By: Joe H. Dickerson
After locating your judgment debtor’s bank accounts, you serve the bank with the garnishment, you should also serve a subpoena for copies of all the credits and debits, front and back, for at least the last 24 months. The credits may come from other assets of the debtor such as transfers from the debtor’s savings account, distributions from trusts of which the debtor is the beneficiary, rental payments from real estate holdings, or income from securities that are your debtor’s own investments.
You really do not want just the periodic income. You want to take the entire corpus of the asset. As for the debits, you want to see where the checks were deposited, in what bank and to which account (this information will be on the back of the check). They may lead to other accounts or brokerage accounts also belonging to the debtor, or to your debtor’s payment for mortgages or rental property or other owned or controlled assets. The purchase of assets may be revealed or fraudulent transfers that could lead to recoveries from revocable trusts, the assets of which may be taken immediately.
You should always get all incoming wire transfers. You will be able to identify the source, which may be additional accounts, domestic or offshore, belonging to your debtor that you can take, and then trace other assets that have gone through that account. You will get the wiring instructions and the copies of all outgoing wires. They often lead you to sources of recovery, both domestic and offshore.
In addition to the loan applications you’ve subpoenaed from the bank or mortgage company, you will also subpoena copies of all tax returns provided by the person and business. From these tax returns, you will then learn where the income is coming from, possibly from real estate, which you may be able to take, as well. Also, there may be K-1’s that indicate income from partnerships or LLC’s that your debtor has ownership in.
If you determine that the debtor has a single-member, limited liability company, usually you can take the entire company, as federal and state courts have held that a single-member limited liability company has no asset protection. These debtor’s financial statements and tax returns can actually provide you with the DNA of the debtor’s financial life, your road map to unwinding that financial world and recovering assets to satisfy your judgment.