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Top Tools for Judgement Enforcement
Although receiving judgment against a debtor is a good first step, it is unfortunately no guarantee that you will receive payment. It may be necessary to turn to judgment enforcement actions to collect the money. There are tools and strategies that a creditor can utilize to enforce a judgment.
First, you can determine the "collectability" of the judgment, meaning how likely you are to collect on it and how much it may cost you. Then there are legal discovery methods to obtain information on the debtor’s assets. After that, as a judgment creditor, you can turn to several available tools to compel the debtor to pay. An experienced Illinois debt collection attorney can implement these tools to collect on an unpaid judgment.
Citation Lien
One of the ways to discover debtor assets and income is via a citation lien to discover assets (CDA). This method does not help you directly collect on a judgment per se, but it does provide a better picture of the debtor’s assets so you can strategically pursue action against the debtor.
Involuntary Bankruptcies: Proceed With Caution
In bankruptcy, debtors file to discharge debts and pay back creditors. Sometimes, creditors can force an involuntary bankruptcy on debtors. Involuntary bankruptcy can be a powerful tool for creditors to recover debt in certain circumstances, such as when the debtor is able to pay back the large amount of debt he owes but shows no signs he will do so.
Yet it comes with significant financial risks for creditors if not done properly. An experienced Chicago, IL creditors’ rights attorney can consult creditors on the advisability of forcing a debtor into involuntary bankruptcy.
What Are Requirements to File a Petition for Involuntary Bankruptcy?
There are a few requirements for filing a valid involuntary bankruptcy petition:
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The bankruptcy must be filed under Chapter 7 or Chapter 11 of the bankruptcy code.
Minimizing Lender Liability
For lenders, a troubling development that has recurred in recent years is lender liability. Lender liability refers to the legal claims that lenders can face alleging that they did not act according to the law during a lending transaction, usually after a default.
A lender liability claim can come from a borrower, guarantor, or third party arguing that the lender owes them damages. Lender liability can make a lender’s job more difficult and expose lenders to monetary losses. For this reason, it is a good idea to consult with an experienced Chicago, IL creditor’s rights attorney on how best to minimize lender liability.
Common Lender Liability Claims
Breach of Contract
A breach of a loan document is a breach of contract. Lenders should be aware of potential areas of liability, such as improperly crediting payments or not fulfilling notice requirements.
Dealing With Debtors’ Fraudulent Transfers In Illinois
One way that debtors may attempt to avoid paying their debts is by transferring assets to a third party such as a friend or relative. This type of fraudulent transfer is illegal, and Illinois offers remedies to creditors for dealing with fraudulent transfers. A Chicago, IL creditor’s rights attorney can help creditors recover debts from debtors hiding behind fraudulent transfers.
What is a Fraudulent Transfer?
A fraudulent transfer occurs when a debtor transfers assets that could be used to pay back the debt to another for the purpose of keeping those assets out of the creditor’s hands. This way, the debtor keeps control of the assets and the money as well. Fraudulent transfers occur in many different types of situations where a debtor seeks to avoid paying a debt, including business, bankruptcy, and divorce.
Commonly Omitted Assets in Bankruptcy & Their Effect On Creditors
Creditors facing one or more debtors who have filed for bankruptcy protection may be understandably concerned about getting paid on outstanding debt. Sometimes debtors will omit assets from the bankruptcy filing intentionally or by mistake, which may affect the value of the bankruptcy estate and the likelihood that creditors – particularly unsecured creditors – will get paid. An experienced Chicago creditor representation attorney can advise creditors concerned about getting paid when a debtor files for bankruptcy.
How Can Omitted Assets Affect Creditors?
How creditors are paid in bankruptcy depends on many factors, including the type of bankruptcy protection the debtor has filed. Yet as a general matter, creditors are paid from the bankruptcy estate, which is made up of the value of the debtor’s assets sold by the bankruptcy trustee. That means that the value of the bankruptcy estate will be determined by the value of the debtor’s assets, which debtors must list on the Schedule B form of the bankruptcy filing.
Using Judgement Liens to Collect On Judgments
Creditors who have received a court judgment against a debtor may sometimes find that the judgment is only the first step to collecting the debt. Unfortunately, that judgment does not guarantee that the creditor will receive payment. One of the tools to which creditors turn to enforce judgments is the judgment lien, which gives the creditor the right to force the sale of property owned by the debtor to collect on a judgment. In Illinois, an experienced creditors’ rights attorney can represent lenders to obtain judgment liens and collect on judgments.
How Can Judgment Liens Protect Creditors?
A judgment lien provides a way for creditors to obtain payment on an unpaid judgment by allowing creditors to force the sale of a property and use the proceeds from that sale to recover the unpaid judgment. It is not an automatic process. The creditor must file court documents in the appropriate country recorder as well as a copy with the Illinois circuit court clerk in the county in which the property is located.
Replevin vs. Detinue in Asset Recovery Actions
When it comes to recovering certain types of assets such as electronics, vehicles, or furniture, two types of actions to which a creditor can turn in Illinois are detinue and replevin. Although related, these two asset recovery actions are different. Both can help a creditor recover property when a debtor has defaulted on their payments. A creditor’s rights attorney can represent a business seeking to use replevin or detinue to recover these types of assets.
Replevin and Detinue Compared
While detinue and replevin are similar in that they are both used to recover smaller assets such as vehicles, there are some key differences.
What is Replevin?
Illinois law provides that when goods have been wrongfully kept or taken, a replevin action may be brought in court to recover those goods to the entity entitled to possession of the goods. In a replevin action, the creditor will take possession of the property temporarily while a lawsuit proceeds. As part of a replevin action, a creditor may obtain a writ of replevin, which is a legal document that authorizes its holder to get back possession of the assets.
Objecting at a Debtor’s Chapter 13 Confirmation Hearing
While you can not necessarily stop your debtor from completing the Chapter 13 bankruptcy process, you can file an objection at his or her confirmation hearing. At a confirmation hearing, the repayment plan and each of the petitioner’s debts are reviewed and confirmed. If there is something inaccurate about how your debtor has disclosed what he or she owes you or the value of any collateral involved, you may want to consider filing an objection. If you do not object during the confirmation hearing, you generally lose your chance to object. If one of your debtors is filing for bankruptcy, an experienced Chicago, IL debt collections attorney should review the filing to ensure that your interests are protected as well as possible.
Negotiating a Settlement Out of Court
Ideally, you should try to resolve the dispute with your debtor out of court. If there is a discrepancy between the amount your debtor owes or the value of any collateral and the amount or value he or she reported to the court, it could be simply due to an error. For example, if your debtor has numerous credit cards, he may have mixed up the balances on two of them. If that is the case, the error can readily be corrected.
Which Creditors Can Garnish Wages in Illinois?
If you have tried almost everything to get your debtor to start making payments and all less extreme methods have failed, it might be time to consider wage garnishment as a means of getting paid back. When you receive a court order giving you permission to garnish your debtor's wages, his or her employer will have to start withholding a portion of your debtor’s pay and sending it directly to you. In Illinois, nearly all creditors can use wage garnishment to recoup a debt. However, you will need to obtain a court order. An aggressive Chicago, IL debt collection lawyer can help you petition the court for a wage garnishment order.
What Types of Debt Can be Recovered Through Wage Garnishment?
Some states are very restrictive regarding wage garnishment, allowing only certain types of creditors to resort to this method of debt recovery. These states often reserve wage garnishment as a remedy for specific types of debt, like family support obligations or tax debt. Illinois allows most commercial creditors to use wage garnishment after getting a court order. You might be able to get a wage garnishment order to recover:
What if I Suspect a Debtor is Hiding Assets?
People who have gone into severe debt may try to hide assets from their creditors, hoping to avoid repaying even part of their debt. After getting a judgment against your debtor, you can still only collect what your debtor can pay based on his or her assets and wages. You may come to realize that your debtor appears to have more money or a more upscale lifestyle than he or she should be able to afford based on the assets he or she reported. When this is the case, it is quite likely that the debtor is hiding assets from you and his or her other creditors. An experienced Chicago, IL asset recovery lawyer can help you search for any assets your debtor may be concealing.
How Debtors Try to Hide Assets
People may try to conceal assets in any number of ways, such as:
- Putting assets in another person’s name - Your debtor may have no savings to his name, but his five-year-old daughter might have a shockingly large bank account in her name. People may also do things like retitling their cars so the vehicle appears to be owned by a family member while the original owner continues driving it.
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