In California, when a creditor obtains a judgment from the courts against a debtor, that creditor must then go through the process of locating assets that the debtor has that can be levied upon. In order for a creditor to find assets such as bank accounts, real property, vehicles, brokerage accounts, or employment information, the courts allow creditors to apply for and file with the court, an Application and Order for Appearance and Examination.
This process is often referred to as a “Judgment Debtor Examination”. It is a terrific tool, because it forces the debtor whom you have obtained a judgment against, to appear in court and answer a barrage of questions about his assets. The creditor can ask if the debtor has a job and if so, where he works and how much he earns. He can ask if he owns real property. He can ask about any cars or boats they own, whether they are owed money by anyone they are expecting to receive, if they have a spouse that works and where they are employed. Essentially the creditor has carte blanche to ask all sorts of questions about the debtor’s financial situation, including bank accounts, bank account numbers and even their social security number.
The process has always been one of the more relatively less expensive tools for a creditor to use. The court filing fee is about $60.00 and the creditor must pay to have the judgment debtor served with the papers to appear. The most difficult aspect of Judgment Debtor Examinations, is that they require the debtor to be “personally” served with the paperwork. This has always been tricky, because debtors that are aware there is a judgment against them, often times try and hide from creditors and will not answer their door to accept service. We creditor attorneys have to get smart about finding ways to get them served when they are actively avoiding it. For example, we will send our process server to their home when we know they are leaving for work. Or we will have our process server go to their work to get them served.
As with everything today, the courts have just raised the cost of these Judgment Debtor Examinations. Many of the courts, including San Francisco, Santa Clara, Riverside, San Bernardino and Orange are now requiring an additional “Court Reporter Fee” of $30.00 per exam to be paid by creditors.
I still believe that these Examinations are worth the expense, because if the judgment debtor fails to appear in court after he is served, the court will issue a bench warrant for his arrest. If this doesn’t convince a debtor to pay his debt, I don’t know what will.