Proceedings supplementary is the “hidden gem” of post-judgment collection tools for creditors in Florida. We are truly amazed at how little this statute is used by creditors (and their attorneys) to collect Florida judgments. Governed by Florida Statute 56.29, the Florida proceedings supplementary statute provides an absolutely potent tool for a judgment creditor to claw back fraudulent transfers of judgment debtors. In an astonishing percentage of cases our firm has litigated, judgment debtors have engaged in fraudulent transfers of some kind, necessitating creditor action. The most obvious fraudulent transfers are those involving real estate.
Florida’s real estate records are readily available to the public, and therefore can provide quick insight into a transfer of real property for less than adequate consideration. However, many times debtors engage in far more nuances fraudulent transfers, such as “equity stripping,” transfers of money or stock holdings to relatives, removal as officers of solvent businesses, and many others.
FLORIDA CREDITOR COLLECTION
The use of subpoena power is underused by most attorneys in the post-judgment collections context. A proper collections strategy should almost always involve a subpoena to the records custodian of any financial institution where the judgment debtor banks or has banked in the past. The same goes for brokerage houses, investment banks, etc.
For institutional lenders such as banks, most judgment debtors would have at some point in time provided a financial statement disclosing these assets (at the origination of the loan). While judgment debtors will be secretive and reticent to brag about wealth in the post-judgment discovery context, the loan origination file should be replete with useful financial information. Remember, when the judgment debtor wanted to borrow the money at the loan’s origination, they were likely very forthright and quick to disclose as much wealth as possible.
A subpoena should be issued to the records custodian of any financial institutions where the judgment debtor disclosed accounts. The subpoena should ask for bank statements, copies of the front and backs of checks, and evidence of outgoing wire transfers. Many times these subpoenas produce evidence of a fraudulent transfer. For example, a $200,000 check from the judgment debtor to a relative just prior to the entry of judgment would constitute solid grounds for invoking Florida’s proceedings supplementary statute. The judgment creditor’s attorney would then seek to implead the third party transferee into the original action (through a court order). This would allow the judgment creditor to hold the transferee accountable, and potentially obtain a new judgment against that transferee. The court also has the authority to unwind the transfer. In the context of a fraudulent transfer of real estate, this is especially valuable, as title to the real property would revert back to the judgment debtor’s name, and thus be available for levy and sale by the sheriff.
DEBT COLLECTION LAWYER
Here at the Law Offices of Paul A. Humber P.L., we have seen it all when it comes to fraudulent transfers. And we know how to aggressively pursue judgment debtors and transferees who seek to circumvent the law and defraud their creditors through the use of fraudulent transfers. We do so in large part through the use of Florida’s generous proceedings supplementary statute.
It is to our clients’ benefit that our attorneys possess a thorough understanding of this area of commercial law. Proceedings supplementary provides an efficient and effective way to collect on your judgment in the event that the debtor has attempted to misplace their assets to a third party. In order to find out more about how our firm can be of assistance in this situation, contact one of our creditor rights attorneys for a consultation on your potential legal recourse.