10 Mar The Rule 69 Examination – the Most Effective Way to Find Your Judgment Debtor’s Assets

The first step to collecting on a judgment is to determine whether the judgment debtor has assets.  If you are not certain of the judgment debtor’s assets, the most effective way to obtain this information is to have your attorney conduct a Rule 69 examination.

While conducting a Rule 69 examination is more expensive than propounding Rule 69 interrogatories (written questions) on a judgment debtor, the Rule 69 examination provides you with a critical tool not provided by written questions—the ability to follow-up with the judgment-debtor’s answers to your questions.

The Rule 69 Examination Process

A Rule 69 examination is something like a deposition, where you are able to subpoena the judgment debtor and compel him or her to appear for questioning.  Your Rule 69 subpoena can also require the judgment debtor to bring certain documents with him or her to the examination.

The Rule 69 examination itself can be held before the district court, a master, or a referee.  If you believe your judgment debtor is likely to try to avoid service of the Rule 69 subpoena or otherwise will not appear for the Rule 69 examination, the most effective way to handle the Rule 69 examination is to hold it at the court house, in case your judgment debtor is a no-show and you have to seek a contempt order from the judge.

In practice, courts will begin the exam in open court by calling the matter up, swearing the witness, then sending the parties and the court reporter to a conference or jury room so as not to waste the court’s time.  If the court is not busy however the judge may also save you the costs of hiring a court reporter by allowing your attorney to conduct the examination in the courtroom, while the court is not in session.  This is an ideal situation, because it gives you and your attorney the ability to get the court involved immediately to address examination issues.

In addition, the formality and immediacy of conducting the examination in the courtroom can be more conducive to obtaining complete and accurate information from your judgment debtor.

What if the Judgment Debtor is a No Show at the Rule 69 Examination?

When a debtor fails to appear for a Rule 69 examination, your remedies are much more effective than the remedies provided for failure to respond to written questions.  If a judgment debtor refuses or otherwise fails to answer written interrogatories, you and your attorney must file a motion with the court and wait for the court to rule on it.

However if a judgment debtor fails to appear for a Rule 69 examination, the court (upon motion) must issue a bench warrant commanding the sheriff of any county in which the judgment debtor may be found, to arrest and bring the judgment debtor before the court for the examination.  The court can also require the judgment debtor to post bond, which monies can ultimately be applied to the outstanding debt.  It is enough that the judgment debtor did not appear for the examination; you do not have to prove that the debtor is absconding.  This is why your Rule 69 subpoena must include a conspicuous warning to the judgment debtor that states: “Failure to appear will result in issuance of a warrant for your arrest.”

Can the Judgment Debtor Refuse to Answer Certain Questions at the Rule 69 Exam?

The short answer is yes.  The purpose of a Rule 69 examination is to discover what assets may be available to satisfy a judgment. However, Rule 69 does not give you and your attorney carte blanc to ask the judgment debtor questions that might incriminate him.  The scope of discovery under Rule 69 does not extend to the forced disclosure of incriminating evidence that may be admissible in a criminal prosecution.  The Fifth Amendment privilege, however, does not extend to the withholding of any record in the public domain, such as tax returns, automobile titles, recorded deeds, instruments affecting real property, and testimony in other proceedings.

To properly invoke the privilege, the judgment debtor must disclose sufficient information to show a mere possibility of incrimination from disclosure.  The burden to show this possibility is on the judgment debtor and not you as the judgment creditor.

Once the possibility of such incrimination is shown, the privilege may only be overcome by a showing that the judgment debtor is mistaken and there exists no possibility that the evidence will be incriminating.  In this situation documents not in the public domain are protected from disclosure, such as bank and savings and loan passbooks and statements.  However, these records might be obtainable directly from the banking institutions.  The United States Supreme Court has ruled that bank records of individual depositors are the bank’s property, not the depositor’s.

If you and your company are struggling to discover the assets of your judgment debtor, don’t go through the process alone.  Call Edwards Law today to discuss the possibility of serving a Rule 69 subpoena.