The Following are Excerpts From a Discussion on Judgment Enforcement Conducted By Martin Greenbaum of Greenbaum Law Group, LLP
Enforcement of judgments is a common topic and there are lots of MCLE courses on it. This is not about following a book. And if you just do what’s in the book, you’ll get all the statutes, you’ll get all the cases, you’ll get all the textbook approach If you just do that, you’re not going to get very far.
Make Sure You Have a Judgment
The first thing that you need to do in a judgment enforcement case, is make sure you have a judgment. I see a lot of judgments where people started out against a particular entity and it turned out that entity was either spelled wrong, didn’t exist, was FTB suspended or was Secretary of State suspended. You get a judgment against somebody who doesn’t really exist by the time the judgment is entered. So make sure that you really have an actual judgment debtor in the case.
An actual judgment, a money judgment, must say who the creditor is, who the debtor is, how much money is owed, have the correct names, and be signed up by a judge. You need to have an available copy of the judgment to get enforcement documents from the clerk of the court.
How Can A Judgment Be Enforced?
Now, there are multiple ways to enforce a judgment. The one that most people look to is, how do I take something away from a debtor?
Make the Debtor Want to Pay You
The better way is how do you make the debtor want to pay you? So this is where the psychology of judgment enforcement begins – we want to make a debtor decide it is better to pay you than have you come after it.
They’ll want to offer you a settlement. They’ll want to start negotiations. It’s much easier when they come to you and they say, how can we resolve this judgment? And so if you start by taking something away, that’s an incentive. Sometimes there are junior lien holders who want to buy your lien, who want to pay you off. There are senior creditors who want to keep their lien or claim senior. Sometimes you can jump ahead of senior lien creditors with revolving lines of credit and make them want to buy out your lien. And you need a collection plan for this and the plan has to be fluid. It has to adapt to what happens.
Historical Web Data
There’s historical web data. If you don’t know what historical web data is, go to Archive.Org. That has the way back machine. And the way back machine shows you what the website used to look like, like before it was changed and it went down. So now you go to archive.org in the “Wayback Machine”. You fill in the name of their website and you can go back four and five years because it has robots that crawl everybody’s website every three or four months. You can pull up what the website looked like two and a half years ago or other time and hunt for clues
For example, suppose if, in the past, a debtor was touting a new development for 22 condominiums. Then suddenly that all disappeared. You discover the development is now owned by a single-purpose LLC or they’ve all sold them off. You’ve got leads as to what happened. So historical web data is very important.
In-Field Investigation
The best tool that is realistic is that rich people live rich lives. Poor people don’t. The in-field investigation, eyes-on investigation, and lifestyle investigation are what really enforce judgments. It tells you where they go, and what they do from the moment they get up in the morning. They don’t just sit in the park and play bocci ball. They go to an office. They go to their businesses. They go to, their developments, they go to their factories. They’re all hidden in the names of LLCs and S-Corps and Wyoming Corps and, and Nevada partnerships. When you know that, leads and actions follow.
The Shotgun Approach
Even the bad debt debtors have cash somewhere. I believe in the shotgun approach. And so I had a judgment, it was against 60 separate judgment debtors. I served eight banks. I had no idea where the bank accounts were, but I thought that if I served B of A and Wells and Chase and US Bank and others, I had a good chance. It worked and I got all the money on a shotgun bank levy because I had multiple judgment debtors and their money was going to be in one of those banks. And so even though it costs to pay for multiple writs and to pay sheriffs of other counties, it can be profitable
Assets
If you take something away from the debtor, whatever it is that they want to keep, they will look for a way to talk to you or get somebody to talk to you. Now the simple things are vehicles, boats, and airplanes. I mean, not too many judgment debtors have vehicles, boats, and airplanes. But if they do, they are all registered and you can take them. The Sheriff will seize them if you pay the money to the sheriff. However, things like rolling stock and equipment are tough. Big trucks are almost all leased. But unregistered equipment, that’s a goodie. If you can seize a forklift or a high lift or something for a manufacturer or something that’s used in construction or in an industrial setting that’s not a licensed vehicle, that’s a goodie.
However, you must pay the sheriff a big fee to hire a rigging company to go and seize it. But that’s good.
Inventory
Inventory is subject to an inventory lien. Loss of inventory will put people out of business. What do you do to take inventory? There’s the tilt tap and the keeper levies. The keeper is the guy who goes in and he says, okay, I’m in charge here. Nothing goes out the door unless I get paid for it in advance.
It’s the sheriff’s department’s keeper. He’s usually a retired deputy sheriff who sits there for eight hours or 16 or 24. As much as you can pay for, he inventories everything. After the inventory, the keeper will haul it away for the sheriff to storage and the sheriff will auction it all off. So you start with the keeper and that’s the equipment seizure.
Only Seize Items with Value
Now you want to take only things that are of value. So one of the things you should do is go with the keeper to see what you want. You don’t want a bunch of junk. I had a judgment against a scrap metal dealer. Well, I didn’t want a bunch of piles of ground-up plastic that came out of cars or foam.
I only wanted the steel as we could move the steel to a steel buyer. Or high-value metals – copper or some of it is a high-value scrap.
Single Member LLCs
Single-member LLCs are interesting. Theoretically, an LLC is subject, just as a partnership to a charging order. But a single-member LLC has only one person in charge. And if your individual judgment debtor has an LLC that he’s doing all of his business through, but he’s the only member of the LLC, you can seize the whole business. And that’s of value because they hide their assets in LLCs and in Corps. If they’re hiding it in a corp and they’re the sole shareholder, you ask for a turnover of a hundred percent of the stock and now you’re the owner of the entire corporation. And if you’re the owner of the entire corporation, you immediately fire the officers and directors and you vote yourself in as the new officer and director. And now you own the business.
Revocable Trust
Anytime you see a revocable trust the assets in a revocable trust of an individual judgment debtor, the assets of the trust are available to the extent that the judgment debtor can revoke the trust. Don’t be fooled by the name. Get a copy of the trust. If the debtor is living in a house that is owned by a revocable family trust, get a copy of that revocable family trust if you can.
Go After the Spouse
If you’ve got an individual judgment debtor, go after the spouse’s wages. Suppose the spouse may have worked at Ralph’s for the last 22 years and be a member of the union. You have to make a motion to garnish the spouse’s wages. But now you get judgment enforcement every night when that spouse says, get this guy off my ass! You don’t really care about the spouse’s wages at Ralphs. You care about hassling the judgment debtor.
Other Key Aspects to Enforcing Your Judgment Include Areas Such As:
- Serving the Notice of Entry of Judgment
- Recording Liens
- Getting Your Abstract of Judgment
- Debtors Examinations
- Dealing with Licensed Debtors
Contact Greenbaum Law Group Today
Enforcing judgments is more complex than merely following standard procedures. As we have demonstrated, a successful enforcer needs a deeper understanding of both the debtor’s psyche and the available legal and practical tools. Key strategies involve not just securing a valid judgment, but also being agile in approach, from leveraging legal structures like single-member LLCs to tapping into unconventional resources like historical web data. Ultimately, in the dynamic realm of judgment enforcement, adaptability and a thorough legal grounding are paramount for achieving desired outcomes. Contact Greenbaum Law Group today for a consultation on your judgment enforcement.