“I know this guy is hiding assets,” said an attorney to a colleague. The Attorney was referencing a defendant whom his firm had won a large judgment against. Now collecting the judgment, was always the problem. The Attorney’s client had suffered a loss and needed to be made whole.
One story tells of a defendant who walked up to a plaintiff in a courthouse, after the plaintiff won their case. “Congratulations on winning, good luck on collecting,” smirking as he walked away. Many judgments are won by default. This means if the defendant doesn’t respond to the lawsuit, the court may automatically rule in favor of the plaintiff. Still, it’s estimated that 80% of judgments go uncollected in the United States.
Historically, liens resulting from a judgment can be attached to properties. This is moderately effective; however, the property owner may not sell for years. Some may not own any property. Financial account searches can be performed; however, they come with a lot of scrutiny and limitations. Locating the place of employment of a debtor can be useful but won’t help in matters where a judgment is against a company, or a party who is self-employed. Motor vehicles may already have liens on them. So, what other recourse is available?
A group of Atlanta private investigators has had some experience in the battle for locating hidden assets of debtors. They’ve found real estate ownership transferred by defendants into trusts and to relatives. Money may be applied to cash debit cards. Another method is to go primarily to cash, although it’s difficult to do in today’s environment. In other cases, the debtor sells their home, takes out the equity and goes to live with mom and dad. Of course, some will go the offshore route. This is all done in an evasive attempt to avoid payment.
One Atlanta private investigator says despite common belief, he sees society as largely friendly to the debtor. He says, “A plaintiff has already suffered from their initial loss. If using an attorney, they may or may not take the case on a contingency. A judgment is won and then surprise happens when a check doesn’t arrive. They could possibly get a contempt action, which may result in the arrest of the defendant, but it’s rare. Now they are flailing in the wind. The defendant will experience a negative outcome on their credit report, but most don’t care.”
The investigator also says that some painful disputes could be avoided if a professional due diligence check is performed on the party, before entering into an engagement. “Often after we begin looking at a person’s background, reality hits home. They’ve been in litigation before. Some have been in court more times than any attorney, due to their history of irresponsibility.”
So, what is the solution? How can the balance be shifted? The same investigator goes on to say, “It comes down to state law. In one state, they hold asset hearings. If the defendant doesn’t show up, they’re arrested and brought before the court. The judge has them empty their pockets of any money in their possession. They are then jailed until they pay the judgment or an agreement is made. It really gets their attention.”
Hopefully, the right kind of attention will make its way through state legislatures, plaintiffs can be reimbursed and we’ll have less and less smirking defendants.