If a creditor successfully sues you in court and gets a judgment against you, they will then likely look for your assets and property to satisfy that judgment. Once they ascertain what property you own, they will then usually take steps to try to collect their judgment from that property.
Most creditors will immediately record their judgment in the Probate office of the county where you live. This allows them to execute against any personal or real property that you have. This includes all real estate, vehicles and other valuables you possess. An execution is where they ask the local Sheriff to auction your property at a public auction.
One of the most known collection practices is a garnishment of your hard earned wages or of your bank account.
You Can’t Hide From Your Creditors
You may be thinking your property is safe because the creditor doesn’t know you own it and/or asking yourself how they could possibly know what assets you have. The answer unfortunately is that you likely have already told them or inadvertently told them what assets you have.
They have good and perfectly legal ways to find out what property you own. One of the best sources of asset information is your credit or loan application. Many times on that application you tell them your bank account information and the name and address of your employer and often times information about other loans you have and what items you have as collateral (your home, vehicle, boat, or zero turn lawnmower) on those loans.
Another way is your last payment to the creditor. A smart creditor will keep information from your last payment in your file. If you paid with a check, they may have photocopied it and now they know what bank you use and your account number on file. This makes a garnishment very easy for them.
It is also very easy for judgment creditors to find information about your real estate as most counties have that information online available to the public. You can search for your real property in Alabama on one of these two sites, Delta Computer Systems or Alabama GIS, or by simply doing an internet search for your county’s tax assessor’s office.
Motion for Discovery of Assets Examination
A judgment creditor can also request a hearing with the Judge for the sole purpose of asking you questions under oath about your assets. It is often called a Motion for Discovery of Assets Examination. At this hearing the judgment creditor will likely ask you about any real estate, bank accounts, vehicles, stocks and bonds, personal property, employment information, and residence information you have and can require you to bring certain types of documents to the examination, such as tax returns, bank statements, business records, deeds, and leases. If you fail to appear for the asset examination, the Judge could hold you in contempt of court and issue a warrant for your arrest. Not for failure to pay the debt, but for your failure to appear for court for the examination. Thanks to our Constitution, you cannot be put in Jail solely for your failure to pay the debt.
Also, very importantly, please note that a creditor cannot garnish your wages until it has sued you and obtained a money judgment. That is why they are called “judgment creditors.” It literally means a creditor that has a judgment against you. There are some exceptions where they do not have to sue you first such as child support, federal student loans, and state and federal tax debts.
As you can see It is very important, the second you receive a lawsuit for you to call one of our conveniently located offices to set up a private consultation with one of our experienced attorneys. That way we can help you avoid that creditor from becoming a “judgment creditor.” If you have any questions regarding Chapter 7 Bankruptcy, Chapter 13 Bankruptcy, stopping a foreclosure or wage garnishment, avoiding liens, stopping law suits, discharging debt, etc., we can help you!
We will analyze your situation and help you make the best decision possible to help you navigate your financial problems.
Grant McNutt is a Managing Attorney at the Bond & Botes Law Offices in Florence and Haleyville, Alabama. He holds a Bachelor of Science from the University of Alabama, and a Juris Doctorate from the Birmingham School of Law. He has been practicing Consumer Bankruptcy Law since 1999. Read his full bio here.