Board Certified Business Bankruptcy and Creditors’ Rights attorney, Bob Bernstein, discusses post judgment discovery of assets and how a lawyer can enforce a judgment on a debtor and what it will cost you on this 5 Minute Legal Master Series video.
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Post Judgment Discovery of Assets Transcript
Once a judgment has been obtained then of course unless the debtor voluntarily pays, the lawyer has to figure out how to enforce it. The most obvious way to enforce it is to find some asset that can be levied on, have the Sheriff or the Martial sale in order to get money to pay the judgment. This has the effect not only of creating a pot of money but also the act itself might convince the debtor that it’s time to pay.
So virtually every state has rules that permit the judgment creditor to inquire of various parties or persons about assets of the debtor. The rules generally allow the deposition or the taking of testimony under oath of any person does not have to be a party to the case does not have to be the defendant or related to the defendant.
So take the testimony of any person about the assets of the defendant. examples there might be the local banker to pose the local banker, might be the defendants spouse, might be defendants business partner in another business, might be a neighbor, any of these people may have information which the lawyer could use to create a picture of the assets of the defendant and then decide how to attack them.
The way that this post judgment discovery is implemented the ways can differ. One can be interrogatories written interrogatories served on this other person generally with a subpoena accompanying it. Depositions are often helpful. Request for production of documents if you were to deposing or making inquiry of the defendant herself they can be required to bring books and records with them so that the lawyer can actually sit down with this deposition and go through the checkbook or go through the Quicken data file or the QuickBooks data file.
Same with any person that your deposing you can ask for information which is on reasonably calculated to lead to information about the assets of the defendant. This can be before or after an execution is issued. So if there’s a levee issue that returns nothing then you can go into this further discovery to try to learn where the assets are.
Sometimes this discovery is for the purpose of getting the attention of the defendant. One of my favorite stories is that years ago my father with whom I practiced subpoenaed a defendant’s wife and his girlfriend for depositions in aid of execution at the same time in the same place. Obviously when those two subpoenas were served the defendant did not want those two women in the same room at the same time and he came to us and we made a deal. So that can be also a byproduct of the discovery process.
The court costs and fees related to that, in a typical commercial collection matter the lawyer may decide that it’s in his interest to pursue this type of extraordinary remedy in order to collect the judgment. Depending upon the fee arrangement he may want to ask the client to contribute something to work this. Certainly the court costs should be paid by the client either in advance or agreed to be reimbursed they can be recovered from defendant.
Ultimately the many states have rules that allow the court costs and expenses, including fees, on this post judgment discovery which develops assets that are subject to execution allows these costs and fees to be added onto the judgment those are things that should be considered when the time comes to enforce a judgment.