What is a Debtor’s examination?
If a judgment debtor does not pay the judgment creditor voluntarily, the creditor will need to explore other ways to collect his judgment. The creditor must first discover whether the debtor has any assets that could satisfy the judgment. If a creditor does not have information about the debtor’s assets, the creditor may find it difficult or impossible to execute the judgment and collect his money.
To obtain information about the debtor’s assets, the creditor can file the appropriate form with the court of jurisdiction requesting that the debtor appear in court to answer questions under oath about the debtor’s financial status and ability to pay the judgment. The purpose of the debtor’s examination is to collect the information from the debtor that could be used to force payment from the judgment debtor. The judgment creditor can ask the debtor questions about where the debtor works, how much the debtor earns, information on bank accounts, stocks, and other income sources, real property owned, the location and value of the real property, mortgage debt, debt owed to others, personal property such as motor vehicles and anything else of value that could be used or sold to pay the judgment.
If a creditor wishes to examine certain documents, the debtor could be served with a discovery subpoena to require the debtor to bring the requested documents to the examination hearing.
As example, documents that could be requested:
- Documents that show proof of income, such as earning statements from most recent paychecks, proof of unemployment compensation, and documents showing public assistance payments;
- Current bank statements from all banks or other institutions where the debtor has or recently had an account of any kind;
- All deeds, leases, contracts, and other documents representing any ownership interest in real property, and all deeds of trust/mortgages or other documents showing encumbrances of any kind on real property;
- All stocks, bonds, or other securities of any class owned, including options to purchase any securities;
- Titles to all motor vehicles, watercraft, and aircraft owned;
- All life insurance policies in which the debtor is either the insured or the beneficiary;
- All promissory notes held by him and all other documents showing any money owed to him either now or in the future;
- All financial statements furnished by him within the past 5 years;
- All deeds, bills of sale, or other documents prepared in connection with any transfer made by him, either by gift, sale, or otherwise, within the last 5 years;
- A schedule of all regular expenses paid by him, such as installment debts, food, utilities, etc., including the amount paid, the payee, and the amount of debt owing;
- All documents showing any interest the debtor has in any pension plan, retirement fund, or profit sharing plan;
- Federal income tax returns for the last 5 years whether filed individually, jointly, or under a partnership or corporation; also any W2 forms received for those years;
- Driver license and social security card;
- All credit cards; and
- Other items.
If the debtor fails to appear for the examination hearing after being properly served, the creditor may request that the judge issue a bench warrant for the debtor’s arrest.