COLLECTION OF JUDGMENTS
In Arizona, a debtor against whom a judgment has been rendered is not required to automatically pay the judgment. Usually, the entry of a superior court judgment will show up eventually on the debtor’s credit report. Lower court judgments may not show up on the credit report at all.
There are five (5) main methods to make a judgment debtor pay the judgment. Various legal procedures are used to seize assets belonging to the debtor.
Record Judgment to Obtain Real Property Lien
The judgment can be recorded with a County Recorder’s office. There are certain legal requirements for recording. Failure to follow these requirements may result in adverse consequences. A properly recorded judgment will result in a lien on any real property owned by the debtor at the time of recordation, or any real property later acquired.
The judgment lien may last for as long as five (5) years and may be renewed if certain steps are taken before the judgment expires. The judgment lien that attached before bankruptcy survives a bankruptcy unless the debtor takes the proper steps during the bankruptcy process to remove the lien.
There are technical and other requirements applicable to the recordation of judgments in Arizona. Improperly recording a judgment may subject the person recording the judgment, the judgment-creditor or others to liability. For assistance with the proper recordation of a judgment, consult an attorney.
Have Sheriff Seize Debtor’s Assets
A “writ of execution” may be obtained to order the Sheriff to “levy” (seize) the debtor’s non-exempt assets. There is a fee to have the writ issued. A fee also has to be paid to the Sheriff and most county sheriffs require that you advise them of the debtor’s location and any known assets.
A writ of execution must be properly issued and served. Most Arizona Sheriffs have certain requirements that must be fulfilled before they will attempt to execute on a judgment. Knowing what language to include in the writ of execution may make the difference between a successful and an unsuccessful collection.
Seize Debtor’s Earnings
A “writ of garnishment” may be issued to “garnish” (seize) the debtor’s wages. The process is time-consuming and complicated. There are many documents to prepare. There is a fee to have the writ issued. The writ, and many other papers, have to be served on the debtor and on the debtor’s employer. A fee has to be paid to have the documents served.
The debtor has an opportunity to contest the writ. So does the employer. Once the Court sustains a writ, it remains in effect until the debt is paid. Reports have to be prepared and filed on a regular basis.
Properly serving a writ of garnishment for wages is a complex and complicated task. There are many, many different documents that have to be prepared, some in English and in Spanish. There are specific time periods involved. For assistance with a writ of garnishment of wages, consult an attorney.
Garnish Debtor’s Bank Accounts
A writ of garnishment may be issued to seize a debtor’s bank accounts. A fee has to be paid to have the writ issued, and another fee has to be paid to have the writ served. Again, the debtor has an opportunity to object to the writ. If there is no objection, or if the objection is overruled, the debtor’s non-exempt funds will be paid over to the judgment creditor, after the financial institution deducts its fee for responding to the writ.
A bank account writ of garnishment is different from a wage garnishment. There are similarities, but there are also significant differences. The writ must be properly prepared, properly issued and properly served to be effective. Once served, there are additional steps necessary for an effective garnishment.
Examine Debtor Under Oath Concerning Assets
A “debtor’s exam,” otherwise known as a “supplemental proceeding” may be held to examine the debtor under oath concerning the debtor’s assets. Financial records, tax returns and other relevant information can be obtained to determine whether the debtor has any assets with which to satisfy the judgment. The examination is also used to learn whether the debtor has fraudulently transferred assets in order to avoid paying the judgment, a surprisingly all-too-frequent occurrence.
A supplemental proceeding can be an effective tool to collect a judgment if it is done properly. Some times, the supplemental proceeding should be combined with other enforcement methods. The time and place of the supplemental proceeding often affect the viability of the proceeding. More importantly, knowing what to ask, when to ask it and how to ask it are essential elements of an effective debtor’s examination.