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An Idea to Limit Body Attachments

posted by Bob Lawless

As many Credit Slips readers will know, so-called "body attachments" allow a creditor to haul a judgment debtor into state court if the debtor fails to respond to court summonses to answer questions about the debtor's financial affairs. It is a highly coercive tactic and was originally intended as a last resort against a recalcitrant debtor. Today, it is an overused tactic that intimidates debtors who often understand only that they have been arrested because they have an unpaid debt.

An AP article ran yesterday around Illinois about abuses in this state. The story recounts how a teaching assistant paid $600 after being arrested over a hospital bill she had been told was issued in error. Two weeks ago, I blogged about widespread errors and problems in the debt collection industry, so it is not difficult to imagine the story recounted in the article is an isolated one. Coercing ill-informed and poorly resourced debtors into paying debts they may not even owe is outrageous. Even readers who may not be particularly sympathetic to the plight of these debtors should question the use of taxpayer financed courts and law-enforcement systems to engage in expensive collection practices on small debts for the benefit of private creditors. These practices are not just a problem in Illinois but across the country.

At least in Illinois, some help may be on the way. A bill is moving through the Illinois legislature, with the support of Attorney General Lisa Madigan, to put some common-sense limits on the use of body attachments. The bill would require personal service, instead of mail service, of a summons before an arrest could occur, a very worthwhile idea in an industry where record-keeping problems seem rampant. The bill also would return any bail to the debtor (in most cases) instead of the creditor. Although the bill has cleared the Illinois House, the latest report says the bill has been postponed before the Senate Judiciary Committee. I hope that action has not dimmed its prospects for passage.

One of the things that annoys me in this story is the corruption of a useful tool for against extremely recalcitrant debtors. When I was in private practice, I remember trying to enforce a judgment in a commercial case against a debtor who had lied about his assets in entering into the transaction that was the subject of the case. The assets he did have were concealed around the country. He answered our interrogatories about his assets because, after a lengthy court proceeding, he finally had no other choice. WIthout the coercive power of the state and the courts, I don't think we would have been able to get any information out of him and collect the small amount of money we did get for our client.

The root of the current problem stems from the fact that the costs are borne primarily by taxpayers and the benefits fall upon private creditors. The system won't really work until these incentives are more aligned. Right now, it makes financial sense for creditors to ask a court and a sheriff to arrest a debtor over a $200 unpaid bill in a consumer transaction. A rule requiring a creditor to pay a substantial fee (maybe $1,000?) before a body attachment could occur might help a lot. And, it would be important that the creditor could not pass along the fee to the debtor as a cost of collection. Such a fee would help ensure that body attachments were again only a measure of last resort, reserved for cases with only the most recalcitrant debtors ignoring court orders and with debts in an amount that justify the expense.

Comments

Requiring personal service of the summons to answer questions about the debtor's financial affairs seems reasonable; but, once you have personal service, why shouldn't the debtor have to reimburse the creditor for the "substantial"attachment fee you propose?

What the Dickens, let's just go back to debtor's prisons. The traditional gruel and unusual punishment.

In my experience in California courts, judges (and particularly commissioners) who are tasked primarily with post judgment remedies treat warrants/body attachments with appropriate restraint and respect as a last resort. Judges who have little experience with post-judgement collection issues seem more inclined to issue warrants and start contempt proceedings.

I do not know much about states like Ill, but requiring a huge deposit doesn't seem to me to be the answer. Instead, the answer lies in adjusting the attitudes of the judiciary to ensure that body attachments are not issued willy nilly and only used as a last resort.

Also Cal does require personal service of the Order for Examination which we be at the start of the whole process. If other states are not requiring that, how do they justify personal jurisdiction to order the debtor to do anything (since the jurisdiction arising from the underlying case ended with the judgment)?

The practice is very perplexing. Although there are clear prohibitions against imprisonment for debt default, debtors--if only because they perceive it as the path of least resistance--may agree to forfeit exempt assets. In my work, I liken some uses of body attachments to "nuisance value" lawsuits. While the creditor's underlying claim is hopefully most often not meritless, the creditor's legal entitlement to the assets that the debtor may feel pressure to forfeit may be less clear.

I think that part of the reason it is confusing is that articles like the AP article linked in the main post frame the issue as a simple matter of debt collection, suggesting that people are being arrested for just not paying their debts as the creditor wants them to. But that is not the whole story.

These are judgment debtors, not just contractual debtors who may be liable. The creditors claim has been reduced to an enforceable judgment (and so by definition cannot be called meritless or wrongful.)

And, more importantly, they are not being arrested for failing to pay their debts but for failing to obey court orders (although the example of the court order that establishes a payment plan is foreign to me and not easy to reconcile). As I recently told one judge in response to a judgment debtor's assertion that she had no money to pay a 6 figure judgment: "to comply with the court's prior order, [the debtor] just needed to answer my questions under oath -- if she had truthfully testified she had no money, we would have been done -- instead, she refused to answer those questions and thus violated the court's order, which means the court can properly institute contempt proceedings to make her comply with the court's order." And by the way, the court in that case gave the debtor every opportunity for almost a year before finally instituting contempt proceedings and it is still unresolved more than a year later.

Also, the fact that the debtor may not assert applicable exemptions is really an issue of education and the lack of affordable legal advice to debtors in these situations. But that is true in nearly all legal areas that affect individuals.

One more thing: Perhaps a better solution to the perceived problem would be to restrict attachments to higher dollar judgments (instead of the suggestion to impose a large fee). But I still maintain that proper judicial discretion is the best fix; a front line judge should know when a debtor is being sufficiently recalcitrant to justify an extraordinary order.

By the by, Wisconsin prohibits body attachment in consumer debt cases, a broad statutorily defined category; section 425.113. There is negligible case law, and my general impression is that the prohibition is sometimes overlooked by both creditor's counsel and judges. Debtors, of course, are rarely represented.

Here's the post-judgment discovery procedure in Missouri:
1. Either apply for debtor's examination or do a notice of deposition and document production, debtor's examination requires personal service by the sheriff, deposition and document production served by mail;
2. Defendant appears in either scenario, no problem;
3. Defendant fails to appear for debtor's examination, immediate writ of body attachment.
4. Defendant fails to appear for deposition and/or fails to produce documents, motion for order to show cause filed and order to show cause with court date to show cause issued and personally served by the sheriff;
5. Defendant fails to appear at show cause hearing, writ of body attachment issued.

What, exactly, is wrong with these procedures other than they require the defendant to comply with civil procedure rules and court orders? If we are going to quit enforcing rules and orders, I thank God I am old enough to retire from the practice of law. I think that the "problems" being complained about are being hyped by sensationalist journalists unless the state in question doesn't require the due process protections followed by Missouri, which I suspect is not generally the case.

I judge for several small claims courts here in Utah, and I note that 1) we're pretty careful about issuing bench warrants, and 2) my clerks do not want to administer a creditor's bond program.

On the second point, there simply isn't bandwidth. The clerks have enough mandates without slapping a comprehensive bonding program on them.

On the first point, we don't hand these out like candy. All that would do is swamp the law enforcement database and create real trouble. For a BW to issue, the following have already happened: judgment, failure to appear at supp proceedings, failure to appear at an initial show cause proceeding, and failure to appear at a final show cause proceeding. And there has to be evidence of service beyond, "We mailed it to them, and it didn't come back." It isn't an automatic process, and it isn't cheap for creditors.

I think the real problem is with the main trial courts handing out the initial judgments without the proper documentation in evidence. Last year I listened to a district court judge lecturing about the collection cases that were coming before, and he remarked that all he needed from the creditor were the account statements. This showed me a basic misunderstanding of contract law that left me wondering where he'd spent his first year in law school. I consider it a generally good idea to have some evidence of the original agreement if for no other reason than to make sure we have the right defendant. And, yes, the evidence is available. I recently had a credit card defendant demanding to see the original credit agreement. Capital One showed up with screen caps of her original click-through application and agreement.

Proper evidence for every phase is available. There isn't really an excuse for short cuts.

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