If a creditor successfully sues you in court and gets a money judgment against you, it will likely look for your assets and property. Once it finds your property, it can take steps to try to collect its judgment from that property. For example, it could record a lien against your home, levy funds in your bank account, or force the sale of an expensive boat. (Learn more about the ways that judgment creditors can collect.) You may think your property is safe because the creditor doesn’t know you own it. But the reality is this: Creditors have good (and perfectly legal) ways to find out what property you own. Below are some of the methods judgment creditors use to find your assets.
(Note that in most cases, a creditor cannot take your property or garnish your wages until it has sued you and obtained a money judgment. That’s why this article uses the term “judgment creditor,” meaning a creditor that has a judgment against you. There are some exceptions to this general rule, such as for debts secured by property, child support, federal student loans, and tax debt.)
Information You Previously Provided to the Creditor
One of the best sources of asset information available to the creditor is you. In the course of applying for or dealing with the creditor, you probably gave the creditor information about your assets.
Credit and loan applications. When you apply for credit cards, car loans, bank loans, or other types of loans or credit, you have to fill out an application. On that application, you often must provide bank account information, the name and address of your employer, and information about your assets. If that information hasn’t changed, the creditor will know where to send a wage garnishment order, what bank to contact to attach funds in your bank account, and whether you own a home.
Your last payment to the creditor. Smart judgment creditors will keep information from your last payment. If you paid by check, the creditor will know what bank you use and what your account number is.
Information About Your Real Estate
It is fairly easy for judgment creditors to find information about real estate you own, especially if it is in a county near where you live. Real estate records are available to the public, and more and more are searchable online.
Information About Cars and Boats
In many states, if the creditor has a judgment against you, the Department of Motor Vehicles will provide it with information about your registered vehicles (although the creditor may have to pay a fee). Also if there are liens filed against your personal property (such as a boat), those are often recorded with the Secretary of State or sometimes with the county, and are usually public record.
The Debtor’s Examination
Once it has a judgment, a creditor may serve you with notice of a debtor’s examination. The notice will order you to appear at a certain place at a certain time and testify, under oath, about your assets. If you don’t show up, the court could hold you in contempt of court and issue a warrant for your arrest. (Learn more about the debtor examination and consequences of not appearing.) A creditor that is serious about collecting from you can hold a debtor’s examination and question you about all sorts of assets and income that you may have.
Typical questions. The creditor will likely ask you about real estate, bank accounts, vehicles, stocks and bonds, personal property, employment information, residence information, and more.
Required documents. The creditor can also require that you bring certain types of documents to the examination, such as tax returns, bank statements, business records, deed, and leases.