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Important New Corporate Ownership Filing Requirements

Business Law: Collection of Judgments

Posted by Gene D. Lipscher | Dec 21, 2018 | 0 Comments

In any action where a party recovers a sum of money in a lawsuit, the amount to which that party is entitled may be awarded and reduced to a judgment. That judgment allows the judgment holder the right to attempt to satisfy the judgment amount with the judgment debtor's non-exempt assets. There are a variety of methods for collecting on the judgment, including, but not limited to, garnishment, attachment and supplementary proceedings.

A.  Garnishments

Garnishment after a judgment gives a creditor a method of collecting money or other

personal property of the judgment debtor by enforcing the judgment against assets which are held by a third person. Many times judgment creditors go after the judgment debtor's bank accounts by serving the writ of garnishment on the financial institution. Once served, and assuming that there are funds of the judgment debtor being held at the bank, the bank will freeze the account up to double the amount of the debt. The judgment creditor will then move for a final judgment of garnishment directing the garnishee bank to pay the judgment debtor to satisfy the debt.

B.  Attachment

Attachment is a proceeding that allows the judgment creditor to seize the property of the judgment debtor and have such property sold at auction. The proceeds of the sale are then applied towards the satisfaction of the judgment.

C.  Proceedings Supplementary

Proceedings Supplementary is the process by which a court orders any property of the judgment debtor to be applied toward the satisfaction of the judgment debt, including property owned by the debtor but in the possession or control of a third party. The process may also be used to reach the equitable assets of the defendant, such as an interest in a trust or contingent rights that may become due under a contract.

D.  Fraudulent Conveyances

Transfers of assets by a judgment debtor with the intent to remove assets from the reach of his or her creditors may be considered a fraudulent conveyance and can be avoided and used to satisfy creditors. In determining whether a conveyance was fraudulent, the courts look for what is known as “badges of fraud.�? The badges of fraud include whether the transfer was made to an insider or family member; selling the assets and not getting a reasonably equivalent value; transfers made when the debtor is insolvent; transfers of substantially all of the debtor's assets; reservation or possession or control by debtor; non-disclosure or concealment of the transfer; absconding by the debtor; pendency or threat of litigation; or removal or concealment of assets

E.  Statutory Exemptions from Execution

The lien or enforcement of a judgment does not extend to a judgment debtor's exempt property. In Florida, there are a number of exemptions which include: a debtor's homestead up to 160 acres outside a municipality or one-half acre within a municipality; a motor vehicle exemption up to $1,000.; personal property exemption up to $1,000.or $4,000. if the debtor does not claim a homestead exemption; health aid for debtor or dependents, life insurance policies, benefits from an annuity contract, pension money; retirement or profit sharing benefits; disability income benefits, wages from re employment assistance, head of household wages.

F.  Piercing the Corporate Veil

Piercing the corporate veil, also known as the alter ego doctrine or instrumentality doctrine, is used not only to disregard the corporate entity in order to reach its shareholders, but to hold a parent corporation liability for the debts and obligations of a related entity or subsidiary corporation. The goal behind this action is to uncover the real and liquid principals hiding behind a shell corporation with little to no assets. Before a Court will pierce the corporate veil, it must be shown that the corporation is the alter ego of the stockholders and was organized or after organization was employed by the stockholders for a fraudulent or misleading purpose. Alternatively, it must be shown that corporate property was converted or assets depleted for the personal benefit of the individual shareholders, or that the corporate structure was not really established or, that property belonging to the corporation can be traced into the hands of the stockholders.

G.  Domestication of Foreign Judgments in Florida

In order to enforce a foreign judgment in Florida, a copy of the certified foreign judgment is first recorded in the official record books of the county where the debtor resides. At the same time, the judgment creditor must also file an affidavit setting forth the name, social security number, if known, and the last known post office address of the judgment debtor and judgment creditor. After receiving the foreign judgment and affidavit, the Clerk then mails a notice of the recording of the foreign judgment by registered mail to the judgment debtor. No enforcement of the judgment issues until 30 days after mailing of the notice by the Clerk. If, within 30 days, the judgment debtor objects to or files an action contesting the jurisdiction of the court entering judgment or the validity of the judgment, the enforcement of the judgment cannot proceed until either the issue of jurisdiction or the validity of the judgment is resolved by the court. If, however, the judgment debtor fails to file a notice of objection or file an action, then the Clerk records a certificate stating that no objection has been filed. Upon recording of the Clerk's certificate, the foreign judgment can be enforced in the same manner as a judgment of a Florida Court.

About the Author

Gene D. Lipscher

Gene D. Lipscher, P.A. has represented business clients that serve in a variety of industries, such as: Business & Commercial Litigation Business Transactions Business Formations Contract Disputes & Litigation Construction Litigation Collections Real Estate Litigation Maritime Litigatio...


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