COLLECTING DEBTS IN TEXAS

The only way to get a debtor's attention is to be persistent.  Remember the squeaky wheel gets the grease principal?  The same applies to the collection of unpaid accounts. 

The great majority of the time our persistence leads to payment without the need to file a lawsuit.  However, when a debtor fails to make voluntary payment, we file a lawsuit and then reduce the unpaid accounts to Judgment.  We then take all necessary steps to collect the Judgment. These steps include any of the following:

• The Abstract

• Post-Judgment Investigation/Deposition

• Writ of Garnishment

• Motion for Turnover

• Writ of Execution

• Abstract of Judgment

Abstract of Judgment

An Abstract of Judgment is a document that is filed in the property records of the county/ies where the Defendant is believed to reside or own property.  A recorded (or filed) Abstract of Judgment creates a lien on the debtor’s nonexempt real and personal property located in the county of the recording.  This is a simple filing that is normally done within a day or two the judgment.

Post Judgment Investigation/Deposition

After obtaining a court judgment against a debtor, the next step is to determine what non-exempt assets, if any, the debtor has.  There are a number of tools available to investigate the debtor’s finances, but perhaps the most valuable tool is simply to take the debtor’s deposition. The debtor is also asked to bring his financial documents to the deposition. These include, but are not limited to, bank account statements, deposit slips, cancelled checks, copies of loan applications, car titles, and trust agreements.  Failure to produce these documents can result in a finding of contempt by the Court.  The documents produced and the debtor’s testimony at the deposition will determine the additional steps needed to get the judgment paid off.

Writ of Garnishment

Did the debtor produce bank account statements at his deposition which show a balance significant to pay-down the judgment?  Or do you already know where the debtor banks?  If so, the writ of garnishment may be the perfect post-judgment collection tool.  A writ of garnishment is an order of the Court to a third party (like a bank) that is in possession of assets owned by the judgment-debtor to surrender those assets to the Court.  A subpoena on a bank will result in the freezing of the debtor’s accounts.  In addition, if the debtor has a deposit-box at the bank, the deposit-box will be frozen and the debtor will not be allowed access to the box.  On one occasion our attorneys successfully garnished a deposit-box containing dozens of Kuggerand gold coins! These gold coins were eventually auctioned off on the courthouse steps in satisfaction of the judgment.

Motion for Turnover

Another tool for collecting debt is the motion for turnover. In simple terms, a motion for turnover asks a court to order the debtor to turn over non-exempt assets to the sheriff for sale to satisfy the judgment. Normally, the judge will give the debtor thirty days in which to locate all non-exempt assets and relinquish such assets to the sheriff.   The sheriff will then provide the proper notice to the public and sell the assets at auction. 

A turnover proceeding can also be used to ask the Court to put the debtor into a “receivership.”  The court can order the turnover of all non-exempt property of the debtor to an independent receiver who will then take possession and control of the property and liquidate the property to satisfy the judgment.

Writ of Execution

A writ of execution is a judicial writ directing the enforcement of a district, county, or justice court judgment.  The writ typically directs the sheriff or constable to levy on a defendant’s nonexempt property, sell it, and deliver the sale proceeds to the plaintiff to be applied toward satisfaction of the judgment.  

A judgment creditor has the right, as a matter of law, to have a writ of execution issued unless and until the defendant files a proper supersedeas bond.  If no supersedeas bond is filed and approved, a writ of execution must be issued if the plaintiff applies for it after the expiration of thirty days from the time final judgment is signed. If a motion for new trial is timely filed but is denied, the clerk must issue the writ after the expiration of thirty days from the time the order overruling the motion is signed or from the time the motion is overruled by operation of law.