Trying to collect a debt can be frustrating. When demand letters and phone calls fail to solicit a response from the debtor, the creditor’s sole remedy is to get a judgment against the debtor. In order to get a judgment, the creditor must first file a lawsuit and then receive a verdict in the creditor’s favor or enter a default judgment against the debtor if the debtor fails to respond to the action. However, judgments do not automatically compel a debtor to pay. In many instances, the creditor must utilize post judgment collection remedies in order to locate and seize assets, levy bank accounts or force a sale of other assets owned by the debtor. 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 tangible property. The creditor is a business in California that provided goods and services to the debtor, but the debtor failed to pay. The creditor files a lawsuit against the debtor in California and gets a California judgment. Since the debtor is not located in California and does not have any assets in California, the California judgment will not be useful for the creditor when the creditor attempts to enforce the judgment because the California court has no jurisdiction over the company or the property in Pennsylvania. Instead of the creditor filing a new lawsuit in Pennsylvania against the same debtor, the creditor can follow the process under 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. Taking that concept a step further, most states have adopted the UEFJA. The purpose of the UEFJA is to provide speedy and economical methods for creditors to enforce judgments in another state. Most, but not all, states have adopted the UEFJA is some form or another. When states have adopted the UEFJA, the UEFJA allows for a creditor to obtain an exemplified copy of the judgment from the original state and file it with the office of the Court in the new state. When it is filed in the new state, a judgment is entered in the new state, as if the judgment was originally obtained in the new state.
In the hypothetical above, the creditor can contact the California clerk’s office and obtain an exemplified copy of the judgment. That document can then be filed with the appropriate Pennsylvania clerk’s office. The debtor is then notified of the Pennsylvania filing and the California creditor has now obtained a judgment against the debtor in California, where the creditor originally obtained the judgment, and Pennsylvania. The creditor did this without having to incur additional costs and fees that are associated with starting a new lawsuit against the debtor. Since the creditor now has a judgment entered in Pennsylvania, the creditor can proceed with enforcing the judgment against the debtor pursuant to Pennsylvania law because the Pennsylvania court now has jurisdiction over the debtor.
Now, the creditor can use legal methods to locate assets of the debtor including written interrogatories and requests for production of documents and/or the creditor can compel officers and employees of the debtor to participate in a deposition. These methods, along with other creative methods such as private investigator searches, can help the creditor find assets. When assets are discovered, the creditor can seize those assets and use them to satisfy the judgment.