What are Supplemental Proceedings? How are They Used in Collections?
When a person or entity obtains a judgment against a debtor, information regarding a debtor’s assets may not be readily available. Without a clear picture of the debtor’s finances, a creditor runs the risk of utilizing a collection method (i.e. garnishment, personal property execution, real estate execution, etc.) that is not tailored to the debtor’s assets. Certain assets are exempt from garnishment and execution under state and federal law. If a creditor fails to do his or her due diligence in identifying the debtor’s non-exempt assets, the resulting collection proceeding may be disappointing.
Supplemental proceedings are authorized by Washington statute (RCW Ch. 6.32) and are designed to help the judgment creditor locate assets owned by the debtor. In a supplemental proceeding, the court enters an order requiring the judgment debtor to appear at a specific date and time to answer questions under oath regarding the debtor’s assets. The order often requires the debtor to appear with specific documentation (i.e. tax returns, etc.) If the judgment debtor fails to appear at supplemental proceedings, the court may issue a bench warrant for the debtor’s arrest and require the debtor to furnish a bond (sometimes referred to as bail) to assure the debtor’s appearance.
Similarly, if another person or entity is in possession of property belonging to the judgment debtor, is indebted to the judgment debtor, or has knowledge regarding the judgment debtor’s assets, an order for supplemental proceedings can be entered requiring the person or entity to appear and testify under oath regarding the assets. See generally RCW 6.32.030.
Supplemental proceedings are not always successful. A debtor may provide inaccurate information and/or perjure him or herself under oath, hindering a creditor’s ability to collect the debt. On the other hand, the formality of supplemental proceeding, including an order to appear and the possibility of arrest, may help to induce a judgment debtor to satisfy the judgment.
Wolff, Hislop & Crockett’s attorneys are experienced at collecting debts, recovering assets, obtaining injunctions to preserve assets, and navigating the often confusing maze of the bankruptcy courts. Our firm advises its creditor clients regarding the most efficient and cost-effective way to collect a debt. Contact us today for a consultation.