Post-Judgment Collection. Matt Meaker

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1 Post-Judgment Collection Basics and Strategies Matt Meaker

2 Which Remedy Should I Choose? So, the court has entered a judgment in favor of your client what now? There are multiple remedies available to you (writs of execution, garnishment, etc.). How do you decide? Important to pull together strategic information on the judgment debtor if not already gathered at the beginning of the case. What do we or our client already know about the judgment debtor? Collectability analysis Bank search Asset search Judgment debtor s examination

3 Information we already have about the judgment debtor First - What information do you have available to you already which may be helpful? Examples: SSN or Federal Employer Identification Numbers Home address of other real property of judgment debtor Bank Accounts - Do we have information on a contract or maybe a previous check/payment from the judgment debtor? Do we have information that other parties owe the judgment debtor money? Has the judgment debtor owed other people money?

4 Collectability Analysis Public records can provide a lot of information about a judgment debtor and allow us to make an informed guess on the likelihood of collection Information available might include: Other pending lawsuits or civil judgments Real property Other recorded documents UCC 1 filings Tax liens Business licenses Bankruptcies

5 Collectability Analysis (cont.) Upon pulling together the public information, we can review and form an educated opinion as to the financial i status. t (If there are other pending suits or if there are tax liens, even if now paid off, the judgment debtor is likely struggling g financially) This information can inform your recommendations to client.

6 Bank and Asset Searches Private Investigators can be used to identify the location of bank accounts and/or other physical assets. Bank searches include the branch information and the amount currently within the account and will likely l cost between $250 and $500. Asset searches include information on real property, vehicles, boats and other physical assets. The cost varies depending on the amount of information located

7 Judgment Debtor s Examinations ARS Prior to seeking, court must have issued a judgment rather than simply a minute entry. Two Options: Order to appear before a judge or the creditor s attorney Motion and form of order filed with the court setting a time in which the judgment debtor must appear before the judge/attorney. Order must be personally served in Arizona (not on spouse or agent). In Arizona, the judge swears in debtor and exam takes place outside the presence of the judge (courthouse hallway, law library, etc.) Would recommend including order compelling production of documents as part of debtor s exam. Failure to appear, in most circumstances, can lead to issuance of civil il arrest warrant. (need SSN and/or DOB) Court cannot require a judgment debtor to appear outside of the county in which he resides.

8 Judgment Debtor s Examinations (continued) Post-judgment discovery Ariz. R. Civ. P. 69 permits a judgment creditor to obtain discovery from any person, including the judgment debtor, using the discovery provisions i of the rules including depositions, interrogatories and document production Advantage - Lawyer can control the when and where of discovery Disadvantage - No court order to appear

9 Recording the Judgment In order to have a judgment lien, (a lien that encumbers the real property of the judgment debtor) the judgment must be recorded Generally, a judgment information statement or some additional document must be recorded with the judgment in order for a judgment lien to exist The point is to let parties searching the county records to know particulars regarding the judgment

10 Recording the judgment (cont.) Generally, prior to the recordation of judgment, we must have received a certified copy of the judgment. A minute entry does not suffice. We want to record in every county in which we have reason to believe the judgment debtor owns real property. Like most other recorded documents, priority is based upon recordation. Accordingly, we want to record the judgment promptly p to establish our client s priority. A failure to comply with the statutory requirements for the recordation of judgment can lead to a lack of a valid judgment lien. When providing a copy of fthe judgment tto the client, find out whether your office has any approved language with regards to the timing of renewal on the judgment and the obligations of the firm and the client regarding g renewal. e

11 Renewal of Judgment In order to remain effective, judgments need to be renewed every 5 years in Arizona. The time frame is calculated based upon the date of ENTRY of judgment, not the date of recordation It is important to be sure to appropriately docket the timeframe for renewal. The renewal process differs by state, but typically requires some sort of affidavit to be filed. This is not something that should be done the day before. Docketing typically starts at least 90 days out from the deadline to ensure sufficient time exists to follow up with client and, if requested, renew the judgment. Arizona permits renewal anytime prior to 90 days before the expiration of the judgment Once renewed, the renewal must be timely re-recorded in order to continue to maintain the judgment lien

12 Writ of Non-Wage Garnishment ARS Authorizes the garnishment of monies owed to the judgment debtor by the garnishee which are not earnings. Also allows for garnishment of monies held by the garnishee or seizure of personal property owned by judgment debtor held by the garnishee. Writ is issued by the clerk of the court. The application includes information regarding the judgment including the amounts due and owing and the identity of the garnishee. The writ must be served on the garnishee. The garnishee has a number of days to provide a copy of the writ to the judgment debtor.

13 Writ of Non-Wage Garnishment ARS (cont.) t) If the garnishee is financial institution (bank, savings & loan, credit union), the garnishment must be served on the actual branch that the judgment debtor s account is located. Once served, the garnishee must hold and not provide to judgment debtor any monies or personal property held, but for any amounts or property that are exempt. The garnishee has 10 days after being served with the writ to answer.

14 Writ of Non-Wage Garnishment ARS (cont.) The Answer will include the amounts being withheld by the garnishee, how much is not being withheld and why and whether the garnishee is aware of other parties who are indebted to judgment debtor or are in possession of personal property of the judgment debtor. A party who has an objection to the writ of garnishment or the answer has ten days upon receipt of either the writ or the answer. A hearing on the garnishment shall be commenced within 5 days of the request

15 Writ of Non-Wage Garnishment ARS (cont.) t) If a garnishee fails to answer the served garnishment, you can seek to default the garnishee and seek an entry of judgment for the full amount of the judgment against the garnishee. If the garnishee is withholding money or property and there is no garnishment, then you can apply for an entry of judgment against garnishee for the amount withheld. This is a one time garnishment and does not create a continuing lien. Great garnishment story-

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18 Writ of Wage Garnishment ARS This writ is used to garnish earnings and create a continuing lien. The process is very similar to the process for the writ of non-wage garnishment. Upon being served, the writ is a lien on the non-exempt earnings of the judgment debtor and garnishee should generally not remit any withheld earnings until an order is entered by the court or if the garnishment lapses. Instead of applying for a judgment against the garnishee, the court will, upon application from the judgment creditor, enter a continuing lien on the earnings of the judgment debtor.

19 Writ of Wage Garnishment ARS (cont.) Starting with the pay period in which the writ was served, the garnishee must prepare a nonexempt earnings statement. After the entry of the continuing i lien, the garnishee shall provide the nonexempt earnings, in addition to the nonexempt earnings statement per pay period. The judgment creditor, so long as the continuing lien is in effect, shall issue a report on the status of the collection effort quarterly.

20 Writ of General Execution ARS , et al. A general execution is one which commands the officer to whom it is addressed to collect the amount of the judgment out of property of the judgment debtor without specifying the particular property. Issued by the clerk of the court directing the sheriff: If the execution is against the property of the judgment debtor, satisfy the judgment, with interest, out of the personal property of the debtor, and if sufficient personal property cannot be found, then out of his real property If the judgment is a lien upon real property, then to satisfy the judgment out of the real property Can only collect on non-exempt propertyp

21 Writ of Special Execution ARS A special execution sets forth in substance the portions of the judgment which command the sale or delivery of specific property and shall require the officer to: Conduct the sale of specific real or personal property (if the judgment calls for it) Deliver possession of the property to the party entitled thereto Must be issued to the sheriff of the county where the property, or some part thereof, is situated

22 Satisfaction of Judgment At some point, hopefully, your efforts will result in the collection of money on behalf of the client. Upon receipt of a payment in full on a judgment, you are obliged to timely file and record a satisfaction of judgment. Depending on partial payments throughout the life of the judgment, you may be obliged to file and record a partial satisfaction of judgment If you are receiving monthly payments of $200 for 10 month, you are probably not obliged If you receive a one time payment pursuant to a writ of non- earnings garnishment, you probably should file and record a partial satisfaction

23 Federal Court Judgments Fed. R. Civ. P. 58 governs entry of judgment in federal court. Under Fed. R. Civ. P. 62, no execution shall issue upon a judgment, nor shall proceedings be undertaken for its enforcement, until the expiration of 10 days after its entry. Whether it be a garnishment or an attempt to seize property, all are called writs of execution post-judgment in federal court Look to the state specific statutes for guidance on Look to the state specific statutes for guidance on recording judgment and for the issuance of writs

24 Bankruptcy If during the course of your post-judgment collection efforts you or your client receives notice of bankruptcy HOLD ON EVERYTHING and follow up with a bankruptcy lawyer. If things are out for service or are pending, follow up timely to be sure no affirmative action is taken against judgment debtor until you are able to confirm bankruptcy was actually filed and whether or not your intended action would be in violation of the automatic stay. Some actions are violations of the automatic stay and some are not. Better to be safe than having to explain a stay violation.

25 Domestication/Registration of Foreign Judgments What if the judgment debtor has no assets in your state? What if the judgment was rendered in another state but the judgment debtor's assets are in your state? The Uniform Enforcement of Foreign Judgments Act ARS et seq.