Judgment Collections

and other Creditor-Debtor Litigation

Asset protection planning can be correctly viewed as pre-litigation or pre-judgment planning. In other words, asset protection is conducted in anticipation that there may be future lawsuits and perhaps even judgments.

Once a judgment has been rendered, the judgment is said to go into “collections” whereby the creditor attempts to enforce the judgment against the assets of the debtor. Like everything else in litigation, there are rules – and sometimes complex rules – that both the creditor and the debtor have to follow during the collections process. During the collections process, the creditor is allowed to conduct extensive discovery of the debtor’s assets, and the debtor is required to respond to those discovery requests or else risk contempt of court. The creditor also has a wide range of remedies available to get at the debtor’s assets, such as attachment of assets and garnishment, but the debtor also at this time defend with statutory exemptions, various due process arguments, and the like.

Understanding the judgment collection process is critical to being able to design and implement effective and appropriate asset protection plans, just as understanding asset protection is critical to unwinding abusive schemes by debtors to hide assets. Most of the databases on this website focus on judgment collection issues, such as fraudulent transfers and charging orders, etc. In addition to those databases, the following resources may help to demonstrate how certain aspects of judgment collection work:

• U.S. Department of Justice, Tax Division Judgment Collection Manual
  The Collections Guide of the Justice Department as it relates to the collection
  of tax liabilities.