Executing Against and Garnishing Assets

After a judgment is obtained against a debtor, the creditor is sometimes left with the more difficult task of collecting on that judgment.  The creditor's major weapon is the ability to execute on a judgment, which is the basic and familiar process of officially instructing the sheriff to visit the debtor's place of business or home, make a list of assets and set a date to sell those assets to pay the debt.  There is a particular type of execution, called a "garnishment" which allows a person to execute on the assets of the debtor held by a third party -- the most familiar example of this is garnishment of a debtor's bank account -- in this case a judicial sale does not occur but the creditor is able to secure funds from the account.

   Sometimes assets are hidden or are not found at the obvious places, however, and the most basic challenge may involve identifying assets to garnish.  Lawyers have a legal means of finding assets, called, "discovery in aid of execution."  Basically, the debtor is required to tell the creditor where and what assets he has and how those assets are titled.  A creditor might expect that this information would be complete (if the lawyer's questions are good) because the debtor is answering under the penalty of perjury; however, in reality, the information obtained is not always complete, or even helpful, and there is no substitute for independent investigation.

   A good starting place is for a creditor always to keep copies of customer checks that were paid in better times.  This may help identify a bank account to garnish.  Similarly, when making a large extension of credit, a creditor should attempt in advance to get a detailed financial statement from the debtor and its guarantors listing his major assets.  A debtor might be more forthcoming listing his assets when times are good. 

   Other methods of identifying assets are more hit and miss, but they cannot be ignored.  As just one example, a search of deed records should always be done in the debtors' state of residence or at least county of residence.  Most lawyers have the computer database to conduct such a search.  Another rule of thumb is that it is often advisable to begin garnishment procedures against banks that are near the location of the debtor or the debtor's business—convenience means a lot when choosing a bank and there is no easier way to collect on judgments then getting a "hit" on a bank account.

-- Rod Fluck