Whether you have successfully brought a lawsuit against an adversary and been awarded a judgment, or whether you are considering the long-term consequences of initiating a lawsuit, it is important to know your options for collecting a judgment awarded to you.
Once a judgment is obtained, the first step in any attempt to collect it would be to record an abstract of the judgment in the real property records of every county where the judgment debtor may own real property. The purpose of the abstract of judgment is to provide the public with notice of the amount of money the defendant owes to the person who won the judgment, the rate of interest to be paid on the judgment amount, whether court costs are awarded and whether there are any specific orders the defendant must obey. A judgment creditor can file judgment abstracts in each county where he/she knows or suspects the judgment debtor holds property. The abstract of judgment acts as a lien on all non-exempt real property the judgment debtor owns in each county where the abstract of judgment is recorded. This means that the abstract will come up in any title search conducted when a judgment debtor attempts to sell real property. Once filed, the abstract is good for 10 years from the date of judgment, but can be renewed by the Court every 10 years after that, essentially make the judgment last forever.
If you have a judgment granted by a court outside of Texas, but wish to execute it against property located in Texas, you must first domesticate your judgment. This means that you must submit a certified copy of the judgment along with some additional paperwork to the clerk of a court in Texas. Once you complete that process, the judgment can be abstracted (and collected) in Texas the same as any judgment issued by a Texas court.
Once you have abstracted a judgment, the next step is execution of the judgment. Once those thirty days have passed since the issuance of a final judgment, a creditor can request a writ of execution from the clerk of the trial court. The writ of execution permits a Texas constable to seize the judgment debtor's non-exempt personal and/or real property and then sell that property at an auction. Writs of Execution are most effective if you know what property the judgment debtor owns and where it is located. If you do have good information on the assets owned by the judgment debtor, you may want to conduct some post-judgment discovery prior to requesting a writ of execution, as there are fees associated with utilizing them.
Texas law requires that judgment debtors assist their judgment creditors in collection of judgments. Post-judgment discovery is the means by which a judgment creditor can force a debtor to do so. A judgment creditor may serve requests for post-judgment discovery seeking information on a debtor’s assets on the debtor and/or third parties at any time after 30 days have passed since the judgment was issued, including notices of deposition. If the debtor fails to timely respond to the requests for discovery and/or appear for the post-judgment deposition, the creditor can file a motion with the Court requesting it order the debtor to respond and/or appear.
Often times a plaintiff has had business dealings with the defendants against whom their judgment was issued. This could mean that the plaintiff has received or deposited checks from the defendant. If this is the case, or if a judgment creditor has information regarding the financial accounts of its debtor through post-judgment discovery, a writ of garnishment could be an effective tool for recovery of all or a portion of a plaintiff’s judgment. Writs of garnishment are the means by which the judgment creditor can obtain property of the debtor that is in the possession of a bank. It is important to remember that a writ of garnishment requires additional law suits be filed against each bank holding property of the debtor. For this reason, the costs associated with writs of garnishment can be significant, and the attorneys’ fees and costs incurred by the plaintiff in obtaining the writs of garnishment will not be recovered.
If the collection efforts above are ineffective or the property owned by the judgment debtor is not easily reachable, the judgment creditor has an additional remedy available for collecting its judgment. This option is known as a turnover proceeding and includes the involvement of a court. Turnover proceedings essentially order a debtor to turn over assets to a sheriff or constable and/or appoint a receiver to locate and take control of certain types of assets belonging to the debtor. Though the law does not require judgment creditors to utilize other collection efforts prior to asking for turnover relief, many Courts prefer to see that the creditor has made its own efforts at collection prior to initiating an action turnover.
As should be obvious from the explanation of the various options outlined above, collecting judgments in Texas can be a complicated process. If you have a judgment that you are seeking to collect, contact us for a free consultation to discuss the options that may be available for your case.
Allen Killgore & White, PC
(832) 491-0990
Based in Houston, TX, Allen Killgore & White, PC is a full-service law firm that offers expert commercial and construction legal representation to a variety of business and individual clients. Our experienced attorneys are committed to providing the best client service at all times, focusing on unique, tailored strategies and solutions for your specific legal matter.