Collecting a monetary judgment is rarely a straightforward thing. If a judgment creditor asks for payment but does not receive it, steps must be taken to begin collection proceedings. The first step is almost always conducting what is known as a ‘debtor’s exam’. How a creditor would go about doing so would depend on state law.
‘Debtors exam’ is the term used in some states. Other states refer to the same step as either interrogatories or post-judgment discovery. Regardless of the term used, the goal is the same thing from one state to the next. The debtor’s exam is a tool for obtaining information from the debtor, information that will be used to determine how to collect.
Information About Income and Assets
The purpose behind the debtor’s exam is to glean information about the judgment debtor’s income and assets. A judgment creditor or its representative wants to know where the debtor works, how much he makes, what he has in cash, and all his tangible assets. Based on the information gleaned a creditor can choose to:
- Offer a payment plan.
- Garnish the debtor’s wages or bank accounts.
- Place liens on the debtor’s property.
- Obtain writs of execution to seize and sell debtor assets.
Attorneys are well aware of the purpose and intent behind a debtor’s exam. Unfortunately, some attorneys advise debtors to not be forthcoming about their income or assets. They recommend providing as little information as possible in order to avoid more extreme collection measures.
Questions Must Be Applicable
The other side of the equation involves creditor attorneys fishing for more information than they are legally allowed to ask for. Indeed, the experts at Salt Lake City’s Judgment Collectors explain that most states are very specific about the types of questions creditors can ask during a debtor’s exam.
All questions must be applicable to income and assets. Questions that are not applicable do not have to be answered. If too many such questions are asked, a creditor could find itself in trouble with the court.
How Debtor’s Exams Are Conducted
Debtor’s exams can be conducted in a variety of different ways depending on state law. In cases in which the interrogatories method is preferred, questions are prepared by the creditor’s attorney and submitted, in writing, to the debtor’s attorney. The debtor answers the questions and sends them back through their attorney. Everything is done without creditor or debtor ever meeting face-to-face.
Another model sees the creditor, debtor, and their respective attorneys briefly meeting face-to-face following the conclusion of the trial. Questions are asked and answered orally, with attorneys for the creditor writing down answers.
Still another model calls for a separate discovery hearing after the fact. A creditor serves a notice of post-judgment discovery, a notice that compels the debtor to attend a court hearing during which questions will be formally asked and answers recorded.
A Failure to Participate
Regardless of the model chosen, most states allow a certain measure of recourse in the event a debtor fails to participate. For example, a court may issue a bench warrant against a debtor. The warrant allows the debtor to be arrested and brought to court to answer questions. Note that a bench warrant is not available in every state.
Collecting judgments from uncooperative debtors is rarely easy. It is a multi-step process that almost always begins with the debtor’s exam. With the right kind of information, a creditor can use the debtor’s exam as the foundation for planning collection efforts. Without it though, a creditor could be left scratching his head over collection.
