Chapter 20 twenty enforcement of judgments civ lit 2nd

Civil Litigation:Process and Procedures

Chapter TwentyEnforcement of Judgments

2Civil Litigation: Process and Procedures Goldman/Hughes

© 2009 Pearson Education, Upper Saddle River, NJ 07458.

All Rights Reserved.

Enforcement of Judgments The legal team’s litigation

responsibilities do not end until the judgment is collected & distributed

Plaintiff & Defendant become judgment creditor (to whom the money is owed) and judgment debtor (who owes the money)

Because of counterclaims, etc., either party can be owed damages




Enforcement Federal and many state rules

require waiting 10 days after the entry of judgment before beginning enforcement

The judgment may be further stayed, however, for posttrial motions & appeals, around 30 days after the judgment entry




Collection Methods Non-adversarial

Collection letter with verification information is sent to the judgment debtor

May contain a satisfaction piece, to be filed once the debt is paid

May result in the debtor (e.g., an insurance company or corporation) processing the demand and issuing a check




Authorization for Distribution The paralegal may prepare a

statement for the client, an Authorization for Distribution Based upon the initial fee agreement Anticipated amount to be collected Deductions for expenses of litigation

& attorneys’ fees




Typical Schedule of Distribution




Adversarial Proceedings If the judgment debtor fails to

respond to the collection letter, the judgment creditor may Use the state court system to enforce

a state court judgment Use the state court system to enforce

a federal court judgment, since the state has jurisdiction over the assets needed to satisfy the judgment




Full Faith and Credit The state court will recognize the

validity of a federal decision (within its geographical boundaries)




The Collection Process The state system will apply its own

laws to the collection process Execution Levy Garnishment Replevin




Replevin A court process that permits the

judgment holder to actually take back a specific item

Sometimes referred to as a court-ordered repossession




Garnishment Usually against wages Permits judgment creditor to serve

a debtor’s employer and the employer must usually deliver a portion of the debtor’s wages

States have many forms of garnishment rules and some states do not permit it at all




Levy Process of identifying property

which may be the subject of an execution sale

Levying is method of identifying the debtor’s claim against certain of the debtor’s property

Preliminary step leading to a sale of such property




Execution Sale, usually at auction, of debtor’s

goods to satisfy judgment States have specific rules about

how this process is conducted Process is carried out by judicial

officer, often a sheriff or constable




Uniform Enforcement of Foreign Judgments Act Simple, uniform process of lodging

foreign judgments for collection by a state court

A foreign judgment is Any judgment, decree or order From any court of the U.S. or other

court entitled to full faith & credit (sister state court)




UEFJA Requires

An authenticated or certified copy of the judgment

Usually docket entries An affidavit stating the name & last

known address of the judgment debtor A filing fee

The foreign judgment becomes a judgment of that court




Registering a Foreign Judgment




Execution on the Judgment The registered judgment can be

collected by execution In order to satisfy the judgment, a law

enforcement officer can proceed against property of the judgment debtor by Taking possession of it (seizing it) Attachment Sequestering Levying against it




Exempt Property Generally, execution can proceed

against real or personal property Some property is exempt, in order

to afford the judgment debtor the means of continuing a trade, or for necessaries Tools of the trade A percentage of income exempt from

garnishment




Satisfying the Judgment The debtor can pay the debt or the

property may be sold Costs of the sale are deducted from

the gross proceeds – schedule of distribution

The remainder is given to the creditor Sale nets more than the judgment –

debtor is refunded the overage Sale nets less than the judgment – creditor

can proceed against additional property (deficiency)




Locating Assets Interrogatories in aid of execution

Questions concerning location of the debtor’s assets

Addressed to banks, brokerage houses, other financial institutions

Paralegals can research Public records for land transactions Internet for stories of windfalls Internet for employment information




Judgment Proof Debtors Usually researched as part of

intake, the defendant’s assets are a factor in evaluating a case (cost/benefit analysis)

A debtor may ultimately prove to be “judgment proof”, perhaps because of a change in circumstances, and immediate collection is impossible due to lack of assets




Post-Judgment Interest Varies by jurisdiction, e.g.,

Not available Tied to the market rate of interest Set statutory amount

Justifies “waiting out” a judgment proof debtor

Must renew or revive the judgment according to the rules of the jurisdiction




Fair Debt Collection Practices Act Protects the the debtor in

collection of consumer debt Personal, family, household purposes Not a business debt




Interpretation of FDCPA and Law Firms

Sayyed v. Wolpoff & Abramson, 485 F.3d 226 (4thCir. 2007)

“[T]he FDCPA clearly defines the parties and activities it regulates. The Act applies to law firms that constitute debt collectors, even where their debt-collecting activity is litigation.”




Bankruptcy Ability to collect from a debtor filing

bankruptcy depends on the circumstances Type of bankruptcy

Chapt. 7, liquidation – the debt may be settled under liquidation, according to the ratio of assets/debt

Chapt. 11, business reorganization Chapt. 13, individual reorganization – the

debt may remain valid under reorganization, although it might take longer to collect




Other Bankruptcy Outcomes The petition could be dismissed Can request a relief from the

automatic stay Once a petition is filed, no debts can be paid

except through the court Some debts are non-dischargeable (exempt) If a stay is granted, collection efforts could

continue despite the bankruptcy




Satisfaction Once the debt is settled, it is

important to file a notice of debt satisfaction On the docket of the court of original

jurisdiction On the docket of each state court

where judgment was lodged




Satisfaction of Judgment Form

Chapter 20 twenty enforcement of judgments civ lit 2nd

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