Trying to collect a debt can be frustrating. When demand letters and phone calls fail to solicit a response from the debtor, creditors who want to get paid must obtain a money judgment against the debtor. A money judgment can be obtained after a lawsuit is filed and either a default judgment is entered or a money judgment is awarded after trial. In some instances, a Confession of Judgment may be used for the entry of an expedited money judgment. Unfortunately, obtaining a money judgment is only the beginning because judgments do not automatically compel a debtor to pay. Therefore, another step must be taken – enforcement of the judgment. So how do you enforce a money judgment if the judgment is awarded in one state, but the debtor or the debtor’s assets are in another state.
ENFORCEMENT OF MONEY JUDGMENTS ACROSS STATE LINES
Post judgment collection remedies include asset seizures, bank account levies, and forced sales of assets owned by the debtor. Each state has its own legal process for these actions. Strict compliance with the law is necessary. A complicating factor is the location of the debtor or the debtor’s assets. If a judgment is entered against the debtor in one state, but the debtor resides in another state or the debtor’s assets are located in another state, then the creditor must transfer the judgment to that state.
Let’s say for example, that the debtor is a company located in Pennsylvania. The debtor owns assets located in Pennsylvania such as real property and inventory. The creditor is a business in California that sold goods to the Pennsylvania debtor, but the debtor refuses to pay for the goods. The California creditor files a lawsuit against the debtor in California and is awarded a California judgment. Since the Pennsylvania debtor and its assets are in Pennsylvania, any attempt to enforce that money judgment in Pennsylvania, without formal domestication of the judgment in Pennsylvania, will be futile.
UNITED ENFORCEMENT OF FOREIGN JUDGMENTS ACT
When a money judgment is entered in one state, but collection efforts must occur in another state, a body of law is triggered. That body of law is called the Unified Enforcement of Foreign Judgments Act (UEFJA). Under the U.S. Constitution, a judgment obtained in one state is to be given full faith and credit to a judgment obtained in another state. The purpose of the UEFJA is to provide speedy and economical methods for creditors to enforce judgments in another state.
PENNSYLVANIA ENFORCEMENT OF FOREIGN JUDGMENTS
Most, but not all, states have adopted the UEFJA in some form or another. The Pennsylvania legislature passed a similar law (42 P.S. § 4306) for the enforcement of foreign judgments. Under the Pennsylvania Statute, Pennsylvania courts are required to give full faith and credit to a judgment obtained in another state so long as a formal process is followed to domesticate that foreign judgment in Pennsylvania. When a foreign judgment is properly domesticated in PA pursuant to the statute, the judgment is no different than a judgment that was originally obtained in PA. Per the PA statute: “The clerk shall treat the foreign judgment in the same manner as a judgment of any court of common pleas of this Commonwealth. A judgment so filed shall be a lien as of the date of filing and shall have the same effect and be subject to the same procedures, defenses and proceedings for reopening, vacating, or staying as a judgment of any court of common pleas of this Commonwealth and may be enforced or satisfied in like manner.”
DOMESTICATING A FOREIGN JUDGMENT
The process to domesticate a foreign judgment in Pennsylvania is fairly simple. First, it is important to note that attorneys who are not licensed to practice law in Pennsylvania are prohibited from domesticating an out of state judgment in Pennsylvania. Courts consider that practice as the unauthorized practice of law. As such, a Pennsylvania attorney should be retained.
In the hypothetical above, a California creditor can contact the California clerk’s office and obtain an authenticated copy of the judgment and the docket entries. A Pennsylvania attorney can file those documents along with a request to enter the judgment with the appropriate Pennsylvania county clerk’s office. The debtor is then notified of the Pennsylvania filing and the California creditor now a money judgment against the debtor on file with the California court and the Pennsylvania court. The California creditor did this without having to incur additional costs and fees that are associated with starting a new lawsuit against the debtor and the creditor can proceed with post judgment collection remedies in Pennsylvania.
PENNSYLVANIA POST JUDGMENT COLLECTION REMEDIES
After the California judgment is properly domesticated in Pennsylvania, the California creditor, with the help of a Pennsylvania collection lawyer, can utilize all post-judgment collection remedies against the Pennsylvania debtor. The remedies include post judgment discovery such as written interrogatories and/or request for production of documents; third party subpoena duces tecum; third party investigator searches for assets; and other common remedies. These methods are necessary to locate assets of the debtor and use those assets to satisfy the judgment.
DOMESTICATING OUT OF STATE JUDGMENTS – THE MARTIN LAW FIRM, P.C.
The Martin Law Firm, P.C. routinely works with out of state law firms and companies to domesticate foreign judgments in Pennsylvania or New Jersey. We act quickly to give our clients the best chance of success. Contact us today to discuss how we can help you at 215-646-3980. We offer free case evaluations.