An Overview of Creditor-Debtor Law and Judgment Enforcement Techniques
CAUTION STATE LAW VARIANCES ! ! !
Judgment enforcement law is about as non-uniform
between the various states as any body of law.
"While the relevance of some of the questions may seem remote, the purpose of a judgment debtor examination is to leave no stone unturned in the search for assets which might be used to satisfy the judgment."
~ Troy v. Superior Court, 186 Cal. App. 3d 1006, 1014 (1986).
A debtor's examination is the creditor's chance to ask the debtor questions about the debtor's assets, and receive live responses. A debtor's examination seems an awful lot like a deposition, i.e., there is usually a court reporter present, and the examination is conducted outside the courtroom. However, a debtor's examination is technically a "hearing", the proceedings can move back into the courtroom and be immediately heard by the judge if there is some issue, the debtor can be ordered right then and there to turn over assets to the levying officer (read: sheriff), and the debtor can be sent to the pokie to spend the night, or longer*, if the debtor refuses to answer questions.
*The record-holder for the longest U.S. contempt incarceration is believed to belong to H. Beatty Chadwick, ironically an attorney, who refused to repatriate $2.5 million from overseas to satisfy a divorce judgment in favor of his ex-wife, and sat in jail from 1995 to 2009 -- nearly 14 years!
The Debtor Examination Process
While the debtor examination process various from state-to-state by, well, about as much as any legal procedure that exists in U.S. law, generally the process begins with the creditor applying for an Order of Examination ("OEX") from the court that sets a date and time certain for the examination, along with an Order to Appear ("ORAP") that the creditor then has served on the judgment debtor. It is common that the ORAP be served along with a (long) list of documents that the debtor is required to bring to the examination, such as bank statements, deeds, titles to cars, trust documents, corporate shares, partnership agreements, and you-name-it.
The debtor then shows up at the specified courtroom as required, and is sworn in as a witness. The debtor, debtor's attorney, creditor's attorney, and court reporter (if the creditor's attorney brought one), then go out into whatever place is available in the courthouse (frequently, just a bench in the hall outside the courtroom, an unused jury room, or about as often the courthouse cafeteria) and the examination commences. In heavily populated counties, debtor's examinations are assigned to a specific judge who holds all debtor examinations one day a week -- I've been to these rodeos when there were as many as eighty (80) debtor examinations going on at the same time.
The creditor's attorney asks questions; the debtor responds. While the debtor's attorney can make objections, in post-judgment proceedings there are frankly not many types of objections that are available. If there is a dispute, and the debtor refuses to answer the question, then the parties march back into the courtroom and the judge sorts it all out. If the judge determines that the debtor should answer the question, and the debtor continues to refuse, then the court's deputy will take the debtor into custody and hold the debtor in jail until the debtor either (1) decides to answer, or (2) is successful with an emergency appeal.
In Kyne v. Eustace, a 1963 California case, a creditor who was owed $353.50 demanded from a music teacher the list of her students, on the grounds that they might owe her money. The teacher refused to turn over the list, fearing that the creditor would call the students' parents and embarrass her. The Court held the teacher in contempt, confined her to jail, and after four hours she thought better of the situation and turned over the list. The teacher then sued the creditor for abuse of process; but the case was dismissed, because the creditor had both the right to obtain the list and to call the students' parents.
The Turnover Order
Another very significant thing distinguishes a debtor examination from a deposition: At the end of the debtor's examination, the creditor can ask the court to order the debtor to turnover any assets identified during the examination to the levying officer, which means either the courtroom deputy (if the debtor has possession of the asset), or require the asset to be turned over within X days to the levying officer.
For instance, in the O.J. Simpson civil case, the judge ordered Simpson in the courtroom to turn over his expensive-looking Rolex submariner, which the creditor did believing that it was worth at least $12,000. Simpson did so with a smile on his face; it later turned out to be a $125 fake.
The Turnover Order can be used for any asset that the debtor has in its possession or control, even if the debtor doesn't have the asset immediately handy. For instance, it is common for the court to order debtors to turn over their cars, keys, title and registration to the levying officer within five days. Company share certificates, deeds to real estate, and the money in bank accounts are all common subjects of turnover orders.
The Turnover Order can also reach property that is outside the state. Assume that a debtor has $10,000 in a bank in Switzerland; even though the Court doesn't have jurisdiction over that account, it does have jurisdiction over the debtor, and if the debtor refuses to bring the overseas money back and turn it over to the levying officer, the contempt order will likely follow (see the story of H. Beatty Chadwick, above).
Recent Articles by Jay Adkisson on Creditor-Debtor Law
2016.8.28 … Registered Agent Sanctioned $234,983 For Helping Ex-Husband Hide Documents Abroad In Sergeeva
2016.7.24 … Sham Mortgage Loan Flops In Pivaroff
2016.7.17 … Wyly's Private Annuities Not Exempt Under Texas Exemption Law Says Bankruptcy Court
2016.6.12 … How Olins' Antique Collection Led Him To Prison For Cheating Civil Creditors
2016.4.30 … 529 Savings Accounts Not Exempt In California Under O'Brien
2016.2.28 … Repatriation Order for Offshore Assets Denied in Lewis
For Past Articles click here
ABOUT JUDGMENTS - Overview of judgments as they relate to judgment enforcement.
Post-Judgment Discovery Procedures
JUDGMENT ENFORCEMENT DISCOVERY - It's difficult to collect against the debtor's assets unless you find them, and it can be difficult to find them.
Judgment Enforcement Remedies
JUDGMENT ENFORCEMENT REMEDIES - The primary methods for taking assets and income away from the debtor.
Other Judgment Enforcement Theories
OTHER JUDGMENT ENFORCEMENT THEORIES - While technically not "remedies", these bodies of law are often used in judgment enforcement proceedings
Other Websites By Jay Adkisson
About Jay Adkisson
About Jay Adkisson
Jay's personal webpage with his background, lists of his books and articles, and past and future speaking appearances, are found at jayadkisson.com
Asset Protection Book
Asset Protection Book
Information about the all-time best-selling book Asset Protection: Concepts & Strategies, by Jay Adkisson and Chris Riser (McGraw-Hill 2004), and also translated into Chinese for publication in Asia, is found here
Captive Insurance Companies
Captive Insurance Companies
Jay is the author of Adkisson's Captive Insurance Companies, which is the all-time best-selling work on the subject, and a collection of his musings and articles about captives are found at captiveinsurancecompanies.com
An examination, with Jay's commentary, about the so-called Harmonized Acts (the Uniform Partnership Act, the Uniform Limited Partnership Act, and the Uniform Limited Liability Company Act) as they relate to charging orders, and a collection of Jay's articles on the subject, is found at chargingorder.com
Jay's award-winning and frequently cited website regarding various tax schemes and financial scams, with a popular comment board for those scams, is found at quatloos.com
Riser Adkisson LLP
Riser Adkisson LLP
For the website of Jay's law firm, Riser Adkisson LLP, and information about his legal services, see risad.com
Voidable Transactions (was Fraudulent Transfers)
Voidable Transactions a/k/a Fraudulent Transfers
An examination, with Jay's commentary, about the Uniform Voidable Transactions Act a/k/a 2014 Revisions to the Uniform Fraudulent Transfers Act, for which Jay was an American Bar Association Adviser to the Drafting Committee of the Uniform Law Commission, is found at voidabletransactions.com
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