Winning a civil lawsuit can be quite a satisfying experience. Yet when there is a monetary award involved, the satisfaction can be short-lived. There is plenty to do in the pursuit of getting paid, including searching for the debtor’s assets. An asset search should be the top priority after winning a court case.
Asset searches are often required because judgment debtors don’t always give up the information voluntarily. They might report minor assets and income, but there could be other assets they want to keep hidden. An asset search is designed to uncover those hidden assets.
Interrogatories and Examinations
Judgment creditors have two tools for discovering debtor assets. The first is known as interrogatories. Salt Lake City’s JudgmentCollectors.com describes interrogatories as a process of submitting written questions debtors are expected to answer honestly and in a timely manner. The two parties’ attorneys facilitate the exchange of information.
The other tool is known as the debtor’s examination. Some states dispense with interrogatories and go right to this examination. Other states offer the debtor’s examination as a supplement to interrogatories. In either case, a debtor’s examination is a court proceeding that looks at the debtor’s income, assets, and debt load.
A Failure to Disclose Everything
It is understood that judgment debtors will fully cooperate with both interrogatories and the debtor’s examination. Failing to cooperate could lead to further punitive action. However, remember that we are talking about people whose behavior directly resulted in civil litigation. Despite potential penalties, they don’t always cooperate fully.
Judgment Collectors once worked on a case in which a judgment debtor failed to disclose ownership of an airplane hangar. Not only that, but the hangar was also located in a different county. Judgment Collectors staff did their due diligence and eventually uncovered the hangar in a property search. They were able to use the information to encourage the debtor to settle.
Assets Are Leverage
The airplane hangar case illustrates why asset searches are so important. Assets equal leverage. When debtors avoid paying, they are banking on the hope that their creditors will eventually give up and walk away. To encourage that very thing, debtors will often try to hide assets.
It’s not uncommon for a debtor to transfer an asset to someone else, for less than market value, in anticipation of losing a civil lawsuit. Fortunately, it’s possible in many states to have such transactions reversed based on the assumption that they were fraudulent attempts to avoid paying.
At any rate, the threat of losing a valuable asset is serious motivation to pay. Airplane hangars are not cheap. Neither are vacation homes, collectible cars, and other valuable assets creditors might be interested in. Your typical judgment debtor is more than willing to work out some sort of payment arrangement once he realizes valuable assets are in jeopardy.
Time Is Crucial
As for why an asset search should be undertaken immediately after winning a judgment, it boils down to a single word: time. Time is crucial to maintaining the upper hand. Whoever wins the time battle most likely wins the collection war.
Running an asset search right away makes it more difficult for debtors to hide assets. On the other hand, delaying an asset search for months gives a debtor a head start. The longer the creditor waits, the easier it becomes to conceal otherwise valuable assets.
Enforcing a judgment is a long and complicated process. The very first step in that process is running an asset search. The sooner creditors can locate assets, the more leverage they will have to encourage debtors to pay up.
