In this time of national crisis, there are going to be a lot of people who try to walk away from their financial obligations for one reason or another. Fortunately, in Massachusetts, there are a host of different creditor's remedies available to both judgment and non-judgment creditors alike who are facing default situations. Whether you have obtained a judgment or are just beginning a lawsuit to recover monies you will need to utilize effective litigation and collection strategies to enforce your rights. The following is a tried and true list of some creditor's remedies that can assist your company in protecting its reputation and bottom line:
1.Bank account attachments. Bank accounts are liquid funds which means that if there are funds if, in the account, those funds can be "frozen" immediately and set aside by the bank to pay your claim or judgment. From our experience, attaching bank accounts is the most efficient way to get your debt collected. Bank accounts can be attached with or without notice ( a lot of jurisdictions do not permit without notice attachments even for judgment creditors) but Massachusetts does allow for without notice procedures even for non-judgment creditors. For more detailed information on how this process works and whether your company can avail itself to this very effective creditor's remedy please contact us at the Katz Law Group at 508-480-8202.
2. Real estate attachments. A good collection and recovery tool but not quite as powerful and immediate as a bank attachment. As with bank attachments, real estate attachments can be obtained with or without notice. The major difference between the two remedies is that once you have attached real estate than you, in many cases, have to force a sale in most cases which can be expensive and time-consuming. On the other hand, having a real estate attachment can ensure that your claim and/or judgment is protected in the event of a sale or if the debtor attempts to refinance the property. In many situations, just the mere fact that you have an attachment is sometimes sufficient enough, in itself, to draw the attention of the debtor and get the matter settled.
3. Reach and apply procedures. An action to reach and apply, in my view, is an underutilized creditor's remedy. Massachusetts allows for reach and applies procedures pursuant to G.L.c.214, section 3. The reach and apply procedure involves the use of an injunction to allow you to recover money against a third party. For example, let's assume that company A owes your company $50,000. Company A does not have the money to pay you in the near term but you have information that company A is owed money by company B. If this is the case, you can then file an action in either the district or superior court( depending on the amount in controversy) to "reach and apply" any all monies due or about to become due from company B to company A in order to satisfy the obligation between company A and your company. The reach and apply action is very effective because many businesses survive from hand to mouth and once they get the money in their operations account the money is gone. A reach and apply action allows you, as a creditor, to get the money at its source before it even reaches the debtor. It is the functional equivalent of an interception of a pass in football.
4. Appointing a receiver. A receiver is a lawyer appointed by the court under Massachusetts law to manage the financial affairs of a debtor. To have a receiver appointed you are required to have execution and then you are required to serve that execution on the debtor by a sheriff who gives the debtor 30 days to pay the execution amount. If the debtor does not comply with the sheriff's demand, then you have a basis to file an action to appoint a receiver. Once appointed, a receiver has the statutory power to take control over a debtor's assets and the receiver also has the legal power to investigate and review a debtor's financial records and can look to retrieve assets that a debtor may have in his possession.
5. Rule 69 deposition. Under the Massachusetts rules of civil procedure, a judgment creditor can take undertake discovery of assets if the creditor has either judgment or execution. This allows the creditor to obtain all documentation including bank statements and tax returns as well as information about jewelry, art, boats, machinery, equipment, and so forth. In one situation on behalf of a creditor client, I was able to seize through a court order a very expensive bowling ball as a result of a rule 69 deposition. The bowling ball was later sold at auction and, even after the auctioneer's fees, my client got almost made whole.
6.Supplementary Process. When you are down to your last option, this is the one you have to take. In Massachusetts, no matter the size of the judgment all supplementary process is done in the district court. This encompasses the filing of a supplementary process summons and complaint. Once the summons and complaint are served on the debtor, the clerk's office will schedule a hearing. The supplementary process rules allow you to subpoena records of the defendant-debtor and to force him to bring them to the hearing. What happens in almost all cases is that a judge will review the information supplied by the debtor, review all documents that have been provided by way of subpoena, and then, based on his examination of the debtor, order a payment program to begin. While the payment program can be cumbersome, many creditors take the position that it is better to get something than nothing even if it takes a longer period of time. Ordinarily, interest does not accrue during the agreed-upon payment period so long as the debtor maintains the court-ordered schedule.
7. Seizure of property and equipment. This can be an effective remedy to collecting on your execution particularly if the debtor has valuable equipment and if that equipment is not encumbered. Usually, with motor vehicles, the finance company needs to be contacted after any seizure and before any sale because if an auto is financed the finance company is in the first position of recovering. Over the course of 37 years, we have seized yachts, limousines, and motor homes.
8. Wage attachments and mechanics liens are two other options that creditors can use to recover their money. Wage attachments are subject to strict guidelines under Massachusetts law and can, like the supplementary process, be long and arduous. Mechanics liens are a more limited option and exist for those creditors who have rendered construction services to a subcontractor, general contractor, or owner and can be quite effective in bringing about an early resolution. In such cases, you are not required to have a judgment or execution to avail yourself of this remedy. There are a number of other lien rights available under Massachusetts law and I will address those in a subsequent blog.
If you have a judgment or execution and you need to know about your enforcement options, give us a call. We have access to databases and use investigators to help us obtain information so that we can utilize the best and most efficient routes of recovery for our clients in any given case. Please call the Katz Law Group at 508-480-8202. We are available from 8 a.m. to 8 p.m. during the week for our clients during this ongoing national crisis.