The goal of execution is to turn a debtor’s assets into money, which will then be distributed to the creditors. What is the difference between personal property and real property? Can money from the debtor’s bank account be used to pay the judgment? Bernstein-Burkley, P.C. Managing Partner, Robert S. Bernstein, answers these questions and more in this 5 Minute Legal Master Series episode: EXECUTION
Welcome to the 5 Minute Legal Master series where expert legal attorneys help you master important legal topics. Today, board certified creditors’ rights and business bankruptcy attorney Robert S. Bernstein discusses execution.
I thought we would talk today about execution which is the process of enforcing a money judgment. Execution may come by different names in various states but generally speaking, an order of execution comes from the court, tells the sheriff, marshal or some other judicial officer to seize property of the defendant to pay the judgment. We have talked in other session about post judgment discovery which is a way of finding out what the defendant owns that might be subject to execution. Once you know, you can issues directions to the sheriff and have the sheriff levy on and sell the property. There are different procedures depending on whether it is personal property or real property, personal property meaning not something necessarily personal, but non real estate. In a personal property execution, once can have the sheriff go cease a car, truck, equipment, inventory, things that the defendant owns, the sheriff will then make a list, publish that list in one way or another, have a sale maybe 2 or 3 weeks later or 30 days later depending upon the locale and there would be bidding at which time the property would be the sold and the proceeds would then be distributed by the sheriff to the judgment creditor in payment of the judgment.
There can also be an attachment of assets in the hands of another person, most usually an attachment of garnishment of a bank account. When a defendant has money in a bank account that is actually a debt that the bank owes to the defendant. In a garnishment proceeding you can garnish hat debt and if you follow it through you can get the bank to then pay you the money as the judgment creditor of their depositor. The bank may have sell off rights if the bank is owed money so you have to be careful there. But at least it usually has a way of getting your defendant’s attention because it immediately locks down the bank account. When there is a going business, a store, the sheriff can do what is called in some jurisdictions a (2:57), essentially taking the money out of the cash register as it comes in. In some states that is at the discretion of the sheriff and the (3:07), there is obviously an extra cost involved so you have to be aware of that.
With real estate it is a little more complicated process, there are usually more notices, formal advertising, notices have to go to lean holders. Each jurisdiction is different in the ability to eliminate or get rid of other leans on the property. Generally speaking, an execution is going to sell the property subject to any leans that were created before the execution but not leans that were created after, or leans that were created before the judgment, not necessarily after. After the sale, the sheriff will propose a distribution, may propose to certain lean holders, there is an opportunity to object to that. There is also an opportunity for the defendant or someone other than the defendant to object saying the defendant does not won that property, I do. You may see that when you try to execute on a judgment against an individual if that individual is married and these are home assets, furniture things like that. There may be a claim by the spouse saying that he or she is a joint owner in the property.
The goal of execution is take the asset, turn it into money and then distribute it according to whatever statutory priority tot eh creditors, hopefully the executing creditor, judgment creditor that has caused this execution.
This has been another installment of the 5 minute Legal Master series where expert attorneys help you master important legal topics.