Learn to Beat Out The Deadbeats

More often than necessary, civil judgments are not satisfied, and the corporate judgment debtor is not forced to pay.  However, there are several often overlooked statutes providing effective tools for collecting otherwise unenforceable judgments.

State codes of statutes often provide assistance to the creditor who is unable to locate other assets of the debtor and must resort to collecting the accounts receivable of the corporate judgment debtor.  The code of statute often allows a judgment creditor to elect to satisfy the execution of the judgment, in whole or in part, out of any debts due the corporate debtor.  Furthermore, it is the duty of any agent or person having possession of any evidence of such debts to deliver it to the Sheriff collecting the judgment..

If an agent or person who has evidence of debts due the corporate debtor fails to furnish the information upon the request of the collecting Sheriff, such agent or person may be liable to pay the creditor the amount due on the execution.  In addition, some codes or statutes provide that one who fails or willfully refuses to supply the requested information can be charged with a misdemeanor.

If the execution is returned unsatisfied by the Sheriff, the judgment creditor may then “levy” funds in the hands of third persons and owing to the judgment debtor, i.e., accounts receivable.  The judgment creditor may petition the Court for an Order that any person or corporation who has property owning to the judgment debtor to pay such funds into the Court for the benefit of the judgment creditor or require them to appear in Court and provide details regarding the funds owing the judgment debtor.

Several advantages of levying accounts receivable are:

  • Gains immediate attention of the debtor;
  • Often forces debtor to make payment or lose accounts receivable;
  • Interrupts cash flow of debtor;
  • Requires person holding property of debtor to hold property of debtor for creditor’s benefit and/or pay such into the Court.

Requesting an Order of Levy is an effective tool to utilize in collecting debts. However, it is normally most effective when the debt exceeds ten thousand dollars.  Thus do not merely accept a returned execution for want of assets.  Take an extra step to force the debtor to disclose the accounts receivable and request an Order of Levy.