Winning parties in money judgment cases, known as judgment creditors, rely heavily on assets for enforcement. The idea is to go after assets as a means of either encouraging a debtor to pay or as payment itself. But what if a debtor has no visible assets in play?
Visible assets are those that are easily identified. A wealthy individual who has built her wealth on a real estate empire owns a portfolio of dozens of properties. Her portfolio is well known. Thus, so are her assets. Such assets are easy to go after because they are out in the open.
On the other hand, there may be assets that are not so easy to spot. Another debtor may have a vacation property in another county. That property could even be in another state. Because the individual is not a high-profile person, his assets are less visible.
Judgment Proof or Not?
When visible assets aren’t in play, a judgment creditor has to ask the obvious question of whether or not the debtor is judgment proof. According to the experts at Utah-based Judgment Collectors, a judgment proof debtor is one who has insufficient income or assets to pay his bills. In addition, he has very few future prospects.
It is pointless to try to collect from a judgment proof debtor. But before that decision is made, there are other things to consider. Judgment Collectors recommends starting with an asset search.
Discovering Hidden Assets
The point of the asset search is to discover hidden assets previously undisclosed by the debtor. Let us go back to the example of the debtor with vacation property. He has not disclosed ownership of that property. But finding it is still possible.
Judgment collection agencies and experienced collection attorneys know enough to search:
- Public property records.
- Proprietary online databases.
- Social media accounts.
All three are a treasure trove of information. Public property records include records of all real estate transactions in the county. Proprietary online databases link consumers to their properties through a variety of means. And of course, people overshare on social media.
Targeting Future Assets
If a judgment debtor currently has no assets of value, that does not mean enforcement is dead. It could mean temporarily setting enforcement aside while keeping an eye on the debtor through future asset searches. Why do this?
It is possible that a debtor with no assets today could have assets a couple of years down the road. By conducting regular asset searches, a creditor increases the chances of finding something he can go after at some point.
Look at Alternative Mechanisms
There is always the possibility of looking at alternative enforcement mechanisms. Is the debtor employed? If so, wage garnishment is one possibility. Even future employment is on the table for a debtor who is temporarily unemployed.
Judgment creditors can take a look at:
- Garnishing bank accounts.
- Intercepting tax refunds and other nonexempt government payments.
- Garnishing debts owed to the debtor (like accounts receivables).
Garnishing debts owed to a debtor isn’t limited to accounts receivables. Most types of debt can be garnished to some degree. I chose the example of accounts receivables because they are a powerful tool for encouraging small businesses to pay what they owe. A small business would rather not jeopardize its own invoices to avoid payment.
The main takeaway in all of this is that a lack of visible assets doesn’t necessarily mean collecting a money judgment is impossible. It does mean a creditor has to be a bit more creative. But with a little imagination and some help, collecting might still be possible.
