Judgment Debtor Examination -- What next?
If you are a judgment debtor who has been served with an order to appear for a debtor examination in connection with collecting a debt, what can you expect? If you are a judgment creditor, what can you do to make the most of it and get your judgment paid?
Judgment Debtors -- the persons owing the money -- the defendantThe debtor examination is one of the most potent weapons the judgment creditor has if properly administered. The examination order is usually accompanied with an order to produce documents intended to provide information about your assets. Bank statements, pay stubs, tax returns, vehicle/boat registrations, etc must be produced along with anything else on the document list. The debtor can be properly asked about family members income/expenses as well. You should not bring cash with you unless you intend to make a settlement offer or pay something on the judgment. Otherwise, cash on your person can be ordered given to the creditor. The examination usually is not conducted in the courtroom, instead you will be put under oath and sent outside the courtroom in the hallway or cafeteria, or vacant private room in the courthouse. The examination can be recorded/videotaped by a court reporter. You are allowed to have an attorney accompany you during the examination proceedings. If you refuse to answer proper questions, fail to bring the documents listed in the subpoena, you can be fined, the hearing continued, and in egregious cases, ordered to jail. If you fail to appear, the court can issue a bench warrant for your arrest. If you are arrested, the sheriff will notify the creditor who can come to the jail/courthouse and conduct the examination. Bottom line: don't treat the matter lightly, show up, produce the records demanded and cooperate. Trump card: file bankruptcy prior to the date set for the hearing and make sure you notify opposing counsel in advance with a copy of you bankruptcy filing notice.
In addition to the debtor exam, the judgment debtor who has money in a bank account or a job (not self employed) can lose the money in their bank account and as much as 25% of their net spendable wages (up to 50% for child/spousal judgments). Any non-exempt assets having equity are also fair game for seizure by the Sheriff. Paid for vehicles, boats, RV's, motorcycles and such can be seized and auctioned off. Even if the asset has a balance owed, the creditor can still have it picked up and proceed to auction as long as the auction sale generates enough money to pay off the lien.
Judgment Creditors --the person collecting the money -- the plaintiffCongratulations! You won your case and now comes the fun part. How do you go about getting money from your debtor. Rarely does the judgment debtor pull out the checkbook and write you a check for the full balance, interest, costs, and attorney fees. Sometimes, you may have selected a lawyer who is good at the discovery, trial, procedure stages, but has no clue how to get your money. You might want to hire a "collection" attorney who is willing to take your case on a contingency basis, meaning the attorney will retain a percentage of what is collected from the debtor. The percentage is negotiable, but runs from 25% to 50% or more, depending on the specifics/difficulties of your case. If you hire a collection attorney, these are some of the steps to be taken. If you don't hire a collection attorney, these are the steps you can take:
1. Record your judgment by getting the court to issue an Abstract of Judgment. It costs about $25 plus the recording fees. It should be recorded in the county where the debtor may own real estate. If you don't know if or where the debtor owns real estate, you can go online and search public records by address to see if your debtor owns real estate. You will have to search county by county (CA has 58 counties) unless you can access/hire a asset searching firm (for a fee) which can search statewide for real estate in the name of your debtor.
2. Wage/bank levy: If you know where your debtor works or banks, you can order a Writ of Execution from the court for a fee of $25 (2018). You must tell the court in what county you expect the employer/bank to be located. You will pay the Sheriff a fee to serve the writ at the address you provide. For a wage garnishment, you will have to provide the debtor's Social Security number (last 4 digits) if you have it. If not, the wages can still be garnished up to a maximum of 25% of the disposable earnings. For example, if the debtor earns $1000/week net income, you can get $250/week. The garnishment is a continuing process meaning you don't need to garnish wages every week. The employer must withhold money from the debtor's check until the judgment is paid in full, the debtor quits the job, or is the subject of a prior wage garnishment. Debts for child/spousal support can get as much as 50% of wages. Bank levies are a one-time event. Whatever amount is in the account on the date of the levy is what the bank takes from the account. If the debtor has $5 in the account on the day it is levied but puts $25000 in the account the next day, you get $5. You can instruct the Sheriff to make multiple bank account levies, but you must pay a fee to the Sheriff each time a visit is made to the bank. It usually takes several weeks before you get any money from your levy/garnishment because the employer/bank sends the funds to the Sheriff who then sends it to the County who eventually sends you a check in the mail.
Debtors can file a claim of exemption within a certain number of days and a hearing will be held before a judge who will decide whether or not to grant the claim fully or in part, based on the information presented at the hearing by each side.