judgment. If the judgment debtor(s) do not voluntarily pay you, you now have a new and different legal problem - collecting the money awarded to you by the judgment.
So what can you do to collect the money awarded to you in the Money Judgment?
In Texas, Federal and State Court money judgments are collected using the same methods. There are, however, some differences between State and Federal Court in how these methods are utilized. Anyone pursuing collection of a judgment out of a Federal Court in Texas must perform research to appreciate these differences. U.S District Judge David Ezra recently identified some of these differences in Amron Int'l Diving Supply, Inc. v. Hydrolinx Diving Commun., 2014 U.S. Dist. LEXIS 57035 (W.D. Tex. Apr. 24, 2014). This guide focuses on the methods that are available under Texas law. It is a guide in the most general sense - to identify a potential collection method. Each collection method offers many opportunities for error or omission. While it is possible that a non-lawyer or a Texas attorney with no collection experience could be successful satisfying a money judgment in Texas, their lack of experience could result in mistakes making the judgment worthless - or worse - creating liability for the judgment creditor.
Abstract of Judgment.
When a Judgment Creditor files a legally conforming Abstract of Judgment in the County deed records in the county where the Judgment Debtor owns real property property, the filing of that Abstract of Judgment creates what people often refer to as a judgment "lien" on that property. The Abstract of Judgment is not supposed to create a lien on a Homestead, and there is a process to remove liens on homestead and to contest that designation. Since a judgment debtor's Homestead exemption terminates on death, an Abstract of Judgment can be valuable for a patient Judgment Creditor. The burden on the Judgment Creditor is that there are 254 potential counties to file an abstract in - each with its own filing fee.
Writ of Execution.
A Writ of Execution is a type of civil process, whereby the Court commands a Sheriff or Constable (the U.S. Marshal in Federal Court) to enforce a judgment, usually by seizing and selling the judgment debtor's property. If a Judgment Debtor is aware of the location of the Debtor's cash or non-exempt property, this can be a very effective collection method. The Writ of Execution is also the collection method used to keep a Texas money judgment alive. If a Judgment Creditor does not deliver a Writ of Execution to the Court Officer responsible for serving it within ten years of the signature (or Clerk's entry of judgment in Federal Court), that Judgment will go dormant. If that judgment is not "revived" within two years after going dormant, that judgment is unenforceable.
When a judgment creditor wants to obtain a judgment debtor's interest in a limited partnership or limited liability company to satisfy a judgment, the charging order is the exclusive method by which a judgment creditor reaches that interest. However, a charging order only provides the judgment creditor with the right to receive any distribution to which the judgment debtor would be entitled to receive. Because the judgment creditor must passively wait for distributions that may never come (especially if friends or family of the judgment debtor are in control of the LLC or LP), commentators have called the charging order a "rather unsatisfactory remedy." See Elizabeth N. Kozlow, A Charging Order Conundrum: Is It Really the "Exclusive Remedy" of an LLC Member Judgment Creditor?, 63 BAYLOR L. REV. 884, 886-87 (2011).
Writ of Garnishment.
A Writ of Garnishment comes after the judgment creditor files a separate lawsuit against a person or entity that owes the judgment debtor money or holds the judgment debtor's property. Courts have described garnishment as a statutory remedy by which the property or money of a judgment debtor, held by a third party, is applied to the payment of a debt that arises from a final judgment against the judgment debtor. A party served with a writ of garnishment has a duty to hold the the judgment debtor's money or property until the writ of garnishment is dissolved by an explicit order of the court that issued it. The effect of a writ of garnishment is to impound any monies or property held by the garnishee (the party served with the writ of garnishment) belonging to the judgment debtor. The writ of garnishment fixes a lien in favor of the judgment creditor on any monies or property "impounded" by the Writ. If the party who has been served with a Writ of Garnishment releases the property that has been "impounded," a money judgment may be taken against that party which may be enforced like any other judgment. When you hear that a judgment debtor in Texas had their bank account "frozen," this was likely the result of a judgment debtor serving a Writ of Garnishment on the judgment debtor's Bank.
Writs of Sequestration and Attachment.
Although writs of sequestration and attachment are almost exclusively used as prejudgment remedies, courts are specifically authorized to use these in the exercise of their post-judgment jurisdiction.
"The primary purpose of the Texas Turnover Statute is to allow, as an additional and cumulative method to aid in the collection of his judgment, a judgment creditor to seek a court order requiring the debtor to disclose and turn over certain assets, documents, and records to be applied towards satisfaction of the judgment." See Bear, Stearns & Co. v. Amad, 919 F.2d 920, 9216 (5th Cir. 1990). The turnover statute gives courts the power to satisfy a judgment by reaching the judgment debtor's property that cannot ordinarily be attached by ordinary legal procedures (e.g. Intangible property or real or personal property located outside the State of Texas). The Turnover Statute gives the court the power to order the judgment debtor to turn over nonexempt property that is in the debtor's possession or is subject to the debtor's control - wherever that property might be located.
The Texas Turnover Statute permits a court to appoint a receiver with the authority to take possession of the judgment debtor's nonexempt property, sell that property, and to pay the proceeds to the judgment creditor to satisfy the judgment. The court can give the receiver various rights and authority to accomplish the purpose of the appointment.
Conclusion - Be persistent, flexible and creative.
Be Persistent: Because the Court has a duty to assist a judgment creditor to satisfy a money judgment, keep asking for aid in pursuit of your judgment. Don't expect to be paid on your judgment using only one method of recovery. Sometimes it takes repeated effort, or combining many of the methods of recovery. Be Flexible: Some judgment debtors try to make collection as difficult as possible in the hope that the judgment debtor will give up. If this happens to you, don't assume your judgment is worthless because you have been unable to collect it. If the judgment debtor has made it too difficult or expensive for you to pursue collection, consider selling your judgment. There are companies that are in the business of acquiring judgments. Some attorneys might also consider purchasing your judgment. If you do decide to sell your judgment, it is likely that you will receive just a small percentage of the amount of your judgment. While value of a judgment is case specific, my experience has shown that if a judgment buyer pays more than 5% of the total amount of your judgment, you have done well. But a small percentage could still be a substantial amount of money. So, Be Creative: While the methods described in this Guide are the most common used by Texas attorneys, they are not the only ones that exist. Necessity is the Mother of Invention. When they are left unpaid, creative judgment creditors will continue to utilize the additional methods available under the common law, the statutes, and the rules of procedure. When there's a Will, there's Way. Creative judgment creditors will remember that even when they can't find a statute or a rule that identifies a collection method, the Court has inherent authority to call its judgment to effect. These creative judgment creditors will tap that vast inherent judicial power and ask the courts to aid them by authorizing new methods of recovery.
Additional resources provided by the author
State Bar of Texas’ Texas Collection Manual (4th ed. 2011).
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