Every state, and most courts, have specific laws and procedures for post-judgment discovery, and this article discusses how post-judgment discovery is done in the state of Texas.
One of many judgment-related articles: I am not a lawyer, and this article is my opinion based on my experience in California, please consult with a lawyer if you need legal advice.
In Texas, post-judgment discovery is what most other states consider a judgment debtor exam. Most states allow judgment creditors to ask their judgment debtors questions, to help them attempt to get information to collect their judgment. A question and answer session takes place in the courtroom, with the defendant under oath. The judgment creditor or the creditor’s attorney asks the defendant about their financial situation and assets.
The questions usually focus on bank account information, including accounts numbers and balances, real estate ownership, and even the amount of money in the defendant’s wallet at the time of questioning. It can be an effective way to motivate the judgment debtor to enter a payment agreement with the judgment creditor.
In Texas, there is no such thing as a judgment debtor exam proceeding. Texas has a process that allows a judgment creditor to ask their judgment debtor questions about assets while under oath. In Texas, post-judgment discovery does not take place in the courtroom before a judge, at least not initially. In Texas, the debtor examination is not done in court, and is not a function of the court, unless the debtor does not show up.
There are several different discovery tools, and the two most effective are written interrogatories in aid of judgment; and the notice of deposition with subpoena duces tecum.
The goals of these two tools are to find information about the judgment debtor; including finding out where a debtor’s money comes from, where the debtor keeps their money, how a debtor spends their money, and what real estate and personal property the debtor owns.
Written interrogatories in aid of a judgment are a set of written questions that the judgment creditor prepares and mails to the judgment debtor.
The purpose of the questions are to collect information about the debtor’s financial situation. The goal is finding nonexempt debtor assets that can be seized, and then sold by Sheriff auction to pay the judgment. The judgment creditor can ask any question that may lead to the discovery of nonexempt assets.
The debtor must answer the questions in writing, under oath, within 30 days of receiving the creditor’s interrogatories. Failing to reply within the time limit puts the judgment debtor in a position where the court may order answers. Continuing to refuse the answers after a court order, can sometimes result in the judgment debtor being jailed for contempt of court, but only if the Sheriff puts a priority an civil bench warrants.
A notice of deposition with a subpoena duces tecum takes place outside the courtroom. The judgment debtor must be examined under oath, and a court reporter records the entire session. The notice of deposition is a written notification sent to the debtor indicating the date and time of the deposition.
A subpoena duces tecum is a subpoena for the judgment debtor’s financial documentation. Using the subpoena, you can request the debtor’s bank statements, tax returns, and any other documents that relate to the debtor’s finances.
Like written interrogatories, the judgment creditor can ask any question that may lead to the discovery of nonexempt assets. The deposition is also enforceable by a court order, followed by contempt of court if the debtor refuses to cooperate.
If you owe money on a Texas judgment, you may someday receive a discovery request from your judgment creditor.
The questions may include asking for their bank records, including copies of the debtor’s bank statements, deposit slips and ledgers, real property ownership records, deeds, and contracts; interests in any businesses from which they receive an income, documentation of any transfers of real or personal property, stock broker account information, including details about stocks you own, a history of your employment, including positions held and salaries paid, detailed information about all of your sources of income, and a detailed statement of your monthly expenses.
If you are a judgment debtor and you receive post-judgment discovery, do not ignore it. If you ignore it, the judgment creditor can go back to court and request an order compelling your answers. Once that order is entered, the stakes for your continued refusal to cooperate are raised substantially. If you continue to refuse to comply with the court order, you will be found in contempt of court.
When the court finds you in contempt, the court can hold you in jail until you comply with the order. However, even if you comply with the order to gain your freedom, the court can fine you, and give you additional jail time as punishment for the offense of contempt. The length of jail time and the amount of the fine depends on which court. It can be up to six months in jail, and a $500 fine for a district court contempt charge.
Your judgment creditor has the right to send you discovery requests on a regular basis. You have a duty to update your answers for any questions if anything later changes in your financial situation. Most judgment debtors do not provide updates, so aggressive judgment creditors may send interrogatories every 6-9 months.
If you are a judgment creditor, post-judgment discovery is a very good tool for locating your judgment debtor’s nonexempt assets. When the debtor properly answers the questions, you may learn about their nonexempt assets. Ask your questions wisely. Of course, if the debtor is really broke, it is going to be very tough to recover your judgment.
If you are a judgment debtor, you will only make matters worse for yourself if you refuse to answer post-judgment discovery requests. I suggest you answer all questions your judgment creditor asks when you receive them. And, make it easy on yourself by updating those answers as your situation changes, whether good or bad.
If you have an aggressive judgment creditor, it will be in your best interest to arrange a payment plan to satisfy the judgment against you.