Proceedings Supplementary

Occasionally, I will help creditors collect a judgment from debtors who are trying to hide assets. Working for the “dark side” once in a while helps me design better asset protection plans because I can see the collection process from a creditor’s vantage point.

When a debtor has made fraudulent transfers or conversions to evade collection, I find that one of the most effective collection techniques is a “proceedings supplementary” under Florida Statute 56.29. The statute provides that upon the creditor making a motion the court may order the debtor to appear in court and testify under oath before a judge or magistrate. If upon examination it appears that within a year before service of process the debtor transferred money or property to a spouse, friend or relative the debtor must prove at the hearing that the transfer was not made to defraud creditors. Friends or family members who may have received fraudulent conveyances may be called as witnesses. If the court concludes that there has been a fraudulent conveyance the court shall order the sheriff to take possession of the property conveyed. Costs and attorneys fees may be taxed against the debtor.

I have found that debtors who attempt to evade or partially answer questions at a deposition are more honest and straight forward when testifying in court when the judge has the right to order the sheriff to immediately repossess property from the hands of the debtor’s family members or friends who were the recipients of his fraudulent conveyances. In addition to a proceeding supplementary the creditor can file and serve upon the debtor’s fraudulent transferees a fraudulent conveyance complaint naming the recipient family members and friends as defendants. Potential debtors need to understand the weapons at the disposal of skilled and aggressive creditor attorneys.

posted by Jonathan Alper, asset protection and bankruptcy lawyer, Orlando, Florida