SO YOU HAVE AN ILLINOIS JUDGMENT DEBTOR; WHAT DO YOU DO NOW?

Simon PLC Attorneys & Counselors – November 2021 Memorandum

SO YOU HAVE AN ILLINOIS JUDGMENT DEBTOR; WHAT DO YOU DO NOW?

Bloomfield Hills, Michigan – Contrary to the belief of many, most defendants do not automatically pay judgments upon their entry. Plaintiffs, or judgment creditors, must actively seek collection on their judgments and in many cases engage in further litigation in order to obtain satisfaction. To the great surprise of many judgment creditors, Illinois can actually be quite creditor friendly- if one knows what they are doing. The Illinois’ legislature and Supreme Court have enacted numerous statutes and court rules to assist with the locating, collecting and liquidating of a judgment debtor’s assets.

When seeking to collect against an Illinois debtor, two inquiries must be made at the onset: (1) is it an Illinois Judgment; and (2) when was the judgment entered? Illinois, like many (if not all) states, has adopted the Uniform Enforcement of Foreign Judgments Act. This act has been codified in Illinois as 735 ILCS 5/12-650. If it turns out you are enforcing an out of state judgment against an Illinois debtor, following this statute by filing the judgment and affidavit in any Illinois county has the effect of turning it into a  circuit court judgment (of that county), which may be enforced or satisfied in a like manner.

If the judgment did originate in Illinois (or is a properly registered foreign judgment) the next task is determining how old the judgment is. Illinois judgments are only valid for a period of seven (7) years (735 ILCS 5/12-104). A judgment may, however, be revived by filing a petition to revive the judgment in the seventh year after its entry, or in the seventh year after its last revival, or at any time within 20 years after its entry (735 ILCS 5/2-1602). Seven (7) years after the final extension, the judgment becomes extinct and is no longer enforceable. Forgetting to revive a judgment before expiration is not fatal to the judgment, but it will affect the judgment’s priority and during the period in which the judgment is dormant, you cannot seek to collect.  For purposes of a registered foreign judgment, the clock for revival begins when the foreign judgment is filed in Illinois.

Assuming you recently took your case to judgment, the next question shouldn’t focus on whether your judgment is dormant or extinct, but whether it is ripe. The general rule in Illinois is that a final judgment can be enforced immediately. With that being said, Illinois affords litigants thirty (30) days to either file a post judgment motion, or an appeal. The filing of a timely post judgment motion stays enforcement of that judgment (735 ILCS 5/2-1202(d) for a jury cases or 735 ILCS 5/2-1203(b) for a bench trial). The filing of an appeal, however, does not automatically stay collection activities unless the appeal is timely filed and an appeal bond is presented and approved by the court within the time for filing the notice of appeal (Supreme Court Rule 305). If the debtor does not obtain a bond, he/she does not get the benefit of a stay and the judgment is ripe for collection.

Once it’s determined your judgment is ripe, you can begin collection activities. While collection law in Illinois can get very complex and detailed, the vast majority of judgments can be satisfied through either a wage garnishment or a citation to discover assets.

The law articulating the wage garnishment process begins with 735 ILCS 5/12-801. If you know your judgment debtor is employed, this is probably the best method to collect a judgment. The wage garnishment begins with the preparation and sending of the Notice to the Debtor. Once that is completed, the wage deduction affidavit and summons can be completed, filed with the court, and served upon the judgment debtor’s employer. Once received, the employer must complete the wage deduction interrogatories and file them with the court (often times we find they simply return them to the creditor’s attorney- but the attorney can file them for the respondent/ employer). From there, what is deducted and turned over is statutory and the court has zero discretion. Creditors recover 15% of all non-exempt wages, until the employee either quits or the judgment is satisfied. The court cannot award more or less. Only one wage garnishment can be executed at a time. If you are a dealing with a judgment debtor who has numerous creditors, the “race to the courthouse” is very much a real thing. The first creditor to serve the wage deduction paperwork and have the garnishment order entered, is the first and (at least temporarily) only creditor to be paid. This is another example of why it is important to not allow your judgment to go dormant after 7 years. If in the process of collecting though a wage garnishment, it could have the effect of canceling the deductions and bumping your judgment to the back of the line.

Additionally, the employer is compelled to answer the wage deduction interrogatories, or they risk having the employee’s problems become their own problems. Failure to timely respond can lead to a conditional judgment being entered against the employer which then, at a later court hearing, can be confirmed if the employer still does not respond. The confirmation of a conditional judgment means a judgment gets entered against the employer and now you can begin collection against the employing company.

The next authority to turn to when collecting a judgment is 735 ILCS 5/2-1402 and its companion Supreme Court Rule 277, both of which are aptly titled “Supplementary Proceedings.” These sections govern citations to discover assets. Citations to discover Assets are an amazingly powerful tool for discovering and liquidating assets in Illinois. The powers of the citation at times appears limitless. A citation to discover assets properly served upon a judgment debtor allows a creditor the right to interrogate the debtor as to any assets or accounts he or she may possess. It allows one to inquire as to the debtor’s employment status, who may owe the debtor money and what real property the debtor may own. Furthermore, it allows for one to demand the turnover of documentation to verify these responses (or simply to dig further). Documents commonly requested in a citation proceeding include tax returns, investment statements, bank account statements, pay stubs, etc. Failure to respond to a citation to discover assets can lead to what is called a Rule to Show Cause, which is an order directing the respondent to appear before the court and explain why they should not be jailed for failure to come to appear for the initial citation. Failure to appear at the Rule to Show Cause hearing often times leads to a body attachment order being entered, directing the Sheriff to go to the debtor and physically arrest him/her and bring them to court. Just about any asset found in the debtor’s possession (that is not exempt) can be ordered by the court to be auctioned off in a citation proceeding. The citation proceeding can cut through a lot of hassle and save a lot of time if properly used.

To the extent assets are discovered in the possession of a third-party (such as bank accounts, etc.), a different citation proceeding simply titled a Third-Party Citation to Discover Assets can be used to obtain a lien on the times and ultimately get a court order directing the third-party to turn the asset over to the creditor’s attorney for auction. Similar to a wage garnishment, a third-party is inclined to comply, as failure to do so can result in a judgment (in the same amount) being entered against them individually.

Collection Law in Illinois is far too complex and potential situations are far too numerous to fully discuss in one article. Illinois has many other statutes and court rules that afford the creditor the ability to collect countless asset depending on the situation and the type of asset. Whether it be the domesticating and collecting of a foreign judgment against an Illinois Debtor, or an original action brought in Illinois, Simon PLC Attorneys and Counselors has the legal expertise to assist you with your Illinois collection matters.

N.B. Not Legal Advice: Please contact us if you would like to discuss the facts and circumstances of your specific matter. Simon PLC Attorneys & Counselors expressly disclaims all liability in respect to actions taken or not taken based on any or all the contents of this memorandum. The information contained herein may not reflect current legal developments and is provided without any knowledge as to the recipient’s location, industry, identity or specific circumstances. No recipients of this content, clients or otherwise, should act, or refrain from acting, on the basis of any content included in this memorandum without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue from an attorney licensed in the jurisdiction for which the recipient’s legal issue(s) involve. The application and impact of relevant laws varies from jurisdiction to jurisdiction, and our attorneys do not seek to practice law in states, territories, and foreign countries where they are not properly authorized to do so.

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