Judgment Collection

JEFFREY R. SANDBERG

Palmer & Manuel, L.L.P.
8350 North Central Expressway, Suite 1111
Dallas, Texas 75206
Direct Line: 214-242-6454 


My background and training as a CPA and MBA is an advantage because I can review financial records and tax information as part of a search for assets when a business entity is the judgment debtor.  Pubic records in Texas can reveal assets such as real estate described in a deed or a business entity (such as a corporation or limited liability company) associated with the judgment debtor. Social media can be helpful as well, as people often refer to assets and income in social media discussions. 

Out-of-state attorneys sometimes refer a judgment for collection. Because Texas has enacted the Uniform Enforcement of Foreign Judgments Act (UEFJA), a judgment entered in federal court, another state and many foreign countries can be recorded, or domesticated, in Texas.  This typically the first step.  Once the judgment is recorded in Texas, collection methods are available that include a writ of execution, the filing of an abstract of judgment to create a judicial lien, post-judgment discovery, garnishment, and obtaining an order of sale so that the judgment debtor's property is sold by a constable or sheriff. 

Post-judgment discovery is used to obtain information from the judgment debtor to identify assets.  Discovery requests such as interrogatories and requests for production of documents are served on the judgment debtor.  The creditor is permitted to ask detailed and extensive questions about the debtor’s financial affairs.  The creditor can ask about all assets in which the debtor has any legal or equitable interest including assets owned jointly with a spouse, family members, or business associates. The debtor must furnish to the creditor all documents the creditor requests related to his financial affairs.  Creditors may properly request documents such as copies of bank statements, check registers, cancelled checks, credit card statements, insurance policy and tax forms. The debtor is required to supply the documents requested which are in the debtor’s possession, custody or control.  In addition to the written discovery requests, Texas also allows depositions.

Execution is a collection remedy used to obtain a debtor’s tangible personal and real property.  Execution and levy is used to seize real estate, stock in corporations, and the debtor’s personal property.  The creditor can execute against the debtor’s property in possession of a third party.

To garnish assets owed to the debtor or in the possession of a third party, a judgment creditor obtains a writ of garnishment from the clerk of court and serves the writ upon the debtor’s employer, bank, financial institution or other person obligated to the debtor.  The creditor is not required to provide advance notice to the debtor prior to serving a writ of garnishment.  A garnishment writ notifies the third party that they must retain an asset or money which belongs to or is owed to the debtor and to thereafter pay the money as the court shall direct.

A Judgment creditor can bring a suit if there is a "fraudulent transfer" - assets improperly transferred by the judgment debtor to the owner of the business or a family member.  In other words, litigation is commenced against a third-party where a judgment debtor gives away or transfers assets (house, money, or other items) to others, often relatives, without receiving sufficient consideration in return, to avoid paying creditors.

When an individual is the judgment debtor, additional diligence is needed to enforce and collect judgments because certain assets of an individual are exempt from collection in Texas.  In particular, the Texas homestead exemption for a personal residence is not limited to a specific amount. 

 
Dallas Litigation Attorney - Jeff Sandberg

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