In judgment recovery, one tool is discovery, where you attempt to find your judgment debtor’s available assets. In most states, you can schedule a debtor examination, and then subpoena records from the debtor themselves or third-parties having knowledge about your debtor’s assets.
When a debtor is a person, in some states; their private information is considered a consumer record; when that information is requested with a subpoena served upon a third-party bank, employer, school, utility company, attorney, accountant, health care provider, etc.
This article is my opinion, and not legal advice. I am a judgment referral expert, and am not a lawyer. If you ever need any legal advice or a strategy to use, please contact a lawyer.
In some states (See our article Which States Require Debtor Notices) there are additional laws to protect consumer-related debtors. For example, California and perhaps in Indiana; before a third-party can release any of your debtor’s private information, they must have proof that your debtor was properly served a “notice to consumer”, (which is sometimes mailed separately) included in the subpoena paperwork served upon the debtor.
While Federal courts, and most states, do not currently require notices to the consumer when subpoenaing third-party witnesses; I expect laws will change in the future, to increase the usage of such notices.
In California, the laws related to consumer notices (e.g., CCP 1958.3 and CCP 1985.6), are sometimes debtor-friendly because they let any person or company/partnership with less than 5 people; get even more advance notice that their judgment creditor is asking about their financials, possibly giving them more time to transfer or hide their assets. Of course, if you already know where your debtor works or banks, you can avoid tipping them off, and simply begin a levy action with the Sheriff without communicating with the judgment debtor.
Notices to the consumer slow creditors down. In jurisdictions that require them, before third-parties can disclose any private debtor information, a notice to the consumer is first served on the debtor. In California, you must wait at least 5 days if the consumer notice (Judicial Council Form SUBP-025) was personally served, and at least 10 days if the process service was done by mail. After the waiting period, you include the consumer notice and proof of its service, with the subpoena paperwork that is served upon the third-party witness. In California, witnesses are entitled to witness fees as per California Evidence Code 1563; so include a check to the third-party with the subpoena paperwork that you give to your registered process server.
In jurisdictions that require consumer notices, most allow third-parties 20 days to provide the information requested with the subpoena served upon them, that includes the proof of service of the notice to consumer. While subpoenas can be mailed to third-party witnesses (in California see CCP 2020.410), serving them by mail gives them 5 extra days to respond. Also, if subpoenas are not personally served, there is no recourse when someone ignores a mailed subpoena.
In California, if personally served – you have to wait more 5 days before you can serve the subpoena (from the date of personal service). If served by mail – you have to wait 10 days before you can serve the subpoena (from date of mailing) Why not do both? Mail them, get that clock started and have them served personally. Whichever of those clocks allow you to serve the subpoena first is the one you use.
If a personally served subpoena is ignored by a third-party witness, or you get nothing except their written objection, you will probably need to sue them to get the information. In California, this is either covered by CCP 1992, and/or you will need to file a court motion to compel that witness to appear and then produce the subpoenaed documents.
With Federal court judgments (including bankruptcy courts, where subpoenas are governed by FRCP 45 and FRCP 9016), there seems to be no law requiring a notice to consumer to be sent. Despite this, in a few Federal court judgment recovery cases in California, a debtor’s lawyer has brought up CCP 1958.3 and the need to serve the consumer notice first; and more than once, a Federal court judge in California has agreed with them, which does not make sense to me, because Federal law generally outranks state law.
If you have a Federal judgment, or in states that have no subpoena-related consumer notice laws, that also means there is no waiting period if you choose to send such a notice anyway. Even if not required, it might sometimes be a good idea to include a consumer notice disclaimer with the debtor examination subpoena package served on the judgment debtor.