Proceedings Supplemental

[EbayBob]

What is the name of your state (only U.S. law)? Indiana

Scenario: 6 months ago I won a judgment for 2500.00 against my neighbor who has yet to pay. He lost his job just prior to me winning the case, yet since I have observed a new car purchase, a new camper purchase, vacationing all the time, etc.....and have since learned that his wife had received a substantial inheritance. So it’s obvious he could pay the debt, and just isn’t, and apparently doesn’t care or realize that it's costing him more in interest with him not doing so. The clerk says my next legal course of action is a debtors exam(Indiana calls it Proceedings Supplemental), but I have heard that most lie about their assets and unless they hold a job where you can garnish their wages, about the only thing it does is educate ignorant debtors on what assets they need to hide/protect. Assuming people don't lie, a debtor’s exam might be great.....but he lied often at the trial, so he will most likely lie at the exam. I have been waiting for him to at least get a job before proceeding, but at the same time I don’t want to miss out if there’s a chance of getting paid as a result of this other money and recent spending. It’s my understanding I can’t go after ‘her’ money, but I doubt it very seriously they understand that, and I’m hoping by approaching this process correctly, maybe I can get paid as a result.

With that said, my question is this......has anyone experienced a debtors exam and have any recommendations? I have a copy of the court form to initiate the process, but all it does is order him to appear and bring with you evidence of your income and assets, but it doesn’t detail exactly what he should bring, so if I am him, I bring as little as possible and play ignorant. Does the court typically include maybe a list of things they should bring, or is it acceptable practice when I file for me to include a list of specific documents(financial statements, credit report, Tax Returns, etc) that I want to examine? If he fails to bring any documents to court, and just verbally respond to everything, can he then be ordered to provide documents to substantiate any claims?

 

[dcatz]

Does the court typically include maybe a list of things they should bring?

No. That’s for you to work out

Is it acceptable practice when I file for me to include a list of specific documents that I want to examine?

Yes, but the mechanism is to do it can change from state to state – production subpoena, Order to Produce etc. – so ask the Court Clerk. The Court can’t give you legal advice, but it can tell you if it can be done and if there is a form to use. Beyond that, you need an enforcement plan, and it doesn’t appear that you have one. It’s not likely that a Court will continue an exam and compel him to produce documents that he swears he doesn’t have – eg. a credit report or financial statements. If he says he can’t remember his bank account number, you may get the exam continued for him to return and provide it, but if he verbally gives you the bank and account number, you’re not going to get him returned to produce bank statements.

You would be advised to acquire some understanding of what the enforcement options are in your state. The Court will assist you to enforce. It’s not going to assist you in a “fishing expedition” or an irrelevant production demand. You need a plan. If the new car is in his wife’s name or if you’re not going to seize and sell it in any event, do you need a copy of the registration?

You might also use the “search” function to acquaint yourself with a “turnover order” if one is available to you.

Here’s a link to the asset questionnaire the IRS uses. Maybe it gives you some ideas about data to acquire.
http://www.irs.gov/pub/irs-pdf/f433a.pdf#search='Form 433A

 

[EbayBob]

Thanks dcatz

dcatz....thanks for the great information. That at least gives me an understanding of the basic process, and what to ask the Clerk for when I go file.

Obviously my plan is to be as prepared and as thourough as possible in finding out his assets so I can then determine what my collections options are. I dont know if the new car and camper are in his name, or the other 3 vehicles they own, or if any of them are paid for, etc. I do know his house is in his name, and I already have a lien on that.

In my research, I found that CA seems to have the right idea and actually provides a form(JUDGMENT DEBTOR'S STATEMENT OF ASSETS Form SC-133) for the debtor to fill out and send to the Creditor. Seems logical that they would all provide this type of form.

The Small Claims booklet our court provides states the following in regards to the Proceeding Supplemental process....."The Creditor must be present to examine the Debtor under oath concerning his or her assets and income. After the examination has been concluded, the Court may order various types of relief, including garnishment of the Debtor’s wages." To me, that would seem to indicate that the Court takes the initiative on what action can be taken to collect, but my guess is I will have to be the one to initiate that process.

With that said, the typical means of collecting appear to be wage garnishment, or bank account levy. What about the sale of vehicles or other property, or drawing cash against a Credit Card, or from an IRA, or against the equity on his house, etc.....Are those valid means for collecting, or any other obvious ones I am missing?

 

[dcatz]

Seems logical that they would all provide this type of form.

A majority do. They don’t all post them online. Call and ask the Clerk in advance. But whether they do or don’t, it’s incumbent on you to determine the information that YOU need. That goes back to knowing the debtor and having a plan. The best recovery efforts are debtor-specific. Someone who is employed has vulnerabilities that are different from someone self-employed etc. etc. The best creditors’ rights practitioners have identified assets before they file suit, have prepared to enforce a judgment and have projected costs. Novices take a judgment and then start working on a way to enforce. It’s not a condemnation. It’s just a reality.

It’s also the reason that professionals have a low regard for asset exams. People do lie. They also just fail to appear. If exams can be avoided, there are better ways to spend time and money.

That would seem to indicate that the Court takes the initiative . . .but I will have to initiate that process.

You initiate. You choose. The Court enables by granting Orders, issuing writs etc.

The typical means of collecting appear to be wage garnishment, or bank account levy.

Exactly. Which is the reason to know the debtor and have a plan. A wage garnishment doesn’t help with a self-employed debtor and can be a problem if the debtor works on commission (not to mention the fact that four states don’t permit wage garnishment). If it’s successful at all, a bank levy is not going to work more than 2-3 times before the account is closed. You need to determine what your state will permit. Moving to seize and sell that prized coin or gun collection may get you paid, whether you really intend to follow-through or not.

And look into a turnover order. Being ordered to give personal belongings (wallet, ring, watch, car keys) to the Sheriff can be a rude and motivating surprise.

 

[EbayBob]

dcatz....I read your comment from another post where you said Debtors exams should be viewed more as a last resort. I would think one would be required in order for the court to also understand the Debtors finances in order to rule on what/if any property the Creditor may be entitled to seize and whether the Debtor makes it exempt of not, or how does that work?

Can someone explain to me the typical legal process of seizing someone's assets? Is it basically proving to the Judge the asset(s) are valid and motioning him to give the Order(Writ of Execution)? Then is it up to the Debtor to respond to the motion if he feels he can prove otherwise or it can be made exempt, and if not, either pay the judgment or one day the sheriff is going to show up and tow away his car, or boat, or whatever? And are you limited on what assets can be taken based on the judgment amount, or are all assets up for grabs and the details or actual value worked out after the fact?

About the only thing I can find on the subject is in Indiana Code 34-55, Chapters 1, 3, & 5http://www.in.gov/legislative/ic/code/title34/ar55/index.html. I'm just struggling to understand the basic legal process of enforcing the judgment once you understand some or all of the Debtors assets.

 

[EbayBob]

Is this a good next step???

My judgment is against an individual for construction gone bad, and I remembered I had written him 3 checks for payment. I went to my bank and got copies of the processed checks and low and behold he cashed them at the same bank....so probably a good sign he at least had an account there.

With that said, should I first call(or maybe subpoena) the bank and see if he just has a valid account there, or is that a waste of time either because they most likely wont even tell me that, or that they could call and/or the process would alert the defendant, who could then close the account?

Or is the recommended next step to just assume he has an account there and use the following, which I assume would be the appropriate next step Court Form.....

http://www.co.hamilton.in.us/library/courts/pdf/ProSuppInterrogToDefBank.pdf

It refers to several Indiana Codes and appears to put a 90 day hold on the account, and not matter that it may be a joint account. It also looks to be up to the Defendant to prove in court what funds are exempt, or do you think just her name being on the account and her not part of the judgment make all the funds exempt, making this approach just a waste of time?

At a minimum this will get the defendant’s attention, but at the same time I dont want to do something that could come back to haunt me.