Asset Search for Judgment Collection

The pleasure of prevailing in court – and persuading a judge or jury to award money damages – can be fleeting if the other party refuses to pay. Courts rarely compel debtors to settle their debts. So when the losing side in a lawsuit fails to satisfy a final judgment, collection efforts will depend on successfully locating their accounts and assets.

We work with law firms, private clients, corporations and court-appointed receivers to ensure that all recoverable assets are located, documented and made available for collection.
 

Asset Searches on Individual Debtors

To facilitate judgment execution against an individual, we conduct asset searches that cover an extensive range of personal financial holdings.

The focus of a comprehensive personal asset investigation includes:

• Financial Accounts
  (Personal Bank, Investment, Brokerage and Retirement Accounts)
  

• Real Property
  (Current Ownership, Financing History, and Recent Sales/Transfers)
  

• Employment and Business Interests
  (Including Shell Corporations and Special-Purpose Limited Liability Companies)
  

• Fraudulent Conveyances
  (Transfers of Property to Family Members, Close Associates or Corporate Entities)
  

• Personal Trusts and Family Trusts
  

• Financial Awards and Settlements
  (Divorce, Probate, Insurance and Civil Cases)
  

• Other Tangible Assets
  (Motor Vehicles, Aircraft and Boats)
  

When dealing with debtors who are financially sophisticated, more intensive investigative avenues can be pursued, such as identification of offshore accounts.
 

Finding Financial Accounts

We conduct nationwide searches for bank, brokerage and retirement accounts.

Account search results generally include:

• Account Type(s)

• Name and Address of Financial Institution

• Approximate Balance (Bank Accounts)

• Approximate Portfolio Value (Investment and Retirement Accounts)

Bank accounts include demand deposit (checking and savings) accounts at banks, credit unions, and savings and loan associations. Certificates of Deposit (CDs) are also identifiable in certain cases.

Brokerage and retirement accounts include trading portfolios of stocks and bonds, mutual funds, 401(k) accounts, and Individual Retirement Accounts (IRAs) held at top brokerage houses and mutual fund institutions throughout the U.S.

Other types of financial accounts – from mortgages, to military pensions, to corporate profit-sharing plans – are also identifiable through our methods and resources. We have the capability to identify foreign and offshore accounts.

All searches are conducted in compliance with the Fair Credit Reporting Act (FCRA) and Gramm-Leach-Bliley Act (GLBA) financial privacy laws.

Business Asset Search

If the judgment debtor is a business, then corporate assets and revenue sources must be explored. The focus of a business asset search can include the following areas of investigation:

• Business Bank Accounts

• Company Benefit, Retirement and Profit-Sharing Plans

• Tangible Assets: Real Estate, Vehicles, Financed Equipment, Aircraft

• Securities Filings (Public Stock Offerings and Private Placements)

• Corporate Credit (UCC Financing Statements, Bankruptcies, Liens and Judgments)

During an asset investigation of small or midsize businesses, evaluation of the personal financial status of the business owners is often merited. This is particularly true for family businesses and single-member limited liability companies.

Other potential areas of business assets include intangible assets such as service contracts, licensing agreements, patents, trademarks and copyrights. More information on our corporate asset searches can be found here: Business Assets.
 

Fraudulent Transfers

Evasive debtors seeking to protect wealth and dodge liabilities may believe they can make themselves ‘judgment proof’ by transferring assets to family members, associates, and privately held companies. Presented with demands for payment of a judgment, they instead plead poverty, presenting their own bank statements with conspicuously low balances as evidence of their reduced circumstances.

The transfer of debtor’s property to deter, hinder or defraud a creditor is a fraudulent transfer. Other actions that unfairly remove such property from the reach of a creditor can also be considered fraudulent. Transfers made in exchange for inadequate consideration are referred to as constructive fraud, and are a common target of bankruptcy trustees; while transfers taken with the intent to deceive are actual fraud. 

Fortunately for judgment creditors, asset transfers are generally avoidable if they are either actually fraudulent or constructively fraudulent. Clawback provisions are a central part of the Uniform Fraudulent Conveyance Act (UFCA) and the Uniform Voidable Transactions Act (UVTA), formerly the Uniform Fraudulent Transfer Act (UFTA). These statutes provide creditors with a remedy when debtors conceal or transfer assets that would have otherwise been available to satisfy legitimate debts.

In such situations, investigation and inquiries must proceed to identify specific assets that have been transferred, and to establish the timeframe, value and consideration of those transactions.

An asset search can identify transfers of tangible property, such as private residences, commercial buildings, vacant land, vehicles, boats and airplanes. Obtaining copies of deeds, quitclaims, title history and registration documents are an important part of this process.

Tracing the flow of funds between financial accounts is another element of identifying – and recovering – fraudulent transfers. Subpoenas are generally required to obtain transactional data and account statements from financial institutions. An asset investigation can reveal undisclosed accounts at banks and brokerage houses where subsequent discovery efforts should be focused.

Post-Judgment Discovery and Debtor Exam

An asset investigation can serve as a strategic roadmap for discovery efforts. Many of the legal devices used in post-judgment discovery – interrogatories, depositions, and demands for production — rely on debtors to disclose the extent and location of their own assets. It is imperative, therefore, to pose well-informed questions. It is also important to know certain facts in advance, so that you can evaluate whether the debtor is fully forthcoming and cooperating in good faith.

Legal discovery also provides opportunities for obtaining account statements directly from banks and brokerage firms, and tracing the flow of money between multiple accounts and beneficiaries. Yet before third-party subpoenas can be served, financial institutions where the judgment debtor maintains accounts must first be identified. This is another reason to consider an asset investigation.

If the total assets identified during an investigation are insufficient to satisfy the outstanding debt, an evaluation should be made as to whether the available funds in the known accounts are too low to support the debtor’s lifestyle. Living in luxury without identifiable means of support is a red flag for fraud. Review of historical statements and account activity can help identify suspicious gifts and transfers to family members, business associates, and shell corporations. Transactional records may also yield insights on the location and jurisdiction of any offshore accounts.
 

Judgment Collection: Levy, Lien and Garnishment

After assets have been identified, the next step is to collect what is owed. Collection methods can include account levy, wage garnishment, and judgment liens.

A bank levy entitles the creditor to remove funds from bank or brokerage accounts. This generally requires court approval of a writ of execution, served upon the financial institution by a county sheriff, federal marshal or other person in the jurisdiction where the accounts are registered. In some states, banks with multiple branches must designate one central branch for receiving service of process.

Certain funds may be exempt from a bank levy, including Social Security, worker’s compensation, disability, veterans and unemployment benefits. Debtors may also claim exemptions for paid earnings and funds necessary for basic necessities.

A judgment lien represents a formal claim against real property owned by the debtor. It creates an encumbrance against the title of the property, which prohibits the debtor from selling or transferring the parcel until the lienholder is fully paid. If the debtor attempts to refinance the property, lenders will likely require satisfaction of all judgment liens before approving a new mortgage. If the property is the debtor’s primary residence, a portion of equity may be protected from collection due to homestead exemption. Judgment liens can also be attached to planes, yachts, motorcycles, cars and other vehicles.

In a few states, entry of a court judgment automatically attaches a lien on real property owned by the debtor in the county where the case was adjudicated. To place a judgment lien in other states, the judgment should be recorded in the county where the property is situated. Out-of-state judgments may need to be domesticated.

After an asset investigation is completed, collection efforts should be coordinated by an attorney.
 

Consult an Investigator

If you would like to discuss an asset search for judgment execution or related matters, please complete the form below. You can also speak with an investigator by contacting our offices at 800-580-8755.