CHAPTER 2 F 0
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State Law Debt Collection
A. Collection Remedies
A.1.Introduction to Judgment Collection
• Creditor pursuing collection through court system; first step is to establish debt owed, could
involved complex trial, or more abbreviated UCC Article 3 suit for negotiable instrument or
default judgment might have been entered
a. Execution (33)
• Judgment itself gives nothing, gives them no interest and no priority in any of the debtor’s
property or income, The judgment creditor remains an unsecured general creditor until execution
is obtained on the judgment, only improvement is that the claim has become liquidated and there is
no dispute as to its validity
• Collection process begins with a writ, often called writ fi fa, or writ of attachment, writ orders
sheriff or marshal to look for non exempt property of a judgment debtor, to seize it, sell it and pay
proceeds the judgment creditor until paid in full, Writ is issued by court clerk and is delivered to
sheriff for EXECUTION
•Usually climbs in pick up and looks, lawyer might go with to show, if too big it is tagged with a
notice, since real property can never be loaded into the pick up it is always seized by a posting
notice of seizure or sale or similar method, this entire process of seizure is called the LEVY, and
what the sheriff does to LEVY UPON the property, Whole process from writ issuance to seizure is
often called an EXECUTION
• Once sheriff has levied upon piece of debtor’s property, the judgment creditor becomes JUDICIAL
LIEN CREDITOR as to that property, or LIEN CREDITOR, sheriff sells property and uses
proceeds of sale to pay levying judgment creditor in full, Remaining F 0
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given back to judgment
debtor, unless subsequent judgment by creditor is levied while stored, Entry made in books
showing either full or partial satisfaction, if not enough sheriff continues looking for property
b. Turnover Orders (34)
•Today, judgment debtors have property scattered all over the world, might even be in intangibles,
etc.
• Texas Statute Example
• The judgment debtor may be ordered to turn over property he possesses . . .
• Risk of imprisonment for contempt if don’t comply
• Considerable advantages
• All have to do is get necessary info about asset, Typically allows for examination of debtor
under oath, so assets found, This remedy reintroduces the threat of incarceration into the debtor
creditor game, on narrow basis
• OJ Case Study
A.1.
had to hand over his SUV and a piano to help pay for the 33. million dollar judgment to
the Goldman and Browns
c. Other Writs (36)
• Variety of others can be used, many jurisdictions have “WRIT OF SEQUESTRATION” which
may be used in defined circumstances to seize and hold specific property of the debtor, often
property in which the creditor has a security interest
d. Judgment Liens by Recordation (36)
• Nearly every state special recordation procedures make it possible to obtain a lien on debtor’s
property quickly and simply, don’t have to do full blown execution process
• Usually involves real estate but in some jurisdictions can be on personal property as well,
judgment lien against real property obtained by a recording instrument is at the country land
records where deeds of sale and mortgage are filed, Thus hard to find buyers when selling if title is
clouded and can’t hide this asset or move it, When they can’t sell often will buck up and pay the $
voluntarily
e. Dormancy and Limitations (36)
• Judgment that has not been subject of enforcement efforts for a long period of time faces disability
in two ways, DORMANCY and LIMITATIONS
