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If your business has a court judgment but still hasn’t received payment, a debtor’s exam could be the key to uncovering assets and collecting what you’re owed. Here’s how this legal tool assists businesses in enforcing judgments in commercial debt cases.
What Is a Judgment Debtor’s Exam, and Why Should You Care?
Securing a judgment against a client or vendor who failed to pay is just the initial step. The ultimate goal is to actually receive payment.
A debtor’s exam is a legal process that allows businesses like yours to discover where a debtor’s money or assets are—enabling you to collect what the court confirms you’re owed.
It’s particularly helpful when a debtor has remained silent, claims they “can’t pay,” or you suspect they’re concealing funds.
When Does It Make Sense to Use a Debtor’s Exam?
Not every unpaid invoice requires this level of effort. However, if you’ve already gone to court and won—and the debtor still hasn’t paid—this tool can be a game changer.
Here are a few signs a debtor’s exam might help:
- You have secured a judgment, but no payments are being received.
- The debtor is unresponsive to calls, emails, or letters.
- You suspect that the debtor might have concealed assets (e.g., bank accounts, business holdings, real estate).
- You suspect that the debtor has moved money to avoid payment.
- You are dealing with a business that claims to have shut down, yet you believe it is still operating under a different name.
How It Works: The Process in Plain English
Here’s what occurs when your commercial collection attorney starts a debtor’s exam:
- Notice is sent to the debtor. This legally requires them to appear and answer questions under oath.
- The debtor is questioned. Your attorney will inquire about their finances, income, property, bank accounts, and business dealings.
- They must provide documents, which can include tax returns, account records, and anything else that assists in locating assets.
- Information is utilized to enforce the judgment. Once you determine where the money is located, you can take action to recover it—through a bank levy, property lien, or other enforcement measures.
If the debtor disregards the notice or fails to appear, they may face contempt of court penalties, which could include potential arrest.
What Can You Learn from a Debtor’s Exam?
A great deal. That’s why it’s such a powerful tool.
Your attorney may uncover:
- Business or personal bank accounts
- Ownership in other companies
- Rental income or receivables
- Real estate holdings
- Transfers of money or property to family or associates
- Vehicles or equipment with resale value
This information enables your attorney to proceed—whether it involves freezing an account, garnishing income, or pursuing transferred assets.
Why Debtors Often Settle After the Exam Is Scheduled
Here’s something we’ve seen repeatedly: just scheduling a debtor’s exam is often enough to motivate the debtor to pay—or at least come to the table.
Why? Because they understand they can’t evade issues indefinitely. They’ll be under oath. They’ll have to respond to tough questions. And they could face serious consequences if they don’t comply.
Many businesses would rather settle than go through that experience.
Why You Need an Experienced Commercial Collection Attorney
Not all attorneys are equipped to navigate the debtor’s exam process. This is where commercial debt collection attorneys—like the team at Rosenthal & Goldhaber—can make a difference.
We know which questions to ask, what documents to request, and how to use what we learn to recover assets. Additionally, we know how to respond when a debtor attempts to evade the process or provides incomplete answers.
You’ve already accomplished the hard part—winning in court. We assist you in transforming that judgment into payment.
Real-World Example: A Business Gets Paid After Months of Delay
A manufacturing company approached us with a judgment they had won six months earlier. Their former distributor owed them a significant amount of money but had ceased returning calls.
We scheduled a debtor’s exam.
Once the distributor received the subpoena, their attorney contacted us. Within a few weeks, we had a payment plan set up. No exam needed.
The client had spent months pursuing the money independently. One letter from us, supported by legal action, made all the difference.
The Bottom Line for Business Owners
If you’ve already secured a judgment, you’re legally entitled to payment. However, debtors don’t always cooperate easily.
A debtor’s exam helps tilt the scales in your favor. It provides an opportunity to discover the whereabouts of assets and take action to collect them.
Rosenthal & Goldhaber helps businesses across New York enforce judgments and recover commercial debts. We know how to handle evasive debtors—and we don’t back down.
Don’t let a judgment linger. Contact us for a free consultation and discover how we can help you receive payment.
Frequently Asked Questions About Debtor’s Exams
Yes. A licensed attorney must obtain the court’s approval and issue the necessary subpoenas. A commercial debt collection attorney will ensure the process is conducted properly and efficiently.
If the debtor fails to appear, your attorney can request the court to hold them in contempt. This could result in fines or even a warrant for their arrest.
Even if that’s the case, the exam creates a record—and it can sometimes reveal future income or improper transfers. Moreover, if the debtor lies under oath, that opens the door to further legal action.
It depends on how cooperative the debtor is. Some cases are resolved quickly, while others take more time. However, a debtor’s exam often jumpstarts stalled judgment enforcement efforts.