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When Debtors Lie
One of the best tools in the judgment recovery business is the potential power of a judgment debtor examination. Like many tools with potential power, as Eric Clapton would sing, "it's in the way that you use it".
Results from judgment debtor examinations depend more on the examiner than the judgment debtor. Everyone lies to some extent, and when a debtor owes money they do not want to pay, one should expect to hear a lot of lies.
The best way to take a class is to know the subject thoroughly before you take it. The best way to get on the job experience, is to already have experience. The best way to do a debtor examination is to know the answers for most of your questions, before you ask them.
Judgment debtor exams are not for asking where all the assets are, and getting a correct answer. They are for establishing control and being persistent.
Most new judgment enforcers do not do enough preparation homework before and after a judgment debtor exam. If your debtor is poor, and their family cannot help them pay off the judgment, there is no reason to schedule and serve a debtor examination.
Some enforcers do not know if their judgment debtor is poor or not, so they serve a giant list of questions, on a "fishing trip", hoping to discover clues to assets.
The debtor usually answers "I don't know", or lies, in response to most questions. Some enforcers do not know at the time of the examination, what is a lie and what is not.
Often, the debtor says they are poor, and have no records - and sometimes that is true. An experienced enforcer never relies only on what a debtor says.
Most new enforcers stop after just one examination. Experienced enforcers ask the judge to continue the debtor examination hearing to a future date, to (e.g.) allow the debtor to find the documents you requested.
In too many courts in California, there is no actual punishment for debtors that do not show up in court, or fail to comply with your document requests. That does not have to stop you from subpoenaing third-parties, and requesting documents - if they are likely to know about, or may possess, any of the debtor's assets.
An experienced enforcer may combat stubborn or lackadaisical judgment debtors with subpoenas to other people, perhaps the debtor's spouse, landlord, relatives, or business partners. Third-parties are only required to answer questions about the debtor, their relation to the debtor, and the debtor's information or assets.
Success in performing debtor exams comes from giving them your full attention, preparing for them, and being willing to continue the examinations for as long as it takes to get paid; in a pattern of examining, learning, then subpoenaing new people, entities, and records. This might be repeated until you find a way to get paid.
Think of the first round of debtor examinations as being the right time for the judgment debtor to lie. That first examination should be continued to a later date, so you can then follow up on some of their lies.
For example, let us say you found out that the debtor owns three fairly new vehicles, a Suzuki motorcycle, and Acura and BMW autos. On the first examination, you ask the debtor who owns those vehicles, and they say the bank owns the two cars, and the motorcycle belongs to their nephew.
You did your homework, and know the title for all three vehicles belong to the debtor. The two autos have bank loans on them, however the debtor owns their motorcycle free and clear.
On the same, or on the second examination, ask the debtor questions about their nephew, including their name, how old he is, where he lives and works, and why does their nephew keep his motorcycle in their name, and when was the last time they saw their nephew and the motorcycle.
Also, ask about the motorcycle, what model and size it is, who bought it, who it was bought for, where is it stored, and is the motorcycle the right size for both the debtor and their nephew?
Then, tell the debtor you are going to continue the examination, and serve a subpoena for the nephew to come in and answer questions about the motorcycle, and bring the receipt for it.
If the judgment debtor cannot or will not provide the name of their nephew, ask the court to enter a turnover order for the motorcycle. If the court decides it believes some of the debtor's lies, they can make an allowance for the "unnamed" nephew to make a third-party claim.
The turnover order can be for the title of ownership for the motorcycle. It can also be for the motorcycle itself, however that means the debtor will be expected to release the motorcycle to the sheriff for a later, sheriff's auction sale. You must pay the sheriff for their work and their costs.
The goal is, in one way or another, to get your judgment paid; either by having the sheriff sell the debtor's assets, or the debtor deciding that they should pay you, to avoid future court appearances by them and possibly others. Whether they lose their motorcycle or not, examinations can be continued as necessary.
Who will be inconvenienced more by debtor examinations, you or the judgment debtor? Debtor exams can be an opportunity to find some reason to continue them, so the debtor will be obligated to come back again and again at later dates. Keep your eyes and ears open for anything that requires a continuation, new entities to serve a subpoena on, or to discover new documents and then review them.
Until the judgment is satisfied, on certain judgment debtors, a debtor examination could be continued for as long as is required, so you can get every document that you requested. Keep it reasonable and focused on asset finding, so the judge will not think you are only harassing the debtor.
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