BEWARE OF DEBTOR INTERROGATORIES, YOUR JAIL TICKET

Your jail ticket.  That's right.  It is not a meal  ticket.  In the debt collection process, the debtors can be jailed for failing to attend state court collection proceedings.  Sometimes it is, emotionally speaking, very difficult for debtors to actively open the mails and learn about their financial circumstances.  Creditors often make threats or sound threatening; over time such threats become psychologically crushing, and our capacity to deny and avoid kicks in.  Creditors cannot threathen criminal action.  This is, not only a violation of the federal Fair Debt Collections Practices Act, but in Virginia it amounts to extortion under Sec. 18.2-59 of the Virginia Code.  So if a creditor threatens you, tell them to back off.

On the other hand, there is one limited instance in which creditors may have debtors jailed.  If a debtor is served with court papers, she ignores the service of such documents at her peril.  First, a creditor may seek judgment against the debtor for a debt owing.  If th debtor had contacted the creditor's attorney and admitted the debt, he may avoid attorneys' fees. Or sometimes a creditor will exaggerate its claim for prinicipal, interest or late fees; the debtor's active review coupled with his minimum level of participation at court may limit the amount of any judgment rendered against him.  Second, once a judgment is taken, the creditor may begin enforcement of the judgment.  In legal parlance, this is known as "execution" of the judgment.  An execution can result in a levy by the sheriff on the debtor's personal belongings and automobiles.  It can result in a garnishment of wages or bank accounts.   As part of the execution process, the judgment creditor may also bring a debtor interrogatory (Virginia) or proceeding in aid of execution of judgment (Maryland).  Debtors ARE FORWARNED the debtor interrogatory is the most effective weapon in the creditor's arsenal.  The debtor can go to jail as a result of such a proceeding.

The Debtor Interrogatory is a proceeding actually started by Queen Elizabeth I of England as a part of the "Star Chamber."   That should tell you something.  If the debtor fails to appear at the proceeding, the court in which the proceeding is pending may issue a bench warrant for his/her arrest.  If the debtor appears, but fails to bring documents requested or to answer questions about his estate, the court may give the debtor a free night's stay at the county hotel.  The court can also compel the debtor to sign over property to the sheriff.  If the debtor fails to comply, you guessed it, the bailiff (the Court's bodyguard) will escort the debtor to the jail.  Also the debtor can be compelled to assign over her interest in bank accounts, patents, accounts receivable and a host of personal property (tangible or intangible).  The creditor can also compel the debtor to grant the sheriff a deed to real property located outside of the Commonwealth of Virginia.  The debtor interrogatory is a very powerful weapon.  Thank goodness most creditors fail to utilize the proceeding to its fullest extent.

Basically, we advise clients, especially if they are anxious by nature, to contact our bankruptcy department and to file bankruptcy petitions before judgments are entered against them. That way the debtors avoid those nasty state court judgment execution proceedings.

Martin Conway

This blog is not intended to render legal services to the reader, including advice about bankruptcy or taxes. Consult with a lawyer concerning the specific application of the law to your unique circumstance.