Debtors Lying

I am not an attorney, I am a Judgment and Collection Agency Broker. This article is my opinion, based on my California experiences. If you want legal advice, you should contact a lawyer.

A valuable tool in judgment recovery is the possible power of a debtor examination. Similar to most tools with possible power, as Mr. Clapton would sing, "it's in the way that you use it".

Results from judgment debtor exams depend more on the examiner than the debtor. Everyone lies to some degree, and if a debtor owes money they don't want to repay, you should count on hearing a lot of lies.

The best way to prepare for a class is to learn the subject completely before you enroll. The right way to get work experience, is to already have experience. The best way to perform a judgment debtor examination is to know the answers for most your questions, before you ask them.

Debtor examinations are not for asking where the debtor's assets are, and hearing a straight answer. They are for establishing control and being persistent.

Many new judgment enforcers do not do adequate preparation homework before and after a debtor exam. If your debtor is poor, and their family can't help them pay off your judgment, there is no reason to schedule and serve a debtor exam.

Some enforcers do not know if their debtor is poor or not, and they serve a huge list of questions, on a "fishing trip", hoping to discover hints about assets.

The judgment debtor usually answers "I don't know", or lies, in response to most questions. Some recovery specialists don't know at the time of the exam, if the debtor is lying or not.

Many times, the judgment debtor says they are poor, and have no records - and occasionally that is true. An experienced recovery specialist does not rely only on what the judgment debtor says.

Many new enforcers stop after the first exam. Experienced enforcers request the judge to continue the debtor examination hearing to a later date, to (e.g.) allow the debtor to locate the documents you requested.

In too many courts in California, there is no actual repercussion for debtors that do not appear in court, or fail to follow your document requests. This does not have to block one from subpoenaing 3rd-parties, and requesting documents - if they are likely to know about, or may possess, some of the debtor's assets.

The experienced enforcer might respond to stubborn or lackadaisical judgment debtors with subpoenas to other parties, maybe the debtor's spouse, landlord, relatives, or business partners. Third-parties are only required to answer questions concerning the judgment debtor and the judgment debtor's information or assets.

Success in performing debtor exams comes from giving them your full attention, preparing for them, and being ready to continue the examinations for the time it takes to get paid; in the pattern of examining, learning, then subpoenaing new people, entities, and records. This is repeated for as long as it takes to be paid.

Think of the 1st round of debtor exams as being the right time for the judgment debtor to lie. That first examination should be continued to a future date, so you can then follow up on any lies.

As an example, let us suppose you found out that the judgment debtor owns 3 recent vehicles, a Honda motorcycle, and Acura and BMW autos. On the first exam, 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 the homework, and know the title for all 3 vehicles are the property of the debtor. The two cars have bank loans on them, but the debtor owns the motorcycle free and clear.

On the first, or on a second exam, ask the judgment debtor questions about their nephew, including their name, how old he is, where he lives and works, and why does the nephew keep their motorcycle in their name, and when did they last see their nephew.

Additionally, 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 correct size for both the debtor and their nephew?

Then, inform the judgment debtor you are going to continue the examination, and serve a subpoena for the nephew to come in and bring the receipt for the motorcycle, and answer questions about it.

If the judgment debtor cannot or will not release their nephew's name, ask the court to sign a turnover order for the motorcycle. If the court chooses to believe some of the judgment debtor's lies, they may 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 could also be for the actual motorcycle, but that means the debtor is expected to release the motorcycle to the sheriff for a later, sheriff's auction sale. You will have to pay the sheriff for their work and their costs.

Your goal is, one way or another, to get your judgment paid; either by having the sheriff sell the debtor's assets, or the debtor choosing to pay you, to bypass future court appearances by them and possibly others. Whether they lose their motorcycle or not, examinations can be continued as needed.

Who will become inconvenienced more by judgment debtor exams, you or the debtor? Judgment debtor exams can be an opportunity to find some reason to continue them, so the judgment debtor will be obligated to come back again and again at future dates. Keep your eyes and ears open for something that requires a continuation, discover new documents and then review them, and new entities to serve a subpoena on.

Until a judgment is satisfied, on certain judgment debtors, a debtor exam might be continued for as long as is required, so the creditor can inspect every document that they requested. Keep everything focused on asset finding and reasonable, so the court will not think you are simply harassing the judgment debtor.


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