Sometimes, even the most straightforward collections case can have some hiccups and roadblocks. If the debtor and all of his or her property is located in another state, the collections process can get a little more complicated—especially if the debtor is doing their best to avoid paying out the judgment—so it’s essential to have resourceful, ingenuitive, and tenacious team players on your side. Here’s how Fickel & Davis helped one of its recent clients recover the money owed to them by an out-of-state debtor.

The Back Story

On the surface, this case didn’t seem too complex. The creditor (our client) and debtor were former spouses, and the debtor was ordered to pay monthly spousal support to our client. The debtor stopped paying, and the arrears (money owed) ended up adding up to an incredibly significant amount. That’s when our client called us in to enforce the spousal support arrears.

Challenges

The real challenge in this case was trying to serve the debtor with legal pleadings because he lived out of state. The debtor thought he was somewhat protected and couldn’t be collected on, because he lived outside of California and had no property in the state. Fortunately, the debtor’s arrogance provided us with some extra ammunition that we ultimately used against him. For example, when we attempted to personally serve the debtor with some legal pleadings, the debtor didn’t answer the door, although he was inside of the house at the time. Thinking he was in the clear, he then sent a written message to our client admitting that he was aware of the process servers he evaded, and clearly stating he was intentionally refusing to pay the judgment. We ended up using this written message in later court proceedings to show the debtor’s willful refusal to comply.

How We Helped

Secure It

Since the debtor and all of his property were located in another state, we couldn’t place liens on his property without getting a sister state judgment and going through that state’s requirements for obtaining liens against him.

Find It

Even though we weren’t able to place any liens, we knew we had to do something to get the debtor’s attention. We served a bank levy, and while we didn’t recover enough money to satisfy the judgment, it was enough to get the debtor’s attention.

After we served the levy, the debtor realized he was going to have to deal with us, so he hired an attorney based in California and filed a motion against our client to try and terminate the spousal support. At that point, the debtor’s biggest piece of leverage was that he lived in another state, but once he filed that motion, he couldn’t hide anymore. It allowed us to start serving discovery requests directly on his attorney here in California—we no longer had to rely on personally serving him.

That’s when the discovery process became a lot easier for us. Because we were able to serve discovery requests on his attorney instead of having to serve them on him, it was a lot easier to get information about his finances and assets. Had he not filed that motion, we would have had to serve all our discovery requests directly on the debtor, and that would have become immensely harder in actually making him turn over documents and making him answer our questions.

Going into the discovery phase, we had an idea that he was retired and receiving pension income. Even though we knew what his income and assets were, we needed to get proof to show the court; being able to serve his attorney with requests for that information made obtaining that proof much easier.

Take It

The bank levy and the added costs of attorney’s fees created pressure that brought the debtor to an agreement. He couldn’t escape payment, so the issue became how much he was behind in arrears and how much he owed.

Final Result 

Before the debtor hired an attorney, we were attempting to reach his pension payment and get an earning’s assignment order (which is essentially a wage garnishment for part of his pension). We would have been able to enforce the judgment, but it would have taken longer to get the appropriate orders, and it would have been paid out in small monthly payments instead of a lump sum immediate payment. 

Ultimately, we were able to settle the judgment and keep our client happy.

If you’re dealing with a debtor who is doing all that they can to avoid being served, or who lives out of state, contact Fickel & Davis. We know the rules and regulations of many states besides California, so your debtor will have nowhere to hide.

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