Practice Areas

Creditor Rights, Commercial Collections & Asset Protection

A critical subject common to both litigation and Alternative Dispute Resolution proceedings such as arbitration is the collection of a judgment entered by a court or award made by an arbitration panel. After a judgment or arbitration award is entered, how does the judgment creditor get paid? From the judgment debtor’s perspective, what legal options and strategies are available to thwart judgment collection efforts and compel a creditor to agree to a settlement? The subject of Creditor Rights and Asset Protection planning is the focus of this practice area. Glenn L. Widom is available for consultation as to all such matters.

Creditor Rights & Commercial Collections

After a debtor has defaulted or a judgment been entered against them, and all demands for payment have been ignored, how does a creditor actually collect a judgment or arbitration award in their favor? For almost two decades, the firm has assisted public and private companies, individuals, trustees and receivers, secured and unsecured creditors, and real property owners in collecting monies owed by recalcitrant debtors.

While a debtor is not without legal protections, a vigilant creditor can maximize their ability to collect a judgment or arbitration award by exerting maximum leverage on the debtor to compel payment. There are many legal options, tools, and strategies available to a creditor including the following:

• Break Orders to lawfully enter a home or business and levy upon all non-exempt assets
• Seizure of funds in bank accounts and debts owed by third parties, through writs of garnishment
• Injunctions
• Attachment of Assets
• Unwinding of Fraudulent Transfers, including impleading third-party recipients of such conveyances
• Forensic Tracing of Assets
• Supplemental Proceedings to locate and seize debtor assets
• Appointment of Receivers
• Domestication and enforcement of foreign judgments pursuant to the Uniform Enforcement of Foreign Judgments
• Turn-over Orders
• Discovery in aid of Execution, to identify non-exempt assets subject to seizure
• Piercing of Corporate Veils and theories of Alter Ego to render others liable to pay an outstanding judgment or arbitration award

Asset Protection Planning

Asset Protection Planning, sometimes known as Wealth Management, is the multi-disciplinary approach of using legal protections and strategies to lawfully restrict a debtor’s assets from being available for seizure by a creditor to satisfy an outstanding court judgment or arbitration award. Asset protection is best implemented when there are no creditors on the horizon. In general and subject to some exceptions, the law allows an owner of property to deal with and transfer their own assets as they deem best. Asset protection planning should be used by everyone, but especially as to companies and high net worth individuals with sizeable incomes and liquid assets, to legally shelter their assets from creditor claims should such a claim materialize in the future. In determining whether a prior transfer should be set aside as a fraudulent transfer in response to a later creditor’s claim against transferred asset, courts look for indicia of fraud to prove an intent to hinder, delay, or defraud creditors. Hence, the best time to implement a multi-prong strategy of asset protection planning is before a debtor actually needs it.

If advance planning was unfortunately not done, all is not lost for debtors. Even as to present creditors, Florida law provides useful, pro-debtor exemptions and legal protections for persons to avoid being forced to pay their life savings to a judgment creditor. For example, Florida’s constitutional homestead law is one of the most comprehensive legal protections available nationwide to exempt a debtor’s home from collection.

Any comprehensive asset protection plan should also include protection of the debtor’s rights through litigation. Simply setting up a structure will not be effective if that structure is then not legally defended by litigation counsel familiar not just with litigation in general but the particulars of Florida law pertaining to the rights and remedies of both debtors and creditors.

A debtor, however, is not without options to protect a life savings or their family’s wealth. Florida law does not require that a debtor, or a potential debtor, neatly wrap up their assets in a gift box and leave them by the front door for a creditor to take. Florida law also does not require a present or potential future debtor to freeze their asset picture while awaiting the final outcome of a dispute with a creditor. The goal of asset protection planning is to allow a debtor to carry on with their affairs, including management and preservation of their own finances, without being involuntarily compelled to pay over essentially all of their assets to a creditor. There are legal options available to debtors that provide multiple layers of protection of assets beyond the reach of creditors.