When the court grants you a judgment for monetary damages in a lawsuit, you become a “judgment creditor.” Unfortunately, being a creditor does not automatically mean you will get paid – it’s unlikely that the opposing party will meet you at the courthouse doors with a check in hand. Instead, you are now essentially a debt collector. However, you do have the court’s permission to pursue the person or party who owes you money (also called the “judgment debtor”) through several methods.
In Texas, there are several ways for a judgment creditor to attempt to enforce a judgment:
Serve Post-Judgment Discovery
The best way to uncover the substance of the debtor’s assets is by serving post-judgment discovery on the judgment debtor. Post-judgment discovery includes typical discovery methods, such as requests for production, interrogatories, requests for admissions, and depositions. However, the rules which typically limit the scope of these requests in a pre-judgment setting are not applicable. Judgment creditors may use as many interrogatories as possible and requests for production that ask for information regarding the judgment debtor’s assets for collection purposes.
This post-judgement discovery strategy is twofold:
- Either the judgment debtor answers the requests and provides information necessary to collect the debt, or
- The judgment debtor does not answer, which leaves them liable for sanctions from the court when the judgment creditor files a motion to compel and motion for contempt.
Sanctions for failure to answer discovery include payment of judgment creditor’s attorney’s fees, fines, and possible jail time for failing to follow a court order. Serving post-judgment discovery is a critical component in obtaining payment on the judgment and should be done before collection attempts commence.
File a Judgment Lien
If the judgment debtor owns property, you can place a judgment lien on their property. This way, if the debtor sells the property, you will be entitled to receive the amount of your judgement from the proceeds.
Some property is exempt from judgment liens in the state of Texas, however. Homesteads and personal property – such as furniture, jewelry, or a car – in the aggregate amount of $30,000 (or $60,000 per family) are considered “judgment proof”. An attorney can help you locate and identify nonexempt property.
To place a judgment lien, you or your attorney file an abstract of judgment (AJ) in any county where the defendant owns nonexempt property. An abstract of judgment is a written statement providing details about the judgment and the debtor that is filed in the property records of the county. The judgment lien is created by the proper recording and indexing of an abstract of judgment. The lien lasts for 10 years and can be renewed. The contents of the abstract of judgment must comply with Texas Property Code § 52.003 in order to be effective.
Request a Writ of Execution
You might need to collect a debt faster than a judgment lien allows. If this is the case, there is a more proactive approach: A writ of execution can be filed 30 days after obtaining a judgment with the clerk of the court that decided your case. The writ of execution directs the sheriff or constable to seize and sell the debtor’s nonexempt property and deliver the proceeds to you, to be applied against the judgment. A writ of execution can also bring unwanted attention to the debtor and can be a useful tool to prompt the debtor to settle or negotiate the judgment.
To successfully levy on the debtor’s nonexempt property, the judgment creditor should communicate with the constable executing the writ and instruct her to collect only those assets that would satisfy the amount of the judgment. If this is not done, the constable will not know what to levy on, which often results in an unsuccessful levy attempt. A good collections attorney will know this strategy before issuing a writ of execution.
Request a Writ of Garnishment
Debtors don’t always have property, but they usually have bank accounts. 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 satisfy a judgment. Courts grant writs of garnishment for bank accounts (this is called a bank levy) and even paychecks.
Your attorney can assist you with garnishment procedures. You will need information on the debtor, such as the bank name, account name and, ideally, the account number. This can be pulled from any cancelled checks the debtor may have written to you in the past.
Writs of garnishment are typically most successful when the judgment creditor knows the amount of funds in the bank account before requesting the writ. If that is unknown to the judgment creditor, it can be risky to request a writ of garnishment because the judgment creditor must pay the bank’s attorney’s fees associated with the writ garnishment. If there are no funds in the bank account, then the judgment creditor is stuck with the bill for the bank’s attorney’s fees and no garnishment of the account. A good collections attorney will know this information and exercise patience in using this method until it is certain there are funds to be collected.
Request a Turnover Order
If other efforts for enforcement fail, you can request a motion for turnover, or turnover order. A turnover order is a court order that forces the debtor to deliver property that cannot be readily attached with a lien or garnished. Once the assets are turned over, the local sheriff or constable will sell the property at auction to satisfy the judgment. Examples of such property can include accounts receivable, cash, stock in a closely held corporation, commissions, royalty checks, and property outside of Texas.
Should the judgment debtor refuse to comply with a turnover order, they could be held in contempt of court and face jail time. And since the turnover order is a public proceeding and requires the debtor to appear before the court, it is another useful tool for engaging the debtor to settle or negotiate the judgment.
Know Your Expiration Date
In Texas, judgments last for 10 years before becoming dormant. You can renew your judgment before it becomes dormant and even attempt to revive a dormant judgment, but judgments that have been dormant for longer than two years may no longer be recoverable.
As long as you are vigilant, your Texas judgment can exist indefinitely. Some judgment creditors collect judgments that are more than 20 years old.
Beware of Fraudulent Transfers
Some judgment debtors do everything they can to avoid paying a judgment. As a judgment creditor, you must “follow the money.” Under the Texas Uniform Fraudulent Transfers Act (TUFTA), debtors may not make transfers with the intent of hindering, delaying, or defrauding a judgment creditor.
If the property or assets you are after mysteriously disappear, you can get it back by pursuing legal action. Read our blog, “What Is a Fraudulent Transfer in Texas?” to learn more about the remedies for fraudulent conveyance.
What Can I Do About a Judgment Against Me?
Many judgment creditors are willing to settle a judgment debt for less or negotiate a payment schedule that is manageable – after all, many creditors realize that some money is better than nothing or the potential of your bankruptcy.
If you owe a judgment, contact your creditor before assets are seized or liens filed. Your attorney can represent your interests in the negotiations. Put the settlement in writing before any payments are made to protect and record your good-faith efforts to settle the judgement debt.
Where Do You Start with Collecting a Judgment?
Now that you know the methods for enforcing a judgment in Texas, where do you start? Contact an judgement collections attorney in the state in which your debtor resides or owns property. Having a judgment in Texas gives you certain privileges, and your attorney can use these privileges to make the judgment debtor pay attention.
At Hendershot Cowart P.C., our Texas judgment collection attorneys can:
- Question the judgment debtor about their activities through depositions, interrogatories, and requests for production of documents
- Help you locate nonexempt assets
- Request writs of garnishment and writs of execution on your behalf
- File motions to compel or motions for contempt
- Negotiate payment or settlement terms
We will aggressively pursue every legal avenue to recover the money you are owed. No matter which available remedy or remedies we use – including the threat of further legal action to spur your judgment debtor to pay up or negotiate – your best interests will always be protected.
Let us exceed your expectations. Call us at (713) 909-7323 or contact us online to schedule a consultation and start your case with our firm today.