When a person or company wins a lawsuit against you, the court enters an order called a judgment. The judgment states the amount of money you owe the other party, including interest and costs. A judgment debtor examination, or debtor's exam, is a chance for the creditor to gather the necessary information to pursue one or more collection methods. This article discusses what information is covered in a judgment debtor exam, how the creditor can use that information to collect the debt from you, and what rights and protections you have.
Written by Attorney Paige Hooper.
Updated July 22, 2021
When a person or company wins a lawsuit against you, the court enters an order called a judgment. The judgment states the amount of money you owe the other party, including interest and costs. This amount is called the judgment debt. After the judgment is entered, you’re considered a judgment debtor. The party who won the lawsuit is the judgment creditor.
A judgment creditor has several options for collecting the judgment debt. A judgment debtor examination, or debtor's exam, is a chance for the creditor to gather the necessary information to pursue one or more collection methods. This article discusses what information is covered in a judgment debtor exam, how the creditor can use that information to collect the debt from you, and what rights and protections you have.
What Is A Judgment Debtor Exam?
To collect a debt against you, a judgment creditor needs certain information. For example, to issue a wage garnishment, the creditor must know - at a minimum - where you work. In some cases, the creditor may already have the necessary information. If not, the creditor may need to conduct a judgment debtor examination.
Any creditor who has a valid judgment against you may ask the court to order a debtor's exam. Depending on your state’s laws, the exam could take place in a courtroom, like a hearing, or at an attorney’s office, like a deposition. You answer questions about your income and assets. A court reporter records all your answers. The examination typically lasts 15-30 minutes.
Your answers at a judgment debtor examination are given under oath, meaning you swear or affirm that you’re telling the truth. If you make false or misleading statements, you could face criminal perjury charges.
You may be required to bring some documents with you to the examination. A list of these documents is often included in the notice of examination. Examples of documents you might need include things like bank statements, account numbers, pay stubs, tax returns, or credit card statements. During the exam, the creditor’s attorney or representative can also ask you to provide documents as proof of your answers. If so, you must submit the requested evidence within a certain time, usually 30 days.
Do I Have To Attend?
Yes. Your appearance at a judgment debtor examination is mandated by court order. The summons or notice you receive ordinarily states the consequences for failing to show up. The court can issue a bench warrant to have you arrested. You may also have to pay a fine.
Sometimes, the judgment creditor may ask you to provide information in writing instead of attending an in-person examination. In this situation, you’ll receive a set of formal interrogatories rather than a summons.
What Are Interrogatories?
Interrogatories are written questions. They can take the place of the questions the creditor would ask you at an in-person examination. Instead of answering in person, you’ll submit your answers in writing. The interrogatories contain instructions about when and where to send your responses.
Because interrogatories replace the examination, all the same rules apply. You must answer the questions under oath, usually by attaching a notarized affidavit to your responses. You may be required to provide documents about your assets and income. You must respond to the interrogatories or the judge could find you in contempt of court.
What Questions Can A Judgment Creditor Ask?
The creditor can only ask you for information and documents that will help with debt collection. This ordinarily includes information about your real and personal property, your income and employment, and your other debts and expenses.
Some examples of information a creditor might ask about include:
Where you work, how much you earn, your job title, and how often you get paid
What other sources of income you receive or have available
What assets or property you own, such as real estate, vehicles, jewelry, or other valuables
Where those assets are located, what condition they’re in, how they’re titled, and what they’re worth
What other debts you owe, how much you owe, and who you owe
What deductions or garnishments are already coming out of your paycheck(s)
How much you typically spend on living expenses and debt payments
A judgment creditor can’t use the debtor exam to harass, demean, or threaten you. If you believe that a question is inappropriate or that answering the question could cause harm to you or someone else, you can object to the question. You must provide a legitimate reason for objecting. You may want to talk to an attorney about your objections.
What Can A Judgment Creditor Collect From Me?
There are several ways a judgment creditor can use the information gathered at a debtor examination to collect all or part of the judgment debt. Some common collection methods include garnishing your wages, taking money from your bank account(s), seizing and selling your assets, or recording a lien against real property you own.
Property And Exemptions
A creditor can use any of your income or property to satisfy a debt unless that property or income is exempt. Every state has laws, called exemptions, that protect certain types of property from being taken or sold to collect a debt. There are also federal exemptions that apply under some circumstances. The same property exemptions that apply to bankruptcy cases also apply to other types of cases.
Some kinds of property that are typically exempt include clothes, personal items, household goods, furniture, family pictures, schoolbooks, tools used for work, retirement accounts, and equity in real estate and vehicles, up to a certain amount.
Some types of income are also usually exempt from collection, such as veterans benefits, Social Security income, Social Security disability income (SSDI), unemployment, supplemental security income (SSI), public assistance, child support, alimony, retirement benefits, life insurance payments, and workers’ compensation income.
Creditors can sell assets that aren’t exempt, but these sales are rare. This is because of the time and expense involved in locating, transporting, storing, advertising, and selling the property. Many times, these costs cancel out most or all the money the creditor can get for the sale.
From a creditor’s point of view, wage garnishment is a much easier and more profitable way to collect on a debt than selling assets. The creditor notifies your employer of the judgment debt through a writ of garnishment or similar document. Your employer must then withhold a certain percentage from your paycheck every pay period. That money is sent to the judgment creditor. A wage garnishment ends when either the debt is paid in full or when you no longer work for that employer. You can also stop a garnishment by filing for bankruptcy.
The law limits how much of each paycheck a creditor can garnish. These garnishment limits vary from state to state. Under federal law, the maximum a creditor can take is whichever of these two numbers is less:
25% of your net pay (net pay is your pay after subtracting mandatory deductions like taxes); or
Your weekly net pay minus 30 times the federal minimum hourly wage (since the federal minimum wage is currently $7.25, this would be your weekly net pay minus $217.50).
Put another way, under federal law, if your weekly net pay is:
$290.00 or more, a creditor can garnish up to 25% of your net pay
Between $217.51 and $289.99, a creditor can collect anything you earn over $217.50
$217.50 or less, a creditor can’t garnish your pay
Again, these are federal limits. Your state’s limits may be different.
If you don’t have any assets to collect or sell, you might be considered judgment proof. Creditors typically don’t waste time or money trying to collect judgments against judgment-proof debtors. You’re probably judgment proof if you don’t earn any collectible income and don’t have any equity in any valuable assets or if all of your income or assets are exempt from seizure.
You may be judgment proof at the time of the debtor’s exam, but creditors know this may change. For example, you could inherit money or get a new job in the future. The judgment creditor may try collection efforts again after a while and can keep trying until the judgment expires.
How long a creditor can keep trying to collect a judgment debt depends on your state’s statute of limitations. A judgment is usually valid for a certain number of years, starting from either the date the judgment was entered or the date of the creditor’s last collection attempt. In many states, creditors can renew a judgment after it expires.
A judgment debtor examination is an opportunity for a judgment creditor to gather enough information to proceed with collection efforts. At the examination, the creditor can ask you for information and documents about your income, assets, debts, and expenses.
The judgment creditor can use the information from the judgment debtor exam to collect a judgment debt by garnishing your pay, levying your bank account, or selling your assets. Exemptions limit what property and income a creditor may take, and garnishment restrictions prevent a creditor from taking your entire paycheck. If you’re concerned about an upcoming judgment debtor exam, you may want to seek legal advice before appearing.