Many litigants are unfamiliar with the process that must be followed after a judgment awarding damages is entered in their favor. In a perfect world, the process would be easy, quick, and inexpensive. After all, if the winning party was not awarded attorneys’ fees, spending time and money paying an attorney to recover damages can be frustrating. The process, however, is typically not easy particularly when the losing party’s ability to pay is not obvious.
Generally-speaking, much of the procedure is governed by state law, as Federal Rule of Civil Procedure 69 provides that a money judgment is enforced according to the procedure of the state where the court is located. Initially, a certified copy of the judgment must be filed in the court where the judgment is to be enforced. Thereafter, a judgment creditor (the party who recovered the judgment) may engage in “proceedings supplemental” and obtain discovery from the debtor about its assets. This involves serving document requests and interrogatories on the judgment debtor (the party against whom the judgment was entered) aimed at learning the debtor’s income, profits, losses, bank accounts, bank statements, tax returns, real property owned, leases held, and other assets and debts. One court has noted that a federal court may require discovery of a debtor even where the discovery exceeds the mandates of state law. Seven Arts Pictures, Inc. v. Jonesfilm, 512 Fed. Appx. 419, 427 (5th Cir. 2013).
After obtaining documentation concerning assets and interrogatory responses, a deposition, also called a judgment debtor examination, is usually necessary to obtain additional details concerning the debtor’s assets. The court typically sets the deposition to take place at the courthouse, but often the parties can agree to conduct the deposition in an attorney’s office with a court reporter present. If the debtor is uncooperative, the judgment creditor may move the court to hold the debtor in contempt. Most states also provide a mechanism to have a warrant issued for an individual debtor’s arrest for failure to cooperate.
Assuming discovery reveals monetary assets, the next step is to obtain a writ of execution from the court, which directs an officer of the court to seize the monetary property of a debtor and transfer it to the creditor. State law will typically govern what assets are subject to execution and sale and whether certain property is exempt (see, e.g., IND. CODE § 34-55-10-2). Hayes v. Schaefer, 399 F.2d 300, 301 (6th Cir. 1968) (“State law applied in determining whether the property is transferable or is subject to levy of execution and sale.”); Marshak v. Green, 746 F.2d 927, 930 (2d Cir. 1984) (“Those courts which have considered the issue have determined that state law also determines the type of property which can be subject to execution.”).
Because of the steps involved, the process itself can take several weeks and, more likely, months before assets are finally transferred. Your attorney can guide you through the steps of the process.