Creditor’s Rights: 6 Tips To Get The Information You Need In A Deposition In Aid Of Enforcement
In many lawsuits, the real challenge begins after the plaintiff becomes a judgment creditor by winning the judgment. Collecting from the defendant can feel daunting, even impossible. Sometimes defendants have transferred their assets, hid their assets or have no assets.
Courts universally permit a judgment creditor to ask questions of the debtor in a deposition in aid of enforcement. This deposition allows creditors the chance to uncover assets and other collection possibilities. An industrious judgment creditor can’t stop the debtor from lying under oath, but they can ask the right questions. Here are proven methods for getting the best from your post-judgment deposition:
- Make Sure The Debtor Has Been Personally Served With The Order Compelling The Deposition. Personal service is the first step towards obtaining a contempt ruling and ultimately a bench warrant for the debtor’s arrest if they don’t show up for the deposition. Courts will want to feel sure that the debtor has been served before signing that warrant. Use the sheriff or a process server you trust.
- Don’t Skimp On The Document Request. The judgment creditor is going to need bank statements, tax returns, canceled checks, general ledgers, mortgage payoff statements and a host of other documents to truly piece together a judgment debtor’s financial condition. In most states, transfers may be set aside for up to 4 years if done without adequate consideration, so the document request should extend back at least that far. Creditors should expect that judgment debtors will not bring all the documents to the deposition, so they should have a clear record of what they’ve requested to obtain a follow up order from the Court.
- Hold The Deposition In The Courthouse, Not A Conference Room. It’s tempting to depose a debtor in your office, where you have all your documents, your computer and your photocopier, but don’t. If the debtor doesn’t bring all the documents you need or refuses to answer your questions, you won’t be able to force the issue from your suite. When the debtor is sitting before (or at least within easy reach of) a judge or a master the creditor has the power of the court to compel the answer to a question or production of a document. There are also stories of how judges have forced debtors to give up valuable assets from their persons right then and there. This legendary seizure is likely more myth than fact, but it can never happen in your conference room.
- Use Bankruptcy Schedules As A Template For Your Questions. Bankruptcy schedules are set up to help creditors and bankruptcy trustees obtain a comprehensive overview of a debtor’s financial condition. Bring a clear set to the deposition and walk the judgment debtor through them, line by line. The forms can be downloaded from this website. ONE NOTE: the schedules only ask for transfers made within the last year. Make sure to ask about transfers for the last 3 or 4 years, depending upon your jurisdiction.
- Don’t Forget To Leave Without A Court Order Compelling Production Of Missing Items. Again, most debtors will not bring all of the requested documents to the deposition. Keep track of the items not produced and have the judge issue an order compelling the production before you leave the courthouse. Many judges will sign an order even if some of the terms are handwritten. For this purpose, the substance counts much more than the look of the document.
- Have A Court Reporter Present, Or Record The Deposition. You want to make sure you have a good record of your questions and the debtor’s answers if you need to file any follow up motions or other discovery. But don’t be surprised when the court refuses to allow you to record the proceedings on your smartphone: make arrangements with the clerk of the court ahead of time, and get the permission in writing.
Sometimes, the debtor honestly has no assets and has made no transfers from which the judgment may be paid. But the creditor shouldn’t make it any easier on the debtor by not taking all the right steps and asking all the right questions.