Collections Blog Post 4: Supplemental Proceedings

THIS IS AN ADVERTISEMENT FOR LEGAL SERVICES

At the Law Offices of Peter D. Isakoff, we fight to get our clients paid after their trial wins.  Sometimes, when a Defendant/Judgment Debtor refuses to pay a Court judgment, collections can become difficult.   But at The Law Offices of Peter D. Isakoff, when collecting gets tough, we get tougher!  There are North Carolina legal processes available to assist you in collecting on your Court judgment.  Our law firm knows how to navigate the complexities of NC Collections law to get you paid after your Court win.

1.               Supplemental Proceedings

“Supplemental Proceedings,” or proceedings in aid of execution of a judgment, are Court actions to force a Judgment Debtor to identify their assets for collection. Supplemental Proceedings are governed by N.C. General Statute § 1-352. Before initiating a Supplemental Proceeding, the Plaintiff/Judgment Creditor must have previously attempted execution by Writ of Execution with the Sheriff of the County. If the Sheriff is unable to find, levy or seize property, the Sheriff returns the Writ of Execution to the Court/Judgment Creditor, marked either wholly or partially unsatisfied. At that point, the Judgment Creditor may then commence Supplemental Proceedings with the Court. The Judgment Creditor may submit, along with their petition, a proposed Order. The date, time and place of Supplemental Proceedings are usually determined by the County Clerk of Court. In some cases, the Clerk of Court, as opposed to a Judge, will process the petition and proposed order.

The Order for Supplemental Proceedings may also order the Judgment Debtor to bring to the Court certain materials/documentation relating to the assets of the Judgment Debtor, like recent tax returns, bank statements, financial statements, stocks, bonds, deeds, et seq. The Judgment Debtor should be carefully examined regarding any possible/potential assets which might be subject to execution or levy. In Supplemental Proceedings, the Judgment Debtor must answer questions under oath. See  N.C. General Statute § 1-356.  If, during the proceedings, assets of the Judgment Debtor are discovered which may be subject to seizure and execution, the Judge or Clerk may order the property sold at public auction. N.C. General Statute § 1-362.

If the Judgment Debtor’s asset is an ongoing business, the Clerk of Court or presiding Judge has the authority to appoint a receiver. N.C. General Statute § 1-363. The receiver does not necessarily have to be a manager. The court-appointed receiver may take possession and control of all of the Judgment Debtor’s non-exempt property; or, alternatively, the receiver may take possession and control of certain specific assets.  If the Judgment Creditor has reason to believe that a third-party owes a debt to the Judgment Debtor, the Judgment Creditor may petition the Court to order that third-party into Court for examination. N.C. General Statute § 1-360.  The Court may also order the Judgment Debtor, or any other person or party, not to interfere with or otherwise transfer any interest in property of the Judgment Debtor. N.C. General Statute § 1-358.

If a person is properly served with an Order for Supplemental Proceedings and such person fails to appear, the Court may punish that individual for Contempt of Court. N.C. General Statute § 1-368.

Supplemental Proceedings are a valuable legal tool in circumstances when the Judgment Debtor may be trying to hide some asset or property. When faced with the prospect of a Supplemental Proceeding, the Judgment Debtor may suddenly make a proposal for payment/satisfaction of the judgment. As in other phases of Collections process, the persistent and thorough Judgment Creditor is more likely to be successful.

2.               Wage Garnishment?

Generally, private civil Judgment Creditors cannot garnish Judgment Debtors’ wages, regardless of where the debt was incurred. See N.C. General Statute § 1-362.  North Carolina Courts do have the authority to order withholding of a person’s income in limited circumstances, such as enforcement of child support obligations. See N.C. General Statute § 110-136; Sampson County Child Support Enforcement Agency ex rel Bolton v. Bolton, 93 N.C. App. 134 (1989).  The detailed, administrative and procedural provisions in domestic cases are beyond the scope of this post. Likewise, garnishment proceedings authorized by federal statutes, such as IRS garnishment or garnishment for student loans, are also beyond the scope of this post.

3.             Conclusion

Collecting on your trial win can be a difficult process.  But North Carolina Collections law has legal processes available to assist in collecting on your Court judgment, including the Supplemental Proceeding.  If you need thorough and aggressive legal representation getting paid what you’re owed, please contact The Law Offices of Peter Isakoff anytime, day or night, at (336) 863-8348 (Main) or (336) 864-9115 (Español).

DISCLAIMER: The information in this article is provided for informational purposes only. It is not offered as and does not constitute legal advice. The accuracy of the information may change pending changes in applicable law. If you have questions about a specific matter, you should contact a lawyer. The use of this article or any information provided in it does not establish any lawyer/client relationship.