All posts by Joe Dickerson

THERE’S HELP TO FIX THE DEBT COLLECTION MESS

Who knew debt collections could be such a messy enterprise? The law firm of Frederick J. Hanna & Associates was hit with a $3.1 million charge for illegally filing debt collection lawsuits against consumers and using “deceptive court filings and faulty evidence.”

In another case, JP Morgan Chase was forced to pay over $200million to settle regulators’ claims that the bank wrongfully collected credit card payments from hundreds of thousands of consumers, subjecting them to collections activity for accounts that weren’t theirs and in amounts that weren’t correct or not collectable.

Unfortunately, these aren’t isolated cases. There are many more examples of these bad debt-collection practices. Here are a few of the problems:

  • Lost/missing paperwork
  • Wrongful collections
  • Double collections
  • Harassment
  • Mandatory arbitration


To compound the situation, there’s very little recourse for current or former debtors who have paid off loans but don’t have a way to prove it.

The good news is that technology can help with these issues. With a self-service portal, debtors can adjust their payments proactively, which helps the original creditor get repaid without feeling like they need to seek out a collections agency.

Another possible improvement is the usage of a centralized database where both consumers and collectors can quickly check the records. With better record keeping and documentation, we could see a massive reduction in fraud, double-dealing, and other collection abuses that plague the system right now.

See Financial Forensic Services improving the landscape for debtors. Global Debt Registry keeps and audit trail to help both consumers and collectors know what’s occurred with a particular debt – and it also allows consumers to receive “extinguishment reports” after they’ve paid their debt.

Currently, both misinformed and unscrupulous collectors are making it harder on honest customers. In instances where debt has already been charged off, sold, or released, consumers are still being intimidated into paying something they don’t really owe. That’s why a national registry and extinguishment report would be so valuable, as consumers would have a reliable way to prove that they paid off their debt in court – and long before the case every goes to court.

Being able to prove that they paid off their debt would be a huge win for consumers!

Another issue the industry faces is how much the state debt collection laws vary. The purpose of documentation for an account is to make sure you collect the right amount from the right person – and that you have authority to to collect that debt. A national registry would help immensely, because right now, it’s hard for a consumer to verify whether a debt collector is telling the truth. It’s also hard for most consumers to remember which company they payed off debt to, or how much the debt was – so when a creditor comes knocking, they’re pretty helpless to defend themselves.

Granted, these technological solutions aren’t cure-alls for the many problems facing the debt collection industry, but they’re definitely a step in the right direction for well-intentioned debt collectors and honest consumers. There are so many chances for errors to occur that it makes sense to have a robust system for equitable record keeping and communication. Hopefully we see the proposed changes come to fruition in the near future.

Copyright all rights reserved. Financial Forensic Services, LLC 2020 Brief quotation with attribution permitted. 

WHAT YOU CAN DO WHEN A COMMERCIAL BORROWER DEFAULTS

What happens when a borrower defaults on a loan secured by commercial property? Lenders have a number of options for how to proceed, but that’s part of the problem – which course of action is the optimal strategy for protecting the lender and achieving maximum collections? There are way too many possibilities to discuss in one article, but here are a few examples to get you thinking.

The forbearance agreement is a short-term agreement between the lender and the borrower. In it, the lender agrees to delay enforcing their rights in exchange for the borrower agreeing to cure the default within a specified period of time. The only thing a forbearance agreement does is delay collection proceedings – it does nothing to the terms of the loan. If the borrower fails to pay what they owe by the new deadline, collections may move forward.

Whether the borrower is looking to refinance or sell the property, the lender must begin receiving payments. But it may not actually be the best thing to collect the rent if there’s already a property manager in place to maintain the property and take care of all other related management activities.

The next option is a loan modification. It shares a number of features with the forbearance agreement, but has a few key differences. For one thing, the loan modification does change the terms of the loan. Second, the loan modification results in the cure of the default, which means another default after modification will require the lender to start the foreclosure process over again. This won’t meet the lender’s goal of getting the full balance paid, but may still be preferable to immediate foreclosure.

Another option that helps avoid foreclosure is a deed in lieu of foreclosure. This essentially transfers the deed to the property to the lender in exchange for agreeing not to foreclose against the property. The borrower may pay a lump sum in order to get the lender to release the lien. Most of the time, the lender isn’t interested in owning the property, but if they’re going to own it at the end of a tedious and expensive foreclosure process anyway, the deed in lieu of foreclosure can be an enticing choice.

Lastly, you can opt to take the foreclosure route, probably the most familiar strategy for dealing with default. There’s both a judicial and nonjudicial method of foreclosure. The judicial involves filing a lawsuit for foreclosure, while the nonjudicial is a trustee sale. The lender’s fastest remedy is to file the judicial foreclosure in conjunction with an application for placement of a receiver on the property.

It’s the receiver’s job to manage the property under court authority, ensuring that the borrower won’t abscond with the collected rent, that the property is maintained and managed properly, and that the lender receives debt service to slow the increasing outstanding balance. While commencing the foreclosure lawsuit and seeking a receiver, it’s usually a good idea for the lender to simultaneously start the nonjudicial foreclosure process.

From forbearance agreements to foreclosure, lenders have plenty of options for dealing with a default situation. Which one is best for your unique circumstances? That’s a determination best made with the help of legal counsel and your accountant. How you respond to a default can make a substantial difference in how much money you reclaim.

Copyright all rights reserved. Financial Forensic Services, LLC 2020 Brief quotation with attribution permitted. 

AMERICAN EXPRESS CARDS USED TO PERPETUATE FRAUD IN SUN VALLEY

The client, Mr. E., is a wealthy business man who owns a couple of ranches, a home in Los Angeles, and one in Las Vegas; but he prefers to spend as much time as possible at his home in Sun Valley where his two daughters and their families live.

In an effort to help one of his daughters, who was an alcoholic, he decided to build a very nice retail shop in Ketchum, the town nearest to Sun Valley where she and her mother, Mrs. E., could set up an exclusive gift shop. The thought was that the mother and daughter could bond while traveling Europe buying antiques and other very nice items to sell in the shop. This turned out to be a success when the high-end exclusive shop became a favorite of many movie stars and other wealthy people. I recall seeing a set of napkin rings; each individual ring was priced at $1,250.00. A lot of money came through that little shop.

A little over a year after the shop opened I received a call from Mr. E. requesting that I meet him at his home office in Sun Valley as soon as possible. He requested that i bring one of my senior forensic accountants with me.

Upon arriving, we learned the following: it seems the daughter and wife enjoyed very much very much their buying trips to Europe , but had little or no interest in running the shop day-to-day. Therefore, Mrs. E. had hired her hairdresser to run the shop and keep the books. Mrs. E. had known her for several years and felt no need to get a resume or check her background. The new manager hired two local young ladies to work in the store keeping the inventory displayed nicely and giving the customers excellent personal service. They also had one part-time employee who worked the stock room and did most of the actual bookkeeping.

This part-time girl found an American Express invoice hidden behind the sink under the counter in the break room where they kept the coffee pot. Concerned with this unusual finding and suspicious that something was probably wrong, she went to the home of Mr. and Mrs. E. after work that day to share her finding with Mrs. E., as Mr. E. was out of town. The next day, Mrs. E. confronted her friend and former hairdresser, the manager. It was not a pleasant meeting. The manager was irate that anyone would even questionn her as if she had done something wrong. The meeting ended with Mrs. E. leaving in tears and quite upset. Thus, we were called in by Mr. E. to get to the bottom of the situation.

With that little bit of background, my forensic accountant and I met with the staff. While the accountant reviewed the books, I began interviewing the two sales ladies and the part-time employee who had found the American Express invoice. I interviewed each of them separately then met with the local Police Chief to explain what we were doing and to set up a meeting with the District Attorney for later in the week. I received assurances of cooperation from both.

Over the next few days we learned the following. Things get boring during the slow season. The manager decided to redecorate her home – with merchandise from the store – it was obvious to her that the owners didn’t care because they were never there. The two sales girls saw what was going on and wanted in on the action. Apparently, to keep them quiet and to share in the spoils, the manager agreed. It became a feeding frenzy. I could only think of the rushed excitement of the gold fish when it’s time for the daily feeding.

The three of them ran into logistical problems since some of the items they “needed” at home were too large to fit in their cars and no one had a pickup. But not to worry – manager to the rescue. Mr. E. had told the manager that since his two friends had sold their local bank to a big bank chain, he wanted her to open the business account at his friend’s new bank down the street. He thought she understood that she was to close the old account. She did as she was directed and opened the new account, but deposits were going into both banks, at her discretion.

To solve the problem of getting merchandise to their homes the manager opened an American Express Business Account and got cards for each of the three of them. They could now do online shopping and have the merchandise delivered to their homes and the invoice paid with checks drawn on the original bank account.

The three ladies were all friends, especially the two sales people. One of them got scared and started recording their conversations, especially after we got to town. During her second interview she broke down and made a complete written confession and went home to get her recordings and gave them to me. She talked to her friend, told her of her confession, and the second lady then determined that she would be allowed to give me her written version of what happened. I granted her demand and took her confession.

With this information and the documentation to collaborate it all with the findings of my forensic accountant, it was rather easy to get the written confession of the manager, especially after we found she had paid for her daughter’s wedding and airline tickets for a family guest – all on the company American Express card. They each took us and the police to their homes to surrender the stolen merchandise. Their unhappy husbands each got to load it all up and return it to the store.

We worked with the local police and the District Attorney and each of the three were convicted and received six months in the county jail and full restitution for everything they had stolen that could not be returned, like airline tickets, the cost of the wedding, etc.

I am happy to report the shop reopened under new, highly-qualified professional management with a professional sales staff using an excellent CPA and auditor. Mr. and Mrs. E. are very happy clients.

Copyright all rights reserved. Financial Forensic Services, LLC 2020 Brief quotation with attribution permitted. 

INDEMNITOR’S $13.54 CHECK LEADS TO $23,500 JUDGMENT RECOVERY

How did a check for $13.54 help recover a $283,500 judgment? The district court judge awarded the judgment at a bench trial against a small, now defunct construction company and the indemnitor, the sole owner. The insurance company had nothing but cancelled checks to their attorney to show for their collection efforts on their relatively small judgment.

As is the standard procedure for Financial Forensic Services, LLC (FFS), whether called in to find assets to satisfy a judgment for a few hundred thousand dollars or several million, the company’s attorney issued a subpoena to the local bank for copies of the front and back of all debit instruments and all credits for the last 24 months (sometimes for a longer period depending on the circumstances). While creating a spreadsheet as part of the review of the subpoenaed production documents, FFS’s analyst noted a cancelled check for $13.54 payable to a Public Service Company, three states away. The payment was for rural electrical services.

This seemed rather unusual. When was the last time you paid only $13.54 for electrical service? Further research revealed that the address was a rural route with no street address. FFS research staff contacted the post office for that address’ county seat and learned that the location was at the intersection of two county roads. A call to the tax assessor’s office gave us the legal description and the name of the taxpayer and his billing address. The next call was to the county clerk and recorder’s office, where we ordered a copy of the deed for the property. We confirmed that the property consisted of a Section of land (640 acres), but there was not a home at this address – only a barn.

We had learned from the rural route postman that this property had cattle and oil wells on it. Next we called the county livestock auction barn, where we obtained the name and phone number of the area Brand Inspector, who inspects all the livestock bought and sold in the county to help control cattle and horse rustling. We confirmed that the herd of Black Angus cattle on the property belonged to our judgment debtor.

Research with the state oil and gas commission provided us with the name and address of the oil company and their production records for our debtor’s property. A subpoena to the producer resulted in copies of all of the checks they had paid our judgment debtor.

From our research with the tax attorney and the clerk and recorder’s office, we documented that our judgment debtor’s father had purchased this section of land after being discharged from the military after World War II, and it was free and clear of any debt. The man’s wife had preceded him in death so our debtor, his only heir, had inherited the property upon his death.

The $13.54 check paid the bill for the single light bulb hanging in the old barn where our debtor’s retired ag teacher from high school kept the feed for the herd of registered cattle he cared for at the debtor’s request.

We contacted the debtor’s attorney and asked if his client wanted to pay his judgment with oil and gas money, the sale of livestock, or real estate, or if we should ask the court to order the liquidation of these assets to satisfy our client’s judgment.

The debtor immediately provided the full payment of $283,500.

No check is too small, even $13.54. No detail is so insignificant that it should be overlooked in the forensic research t satisfy a client’s judgment.

Copyright all rights reserved. Financial Forensic Services, LLC 2020 Brief quotation with attribution permitted. 

THE NEAR PERFECT PLACE WHERE THE “BAD GUYS” HIDE ASSETS RIGHT IN FRONT OF YOUR EYES

Where can you hide and grow substantial assets with very little, if any, chance they will be detected?

Typically, investigators and attorneys are going to search for corporations, LLCs, and partnerships associated with their judgment debtors. When found, these entities are then searched for bank accounts, other assets, and real estate. There’s really nothing new or exciting about this age-old standard operating procedure. Every rookie investigator or first-year associate attorney knows how to use this process to trace and recover assets. In fact, failing to do so may well be malpractice.

Few, if any, investigators or attorneys are going to even search for assets in the name of a corporation that has not been “active” or in “good standing” for 3, 5, 10, or 15 years. Such searches are seen as a waste of time and resources. No person in good mind would put assets in an entity with no asset protection. Actually, assets have been hidden in these noncompliant entities for years because—nobody looks there, except a few of us out-of-the-box thinkers, a.k.a. “rebels.”

In the last ten years, we have recovered from a few hundred thousand dollars up to over $2.5 million, from such non-compliant entities. In the latter case, one of my favorites, we recovered from a Wyoming noncompliant LLC that had a noncompliant Wyoming corporation as its managing member. We recovered a “homesteaded” ranch, along with cattle, oil and gas royalties, rental property, and cash in the bank. We were not chastised for coloring outside the lines. Never assume that the bad guys are playing by the rules—they often are not, and it’s your job to recover their ill-gotten gains.

HOW TO DOCUMENT $MILLIONS IN HIDDEN REAL ESTATE

Most consumers have no idea what the Mortgage Electronic Registration System (MERS) is, but it is estimated that one out of every two loans in the United States are “owned” by it. And it has also become a tool used by debtors to hide their assets. If you have debtors that invest in mortgages, you need to know about MERS.

MERS is a legitimate private US corporation that solved one very expensive problem: how large amounts of mortgages can be bought and sold by investors without generating the fees charged by counties to record the change of ownership. A large group of loans could incur thousands, if not hundreds of thousands, of dollars in recording fees, every time an investment in a loan pool is made. MERS neatly solved this by simply operating an electronic registry. Transfer your loan into it, and MERS is now the nominee owner. You’re free to buy, sell and transfer your loan to other investors within the registry, without having to record the change of ownership with the local County Recorder. The Federal Government has backed the system as a way to create a liquid market for investors.

However, some state County Recorders have started to fight back. They are claiming MERS is nothing more than a work-around to avoid the proper paying of recording fees that are used to support the records office.

We have also seen cases where debtors use MERS to hide their assets by making sure their ownership is not publicly recorded, and they have then failed to disclose their ownership of these assets. The good news is that once we have identified debtors that are involved with MERS, we now have a decided advantage for uncovering current ownership and proving fraudulent transfers: the MERS system itself!

It is important to know that each loan transferred into the MERS system is assigned a Mortgage Identification Number (MIN), and will have this number for the life of the loan, no matter who the current owner is. Once we build the master list of loans owned (past or present) by the debtor, we follow the ownership transfers by date to develop the status of an investment pool. Post-judgment transfers can also lead to other entities that are sheltering the ownership of the assets for the debtor that we may have not known existed.

So be aware that MERS is an effective tool that a debtor can use to hide assets, and that it is an even better tool to use for recovery.

OFFSHORE INSURANCE – LOAN STACKING – TAX FRAUD

Mr. J. is an entrepreneur in the United States. His ‘chief fundraiser’ for investments in the U.S. is a Columbia businessman who, according to informed sources, is under international investigation for narcotics trafficking and money laundering.

Mr. J. is friends with a U.S. citizen who owns an offshore insurance company. Mr. J. purchases insurance using money placed with his U.S. company for investments by his “chief fundraiser.” The premium is $1 million. The premium is treated as a business expense, thus a tax deduction.

The money laundering, loan stacking, and tax fraud is now underway – it works as it follows:

Mr. J. now borrows $700,000 from the insurance company – loans are not taxable income. He then pays another insurance premium of $700,000 and borrows another $490,000 from the offshore insurance company. He then pays a $490,000 premium and borrows $343,000.

The sham transaction, without a valid business purpose, represents a tax saving for Mr. J. of nearly $800,000, depending on his total effective tax rate. Thus, Mr. J. keeps in pocket a total of more than $1.1 million – $343,000 from the last loan plus at least $800,000 in immediate savings from the more than $2 million in deductions in exchange for a total outlay of $657,000 to the “insurance company.” The insurance company could show the loans as account receivables, an asset, on its books so it could remain adequately capitalized for the offshore insurance regulators.

Mr. J. may decide to retain the proceeds rather than pay a return to the Colombia investor. The investor could be told by the “chief fundraiser” that their money was lost in investments that went bad in the U.S. If the investment funds were the proceeds from low-level narcotics trafficking, to whom are they going to complain?

Note: the loan stacking and tax scenario were taken from a filing in a civil case that has been ongoing for at least four years.

7 Critical Mistakes Judgment Creditors Make Attempting to Collect Their Judgment – Mistake #7

There are seven critical mistakes judgment creditors make when attempting  to collect their judgment. We’ll be discussing each mistake in detail … and how to correct it. Last week, we covered mistake #6: Failure to Ascertain the Psychographics of the Judgment Debtor. Now, let’s identify the problem we are dealing with this week.

MISTAKE #7: FAILURE TO ADD APPROPRIATE MEMBERS TO THE JUDGMENT ENFORCEMENT TEAM

Since this month we are addressing the 7th of the Seven Critical Mistakes Judgment Creditors Make Attempting to Collect Their Judgments, let’s start by reviewing the first six we have discussed in some detail over the last six months.

  1. Not Understanding that the Court Does Not Make the Judgment Debtor Pay the Judgment
  2. Conducting a Debtor’s Exam (Deposition) of the Judgment Debtor as Soon as the Judgment is Entered
  3. Expecting the Judgment Debtor to Actually Appear for the Deposition, Tell the Truth and Produce the Subpoenaed Documents
  4. Expecting to Find the Pot of Gold at the End of the Rainbow
  5. Attempting to Collect from a Judgment Debtor that has No Assets
  6. Failure to Ascertain the Psychographics of the Judgment Debtor

Having the appropriate members on the Judgment Enforcement Team is, without a doubt, the most important thing a judgment creditor must address aside from actually obtaining the judgment.

Addressing the first six mistakes are important and should receive appropriate attention, but that is of no consideration if the appropriate members of the Judgment Enforcement Team are not on board.

There are many excellent litigation attorneys who can take the facts of your situation and present them to the trier of facts, be it a court or a jury, and if the law supports your position, win an appropriate judgment for you. This does not mean those attorneys automatically have the necessary skill set and experience to collect the judgment for you. This does not imply they are not excellent attorneys, but enforcing a significant judgment does requires a unique skill set — usually an experienced specialist/expert in commercial collection.

You must take great care to ensure you have the right team of experts. If you needed a brain surgeon, you would not hire a proctologist. They are both experts, but only one has the special skills needed to successfully perform the brain surgery. Likewise, there are many collection attorneys who perform consumer collection work dealing with credit card collection, hot checks, medical bills, car loans, small claim judgments, etc., but not commercial collections recovering hundreds of thousands or millions of dollars locally, nationally, and globally. Be sure you retain the appropriate collection attorney for your needs. This will be a significant key to successful resolution of your case.

Additionally, there are many private investigators who advertise they do complete “asset checks” for judgment enforcement for a flat fee of $500. They are general practitioners who also work divorce cases, personal injury investigations, missing person cases, criminal defense cases, etc. You probably want to engage the services of a financial forensic expert who understands judgment enforcement laws and knows how to obtain bank information and other necessary information legally, so it is admissible and does not violate privacy laws. Expert work done by this professional can save you both time and substantial legal fees while obtaining evidence for your attorney that makes the difference and prevents you from spending significant money only to be part of the 80 percent that never collects their judgment. This will help ensure you are in the 20 percent recovering the losses the court awarded to you. Other experts frequently needed as members of your Judgment Enforcement Team often include forensic accountants, forensic evaluation experts and forensic computer experts. Be certain you have the right team or you will never be in the successful 20 percent that collect their court awarded money judgment.

Let’s review a list of the professionals you may well need as a part of your Judgment Enforcement Team:

  • Team manager/coordinator
  • Seasoned commercial collection attorney
  • Financial Forensic Research Professional
  • Data analyst
  • Locksmith to help with access/ securing home, office, files, safes, safe deposit boxes, warehouse/storage facilities, vehicle(s), plane(s), etc. that you and/or the sheriff may be authorized by the court to enter and/or take possession of that asset
  • Licensed, bonded movers/ storage facility
  • Bond company
  • Receiver
  • Appraiser/valuation experts
  • Court approved auctioneer
  • A document examiner (handwriting expert)
  • Forensic accountant
  • Computer (digital) forensic expert
  • Securities/finance/banking expert
  • Bankruptcy attorney (familiar with Sections 523 and 727 of the U.S. Bankruptcy Code)


You will seldom need all these experts on any one case, but you must be aware of them and the value they add to your recovery when needed. This is not intended to be an all-inclusive list of every expert you could ever need, but rather a list of many of the most common experts often comprising the most successful team. Hopefully, this list will bring to mind experts, who, when needed, are appropriate and necessary to best serve your clients.

We at Financial Forensic Services are always available to help you find the experts you need to ensure success in all your judgment enforcement cases.

7 Critical Mistakes Judgment Creditors Make Attempting to Collect Their Judgment – Mistake #6

There are seven critical mistakes judgment creditors make when attempting to collect their judgment. We’ll be discussing each mistake in detail… and how to correct it. Last week, we covered mistake #5: Wasting Significant Money Attempting to Collect from a Judgement Debtor Who “Has No Assets.” Now, let’s identify the problem we are dealing with this week.

MISTAKE #6: FAILURE TO ASCERTAIN THE PSYCHOGRAPHICS OF THE JUDGMENT DEBTOR

Your chances of successfully enforcing your judgment are significantly enhanced when you understand the psychographics of the judgment debtor. You must know what makes him tick to understand how to attack him.

Sun Tzu says in “The Art of War,” “Take from a man that which he cherishes and he will conform to your desires.” This is one of my favorite quotes from “The Art of War.” There is much wisdom in that book that applies directly, in my opinion, to the practice of judgment enforcement. I have relied on the wisdom of Sun Tzu for years in representing our clients in our financial forensic research and consulting practice.

Financial Forensic Services typically gathers as much research and conducts as many interviews with people who know the debtor(s) as possible to understand how they think and what they like and dislike. For example, while interviewing the former wife, former personal assistant, and former business partner of one of our judgment debtors, we learned he was passionate about big game hunting in Alaska.

Our attorney obtained a Writ of Execution from the court, and we accompanied the Sheriff’s deputies to the debtor’s home to execute that Writ. The first assets we took were the standing polar bear and the mounted moose. As we started to take several high power hunting rifles, the debtor became obviously distraught and demanded we stop the seizure of his assets and allow him to settle the judgment. Within 48 hours, he paid the entire high, six-figure judgment in cash and was able to preserve his trophies, expensive guns, and other assets.

In another case, our client had been pursuing their judgment debtor for over four years, attempting to collect a multimillion-dollar judgment. They had been through two major law firms and three private investigators, had zero recovery, no leads, and nothing but cancelled checks to their law firms to show for their unsuccessful efforts.

From our client, we learned the debtor’s pride and joy was his restored vintage Mercedes Benz. We reviewed his cancelled checks we had subpoenaed from the past 24-months. We found a check signed by his new wife from their joint account for over $150,000 to pay for the sailboat she had gave him on his birthday. As the debtor and I stood on the front porch of his country club mansion, watching the award-winning restored Mercedes and his new sailboat being towed away to be auctioned off by the Sheriff, he turned to me with tears in his eyes and asked, “What is it going to take to get you off my butt?” I explained to him that he could just consider me to be his new business partner. I told him I wished him no ill will, but from every success in the world he had from that point forward, I would be taking part of every dollar he earned to satisfy my client’s judgment against him. I told him if he thought he would not enjoy having me as a partner, I would go away, but first I needed 100% of the balance of the judgment plus interest and cost.

He immediately agreed to pay the total judgment and cost, and my client agreed to waive the interest. Our client was paid in full that week.

If you take time to learn the PSYCHOGRAPHICS of the Judgment Debtor, you can move in the right directions quickly and enjoy a greater recovery.

“Take from a man that which he cherishes and he will conform to your desires.”

7 Critical Mistakes Judgment Creditors Make Attempting to Collect Their Judgment – Mistake #5

There are seven critical mistakes judgment creditors make when attempting to collect their judgment. We’ll be discussing each mistake in detail… and how to correct it. Last week, we covered mistake #4: Not Understanding That the Court Does Not Make The Judgement Debtor Pay The Judgement. Now, let’s identify the problem we are dealing with this week.

MISTAKE #5: WASTING SIGNIFICANT MONEY ATTEMPTING TO COLLECT FROM A JUDGMENT DEBTOR THAT “HAS NO ASSETS”

Even if all the facts are on your side, regardless of how much you may have been embezzled out of or how much you may have been awarded in the contract dispute, it is usually of little consequence if you win a significant judgment if your debtor truly has no assets and no prospects of having significant assets in the future.

Prior to filing a complaint, an astute plaintiff and her attorney will obtain a financial forensic viability report to determine if the target has sufficient assets that can be reached to satisfy the claim, should a judgment be entered. Should it be determined that your target actually has no assets, you can save yourself untold heartache, time and money chasing a debtor that has no money to satisfy your judgment. You need NOT be in the 80% who never collect their judgment. If adequate assets are located, the plaintiff can proceed comfortably knowing that there appears to be sufficient assets to justify the litigation. Should these assets dissipate prior to recovery, you often have a good basis to initiate a fraudulent transfer investigation.

An investment in the financial forensic viability research and report, and consulting with experienced experts is always wise. When you obtain your judgment, you have a great start for the more in-depth financial forensic research to locate and document assets to execute upon toward the satisfaction of your judgment. Knowing what types of assets are available for recovery helps in deciding which post judgment commercial collection attorney you need to retain. The assets located in the preliminary research may be anywhere in the world so you may need help in Hong Kong, Saudi Arabia, The Isle of Mann, the Virgin Islands, or Texas and Florida. You must have the right forensic research and enforcement team with the right contacts, skills and experience to be successful. You may need experience with oil and gas cases, commercial real estate, or securities. From the preliminary financial forensic report, you will be able to assemble the right team of experts to get the job done properly and as efficiently as possible.

You must recognize that the truly sophisticated debtor is well-positioned to appear to have no assets. They may have entities domiciled in Nevada, Wyoming and in offshore asset protection havens. These entities will be controlled by nominee officers, directors, and/or trustees of irrevocable offshore asset protection trusts. Getting past these professional gatekeepers is not a task to be taken lightly, but it can be done.

Your professional asset recovery and competitive intelligence team are equipped to locate, document, and work in tandem with a carefully selected, highly skilled and specialized attorneys to recover these deeply buried assets. Investing money to locate assets for recovery is NOT THE MISTAKE. THE REAL MISTAKE IS NOT ENSURING YOU ARE INVESTING WITH THE TRULY SEASONED EXPERTS WHO HAVE A TRACK RECORD OF LOCATING AND RECOVERING THE ASSET THAT EVERYONE KNOWS THE DEBTOR “DOES NOT HAVE.”

You don’t go to your family doctor for heart bypass surgery—you get the best heart specialist money can buy. Use the same good judgment when your financial life is at stake—do your due diligence and engage only the best team of experts you can find to recover your money.