Once a judgment and Writ of FiFa is obtained against a debtor, there are two extremely effective collection methods available. One is the post-judgment discovery process and the other is garnishment actions. These two methods are particularly useful when a judgment is obtain against an individual debtor. For these two tools of collection to be most effective, a personal guarantee should have been obtained when the debtor opened his/her account.
These two procedures have different strengths and weaknesses. For example, one strength of a garnishment is the speed by which funds may be seized while a strength of post-judgment discovery is the pressure of responding and thereby disclosing the location of assets and the ability to incarcerate an individual who fails to answer.
There are two types of garnishments available for collection purposes: 1) a regular garnishment which is used to seize funds within a bank, and 2) a continuing garnishment which is used to obtain a percentage of the debtor’s wages or salary over a period of time. The regular garnishment is extremely useful if bank account information has been obtained since one can call the bank and confirm whether funds in the account are sufficient to cover the amount of the judgment. Thus, whenever payment by check is received from a customer, a copy of the payment checks should be made and placed in the file. By retaining this bank information, one can keep an accurate record of accounts and banks used by the customer and estimate the amount of funds present in any one account. In addition, by retaining this banking information, one can make a quick and informed decision on whether to garnish the account. A continuing garnishment, while effective, can result in a slower recovery due to the limited amount recovered each pay period and will end if the debtor terminates his/her job.
The filing of a garnishment is primarily a form filing, i.e. completing the forms provided by the court. In general, garnishments require a filing fee of approximately $45.00 to $80.00, the name and address of the Garnishee (the party who must answer the garnishment, i.e. the bank) for service, the style and number of the case in which the judgment was obtained, the amount of the judgment and a signed affidavit from the person filing the garnishment as to the truthfulness of its content.
Once a garnishment is filed, the sheriff within that jurisdiction will serve a copy upon the garnishee (i.e. the bank). When served, the garnishee must seize available funds and then has forty-five days to answer the garnishment and pay any captured funds into the court. It is worth noting that many banks once served with a garnishment will not only freeze the debtors account as to the judgment amount but will freeze the entire account thereby denying that corporation or individual access to any of their funds for the period of the garnishment. All courts hold the captured funds by statute for at least fifteen days prior to there release to allow for a traverse of the garnishment. A traverse is a action taken usually by the debtor to contest the garnishment and thereby attempt to prevent the funds from being released to the creditor. A traverse must be heard within fourteen days of its filing, which substantially reduces any unwarranted delay. If a traverse is not filed then a letter requesting the release of funds must be forwarded to secure them.
An additional potential benefit of filing a garnishment action is if the garnishee (i.e. bank) fails to answer the garnishment within forty-five days and an additional fifteen days passes, a creditor may obtain a judgment against the garnishee. While a bank will rarely fail to answer a garnishment, it is not uncommon for other parties not as familiar with garnishments to fail to respond thereby giving one two potential sources from which to collect the funds.
Post-judgment discovery typically consists of interrogatories and requests to produce. The interrogatories are questions designed to uncover any assets the debtor may possess or has recently possessed. The request to produce forces the debtor to produce specific documents in order to verify assets. One benefit of post-judgment discovery is that there is no filing fee required.
If properly prepared, post-judgment can be an enlightening experience for a creditor and a troubling experience for a debtor. Typically, however, the debtor will refuse to answer the post-judgment discovery within the statutory thirty day period due to the large burden it places on the debtor and his/her fear of exposing assets to collection. By the debtors failure to answer the post-judgment discovery, the creditor can file a motion to compel the responses required by the post-judgment discovery. Once the assigned judge has ruled on this motion, the debtor is usually given ten days to comply with the judge’s order compelling the debtor to answer. If after the expiration of the ten day period the debtor still has failed to comply with the judge’s order then the creditor can request the court to incarcerate the debtor until he/she has fully answered the questions or provided the documents requested in the post-judgment discovery. The prospect of going to jail is often enough to convince a debtor that it is finally time to pay the piper. While post-judgment discovery can led to a wealth of information, it is often indirectly used as a tool to encourage payment of a debt or to determine that in fact there are no funds to collect.
Unlike garnishments, post-judgment discovery can take time to be beneficial and is most productive with debtors who have funds but are attempting to delay payment or otherwise not pay. The time required for the post-judgment discovery to prove useful depends on the debtor and the particular court and judge assigned to your case. Some judges are very prompt in addressing these motions while others may allow the case to age before ruling and incarcerating the individual.
In conclusion, garnishments and post-judgment discovery provide alternative methods of collection depending on the creditor’s information of debtor funds and assets. If the location of funds are known, a creditor can quickly seize those funds via a garnishment. However, if a creditor has little or no information regarding the debtor’s assets then the creditor may choose the slower, but nevertheless potentially productive, post-judgment discovery method to obtain information and funds. As should be apparent from this article, often the best collection information a creditor can have obtained prior to the customer’s financial demise via credit applications or yearly updated credit information designed to obtain current credit records as well as maintaining banking information via copies of all payment checks.
Mr. Busch is an attorney specializing in commercial and construction litigation for Busch, Reed, Jones & Leeper, P.C. in Marietta, Georgia