In the judgment collection arena, we frequently encounter debtors who are judgment-proof for all practical purposes. But we also encounter debtors who try to make themselves appear judgment-proof by hiding their assets. Most of the tactics they use are both traceable and legally reversible. But if you don’t know how to do it, you could be out of luck.
Some money judgments are paid without a hitch. But when a creditor faces resistance, it usually goes something like this: the debtor hides or transfers assets, the creditor digs around until those assets are uncovered, and enforcement tools are then used to undo the debtor’s actions and move on to recovery.
So, how do debtors attempt to hide their assets? Here are the most common tactics as well as how collection specialists like Judgment Collectors overcome them:
1. Misleading Disclosures
Deception among debtors often begins at the earliest stages of post-judgment discovery. Debtors will provide misleading or completely inaccurate information in an attempt to throw creditors off.
Something as simple as providing false employment and income information can delay collection. The creditor must attempt to verify the debtor’s employment. Only then can he verify income. But sometimes, verification proves difficult. A creditor needs to scan social media, look at publicly available records, and employ other research tactics to uncover the truth.
Misleading disclosures also include ‘accidentally’ forgetting to reveal a valuable asset, like a vacation property. But a good investigator will eventually find any and all forgotten assets.
2. Property Transfers
State laws generally prohibit defendants from transferring real estate, cash, vehicles, etc. to family members or friends once civil litigation has begun. Yet defendants still do it. They might transfer a piece of real estate for little to no money in hopes that, if they lose, the property will be untouchable. Fortunately, such transfers can usually be undone if a creditor can prove they were conducted to evade collection efforts.
3. Establishing Shell Companies and Trusts
Small businesses and partnerships will sometimes establish small companies or trusts into which they can transfer assets. The thinking is the same as in the previous example. They hope their shell companies or trusts will protect property from collection. But they can be undone just like fraudulent property transfers.
4. Co-Mingling and Layering
More enterprising judgment debtors may practice co-mingling and layering. This is the practice of cycling money through multiple accounts or mixing personal and business assets in order to blur the lines of ownership. It takes a creative investigator to uncover such practices and untangle the web. But thanks to the resources at a collection specialists’ disposal, identification and verification are possible.
5. Creating Offshore Accounts
The most extreme cases involved judgment debtors who created offshore accounts into which they could transfer assets. Such accounts are beyond the jurisdiction of U.S. courts. Although procedurally complex, a skilled collection specialist can sometimes recover assets from offshore accounts.
6. Going Into Hiding
Finally, some debtors will liquidate their assets and then go into hiding. They might move across the county, to a neighboring state, or clear across the country. Collection specialists tap into a process known as skip tracing to locate such debtors. Once located, they can once again be pursued for collection.
It would be nice if every judgment debtor paid his bill as soon as the judge’s gavel came down. But most do not, which is why organizations like Judgment Collectors exist. We fight for judgment creditors working against debtors purposely trying to hide their assets. Perhaps we can help you recover what you are rightfully owed.