In many collections cases, obtaining a judgment is, unfortunately, only the beginning of the process. The judgment is essentially a judicial declaration that the debt is owed. With some limited exceptions, the debtor’s ability to challenge the fact of the debt has passed. As far as the court is concerned, the debtor owes the creditor a certain amount of money as of the date of the judgment. In most cases, that amount accrues interest at 8% per year from the date of the judgment. That’s all well and good, but the creditor has not been paid. Now what?
The judgment gives the creditor a number of tools through the court that were not available before the judgment. Indiana Rule of Trial Procedure 69 sets forth many of these tools.
The proceeding supplemental, described in Trial rule 69(E) is a process by which the judgment debtor can be compelled by the court to come to court and answer questions under oath about his or her income and assets. Among other things, the rule provides that the defendant may be ordered to appear before the court to answer as to his non-exempt property subject to execution and that a garnishee can be required to answer as to property or an obligation to the judgment debtor.
The most common garnishees are banks and employers. A judgment creditor can, after fulfilling certain requirements, request that a bank account be frozen until a hearing can be held and then that non-exempt amounts in the bank account be ordered applied to the judgment. The judgment creditor may also request that a portion of the wages owed by an employer to an employee be paid to the clerk of the court and applied to the judgment. These are very useful tools for a judgment creditor if the bank accounts and employment information for the debtor is known. However, very often, this information changes over time or was never known to the judgment creditor. That is where the authority of the court to order the judgment debtor to appear and answer questions at the proceeding supplemental becomes important. The judgment debtor is the most likely source of information about the nature and location of the assets. And that is what makes the court’s authority to order the defendant to appear and to answer questions under oath so critical. If the court orders the judgment debtor to appear and answer questions but the judgment debtor disobeys the court order by failing to appear, the court has the power to issue a writ of body attachment, ordering the Sheriff to arrest the noncompliant defendant and compelling him or her to come to court and satisfy the court’s order to testify.
Because the legislature has recognized that having money now is more valuable than potentially having money in the future, it has passed a law stating that judgments accrue interest at the rate of 8% per year. In other words, if a judgment for $1,000 is entered on January 1, 2014, and no payments are made toward the judgment, the amount due on January 1, 2015 would be $1,080. Additionally, judgments automatically act as a lien against real property in the county owned by the judgment debtor. The creditor can take additional steps to record a judgment lien against real estate in other counties. If the judgment debtor wishes to sell the property, the judgment lien typically must be satisfied. These judgment liens are generally valid for a period of 10 years after the judgment at which time they expire if no further action has been taken. Judgments themselves are good for 20 years. After 20 years, there is at least a presumption that the judgment has been paid. That presumption may be rebuttable, but, as a practical matter, if a judgment has not been collected after 20 years, it probably never will be. The more quickly a creditor works to collect a judgment, the more likely the debt will be paid.
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