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In a civil court case involving a monetary award, the winning party is known as the judgment creditor. A judgment creditor has several tools at his disposal for collection. One such tool is something known as the debtor’s examination. A debtor’s examination allows a creditor to ask certain questions in order to better understand a debtor’s financial position.
The experts at Salt Lake City’s Judgment Collectors explain that questions and topics are limited. Not every question a creditor could think of asking is on the table. Judgment Collectors also say that the rules dictating how debtor’s examinations take place can be different from one state to the next.
Ask for the questions themselves, most states limit creditors to asking only about things that directly impact their ability to collect. Here are some sample questions most states would allow:
1. Where do you work and how much are you paid?
Judgment creditors need to know where their debtors work and how much they get paid. Why? Because in most cases, garnishing wages and bank accounts is the first option for collecting – especially when a debtor will not, or cannot, agree to a payment plan.
It is expected that the debtor will answer honestly, providing the full name of his employer along with an accurate number representing his salary. He might also be asked to disclose how frequently he gets paid.
2. Do you have any other sources of income?
A debtor’s full-time job may or may not be his only source of income. Additional sources of income could be found in second jobs, side gigs, and even part-time hobbies for which the debtor gets paid. If the debtor runs a business as a sole proprietor, the receipts from that business are considered income. A creditor needs to know all sources of income to get a clear picture of the debtor’s financial situation.
3. What financial accounts do you have?
Next up is the question of the debtor’s financial accounts. Most states allow creditors to inquire about checking accounts, savings accounts, certificates of deposit, and so on. A creditor may also request current account balances and even account numbers if there are plans to garnish.
Note that not all states allow garnishing financial accounts. Those that do often limit the amount a creditor can take from debtor accounts.
4. Do you have investments or business holdings?
A debtor’s normal income is one possible source of payment. Another would be any assets or business holdings the debtor might own. For example, stocks could be liquidated to pay what the debtor owes. Likewise for any business holdings in a company in which the debtor is not the primary owner.
5. Do you own any real estate?
Judgment Collectors say debtors will always ask about real estate simply because leveraging property is one of the best ways to ensure payment. Most states protect a debtor’s primary residence – or at least a portion thereof – against collection efforts. But any other real estate owned by the debtor is up for grabs.
6. Are you expecting tax refunds?
Finally, a judgment creditor might ask about tax refunds anticipated in the future. Tax refunds can be garnished at the state level to satisfy most types of monetary judgments.
It should be clear from the sample questions that judgment creditors can solicit explicit financial information that might aid in collection efforts. Creditors are not allowed to ask questions outside of that limited scope. As long as debtors are truthful and transparent, a ton of helpful information can be gleaned from the debtor’s examination.
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