If you just won a judgment in state or federal court for yourself or your client, your feelings of victory may start to fade when you look down the long road ahead for collecting.
Collecting a Judgment in Texas
When the court grants someone a judgment for monetary damages in a lawsuit, they become what is known as a “judgment creditor.” Unfortunately, being a creditor does not mean automatic payment by your “judgment debtor.” It’s unlikely that the opposing party will be rushing home to put a check in the mail (or send a Venmo, for that matter).
Instead of being the judgment creditor, you have also become a debt collector. However, there is some good news. You have the court’s permission and its authority backing you to pursue the person or company who owes you money through numerous methods, all with the power of the law on your side!
Abstract of a Judgment
After obtaining a judgment, the next step is to record an abstract judgment in every Texas county’s real property records where the judgment debtor is believed to own such property. The purpose of the abstract of judgment is to put the public on notice that the judgment has been attached to the judgment debtor’s non-exempt real property.
“Non-exempt property” under the Texas Property Code Section 42.001 et seq. is the opposite of property that qualifies for exemption in a post-judgment collection, i.e., homestead, wages, heirlooms, jewelry, cash up to a certain amount, vehicles for each person licensed in a household to drive, and other property belonging to the Texas debtor.
This list rarely includes secondary properties, often held by many judgment debtors who find themselves being pursued by a judgment collection attorney and personal property above certain threshold limits.
File a Judgment Lien
The abstract of judgment is also known as a judgment lien since it places a lien on non-exempt real property that the judgment debtor owns in each county where the abstract of judgment is recorded as permitted under Tex. Prop. Code Sections 52.002-52.003. The lien lasts for (10) years, and longer if it is filed again.
To place a judgment lien, the attorney for judgment collection files an abstract of judgment in any county where the defendant owns the non-exempt property. The proper recording and indexing of the abstract create the judgment lien.
This lien is a highly persuasive method for getting the judgment creditor to work with your judgment collection attorney or judgment collection specialists, as it renders the debtor’s property no longer ‘free and clear,’ which comes up every time a title search occurs. Title searches are an essential step in the sale of real property. Provided that the debtor can sell their property, you are automatically entitled to a portion of the proceeds from the deal when you have a judgment lien on the property.
Turnover Orders and Receivership
When a judgment debtor’s non-exempt property is beyond standard legal processes, a judgment creditor can consider asking their judgment collection attorney to seek a turnover order. According to section 31.002 of the Texas Civil Practice and Remedies Code, a judgment creditor can receive aid from the court to reach a judgment debtor’s property and force them to “turn it over” to satisfy the judgment.
How does a turnover order work? First, the judgment collection attorney files a motion with the court to request a turnover order, which will contain language directing the debtor to deliver the property to the representative of a local law enforcement agency (usually a sheriff or a constable). The representative then gathers and sells the property at an auction, and the proceeds are used to satisfy the judgment.
Because a court order is involved, the judgment debtor must turn over the non-exempt property. Non-compliance with a court order can lead to contempt proceedings, including additional fines and jail time. For this reason, the turnover order is a powerful weapon in the arsenal of post-judgment collection.
Request a Writ of Garnishment
Another tool that judgment collection specialists and attorneys use is the writ of garnishment against a judgment debtor. Debtors don’t always have property, but they almost always have bank accounts. Therefore, if you request a writ of garnishment, you may be able to collect your judgment directly from the debtor’s bank account. A writ of garnishment orders a third party (like a bank) to turn over property to settle a judgment.
Your attorney can assist you with these garnishment procedures. You’ll need the debtor’s information, such as the bank name, account name, and, ideally, the account number. This can be pulled from any canceled checks the debtor may have written to you in the past.
Request a Writ of Execution
Similar to the motion for turnover, another proactive approach is the writ of execution. A creditor can request a writ of execution from the court clerk thirty days after obtaining a final judgment. After the clerk issues the writ of execution, a constable can seize and sell the judgment debtor’s non-exempt property at auction. The sale proceeds are used to satisfy the judgment and any fees associated with this process. Even if the debtor does not have much property to sell, the engagement of a law enforcement officer and a writ from the court has been found to encourage many debtors to agree to repayment terms rather than face these harsh measures.
To successfully levy on the debtor’s non-exempt property, the judgment creditor should communicate with the constable executing the writ and instruct them to collect only those assets that would satisfy the amount of the judgment. This is critically important so that the constable knows what to levy on so that the execution of the writ may be a success. But what does the debtor own, and how can a creditor find this out? One of the ways to know exactly what the debtor is holding is to use post-judgment discovery, discussed below.
Serve Post-Judgment Discovery
What if you don’t know what to tell your attorney for judgment collection about the property of your judgment debtor? Post-judgment discovery is another powerful tool for finding out just this. This process obtains information directly from the judgment debtor about their non-exempt assets. Similar to other court orders, this method exposes the judgment debtor to penalties and sanctions from the court for non-compliance with the court’s directives. In short, it’s serious business with serious consequences.
Post-judgment discovery includes typical discovery methods, such as requests for the production of documents, interrogatories, requests for admissions, and depositions. Many of these will consist of attempts to gather information about what non-exempt property the debtor has, recently had and tried to dispose of, or will have in the near future. Rules which typically limit the scope of requests for information in a civil case go out the window at the post-judgment discovery stage, when there are few or no limits on discovery.
How Can a Judgment Collections Attorney Help?
At the Law Offices of Kretzer and Volberding P.C., our seasoned attorneys are experts in every aspect of Texas judgment collection. Our judgment collection specialists will work to get you paid quickly through one of these tried-and-tested methods for post-judgment collection. Contact us online today or call us at 713-775-3050 to schedule a consultation.