Working out a post-judgment installment plan with a debtor is one way a judgment creditor can put the case behind him and move on with his life. Such a plan can mitigate the need to take more aggressive collection actions against the debtor. But creditors should understand that agreeing to an installment plan does not mitigate their rights under the law. For example, it does not preclude discovery.
Imagine a judgment debtor whose attorney advises him to voluntarily suggest a monthly installment plan. He does so hoping the creditor will not proceed with post-judgment discovery, a process that could reveal significant assets the creditor could leverage for payment.
The creditor may choose not to proceed with discovery based on an acceptable payment plan. But agreeing to a payment plan does not strip him of his right to utilize every available discovery tool to learn about the debtor’s assets and income. He can still pursue discovery if he believes it is necessary.
The Basics of Discovery
‘Discovery’ is a legal term denoting the process of using various tools to glean information related to a civil lawsuit. In a post-judgment scenario, discovery is about learning as much as possible regarding the debtor’s finances. A creditor wants to know about the debtor’s income, cash assets, real estate, business assets, and so forth.
Judgment Collectors, a Utah collection agency that specializes in money judgments, says creditors have access to a number of court-driven discovery tools. They include:
- Interrogatories – Formal, written questions submitted to the debtor and his attorney. The questions must be answered under oath.
- Debtor Exams/Depositions – Formal interviews, under oath, conducted either at the courthouse or in an attorney’s office.
- Subpoenas – Third parties and documents that may offer information about the debtor’s finances can be subpoenaed by the creditor.
There are other means of discovery that are not court driven. They include things like property records searches and credit checks. Discovery’s primary goal is to yield as much information as possible. A creditor can formulate a collection strategy based on that information.
What an Installment Plan Can Accomplish
An installment plan is more or less voluntary payment plan both parties agree to. The court views it as a private agreement outlining the terms and timing of the judgment payment. In some jurisdictions, a court must approve any such plan before it becomes official.
From the debtor’s standpoint, working out an installment plan can stave off more aggressive collection efforts. Working out a plan means the debtor does not have to worry about wage garnishment, property liens, or even writs of execution against his personal property. As long as he sticks to the monthly payments, he doesn’t have to worry about regular inquiries asking for money.
An installment plan accomplishes quite a bit on behalf of the creditor as well. Primarily, a creditor does not have to invest any more time, effort, or money in collection. He goes about his business and lets the monthly payments come in. He also doesn’t have to go back to court, which in itself is pretty big.
Sticking to the Plan
All the benefits of an installment plan are contingent upon the debtor faithfully making all scheduled payments on time. As such, creditors reserve the right to press forward with discovery even with a plan in place. Many do with the understanding that they may need to be more aggressive if the debtor fails to make the agreed payments.
In short, an installment plan does not preclude post-judgment discovery. But voluntarily agreeing to a payment plan is better than some of the alternatives.
