Without question, the biggest obstacle for most civil judgment holders will be their inability to locate the assets of the judgment debtor (the judgment debtor owes the money). It goes without saying: if you can’t find it, you can’t seize it!
I can imagine you’re thinking… “But what’s an asset?”
An ‘asset‘ is an item of value owned by an individual or business.
Assets that can be quickly converted into cash are considered ‘liquid assets.’ Other assets include real estate, personal property, and other items that can be sold. Before proceeding with the ‘where,’ we should probably cover the ‘what.’ That is, what assets can you seize? Don’t be afraid to get very creative when it comes to the ‘what.’
Here is a list of some of the assets that are usually not exempt; which means you can seize them through the court to satisfy a judgment:
- House/real estate, cash,
- rental income,
- business income/equipment/inventory,
- vehicles (cars, trucks, RVs, boats, snowmobiles, motorcycles, etc),
- money deposited into checking or savings accounts, wages (25% in most states),
- stocks/bonds/mutual funds, annuities/lottery payments,
- royalties, inheritances, personal property (jewelry, heirlooms, furniture, collections, firearms, etc),
- business accounts receivable,
- security deposits,
- property belonging to the debtor held by someone else,
- judgments or other debts owed to your debtor,
- and – all of the above belonging to the debtor’s SPOUSE (in community property states).
Basically, if it’s not exempt – it’s fair game!
There are some assets that will be considered exempt, or at least a portion of those assets will be exempt from the enforcement of a civil judgment. Exemptions for certain types of assets are provided under state and federal law. These exemptions were created to protect debtors from losing so much that he or she can’t start over, or live with basic necessities. Each state’s civil code will specifically outline what is considered exempt from enforcement.
Typically, common exemptions include:
- Life insurance,
- health and disability income,
- social security income,
- 401(k) benefits,
- insurance benefits,
- unemployment insurance,
- workman’s compensation,
- retirement benefits,
- and child/spousal support.
Some assets, like an automobile or a house provide for a certain amount of the equity in that asset as exempt.
There are many ways to locate the judgment debtor and his/her assets. In judgment recovery circles this is called ‘skiptracing.’
Obviously, since this is just a newsletter article, I don’t have nearly enough room to elaborate on all the myriad sources of information at your disposal – particularly when it comes to public records. Suffice it to say that these days, most skiptracing can be conducted online using the information available in public records and online databases, but your most valuable asset location tools will be private consumer records.
Private consumer information would include full consumer credit reports, banking detail reports and other data that is not readily available to the general public. You’ll have access to private consumer information once you’ve obtained an assignment of judgment. Once the judgment is assigned, you will then legally become the judgment creditor and the owner of the judgment. You will have every right to obtain consumer credit history and other critical financial information about your judgment debtor.
Anyone who has ever applied for financing, opened an account for utilities, has a credit card, applied for or opened a checking or savings account, or has accumulated bad debt – essentially everyone – will leave a paper trail. These reports will reveal much about your debtor including current and former employers, bank accounts (sometimes even including check orders), driver’s license numbers, telephone numbers, current and former addresses, aliases, social security number, date of birth, bankruptcies, collection efforts, other creditors, as well as a list of anyone who’s inquired into the subject’s credit history.
Think about the last time you applied for credit. Did you notice the tiny disclaimer at the bottom of the application, the one just under your signature? When signing this application, you gave permission to your creditor to share information about you with other creditors. As a judgment creditor, you have a legal right to discuss your debtor with these other creditors.
Which brings me to the incredible power of court ordered subpoenas.
A subpoena can be issued from the court to legally compel judgment debtors – as well as other creditors listed on a credit report – to provide you with information and specific documents relevant to the disclosure of the debtor’s assets. Think: paycheck stubs, bank account statements – or coming from the other direction credit applications. You get the idea.
Aside from the obvious benefit of several free and fee-based databases that are available on the Internet, don’t discount the amount of information you may be able to obtain about your subject by using a search engine (like Google). Did your subject make the local news in the hometown paper lately? Maybe the new company they’re working for posted a press release about the new hire.
Perhaps they have a website for business or general family purposes. They may even be listed on the minutes of the local PTA meeting. Do they have a MySpace or Face Book page? It seems like everyone does these days, and it’s amazing how much personal information people share on those sites! Much of this information can be found on the Internet and sometimes it will help you locate a subject when nothing else works.
If you don’t have time to do your own asset location there are several companies that you can outsource the work to for a fee.
These fees will be reimbursable to you off the top of what you are able to collect. Outsourced searches for banking information and/or employment information are almost always provided on either a ‘no hit – no fee’ basis, meaning that if no information is found then there is no cost to you. A few of these companies will charge a nominal ‘no-hit’ fee if they’re unable to locate any information about your subject.
I have provided information about several of these companies and resources in my home study training and my quick start courses.Â You can check out the quick start guide by going here:Â http://www.misuniversity.com/newbooks/
I hope that this has helped to paint a bigger picture into the scope and range of information at the disposal of a judgment recovery professional. As always, I welcome your questions.