QUESTION

How do we collect on a judgment against a business?

SHORT ANSWER
Once a judgment has been entered, Illinois statute allows a creditor to us a Citation to Discover Assets to obtain information about the debtor's assets.
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Illinois statute provides several procedural tools for collecting judgments. With regard to a judgment against a business, the primary tool is a “Citation to Discover Assets.” Serving such a Citation allows a judgment creditor to both obtain information about the debtors’ assets, as well as freeze any funds that might be held in the debtor’s name. Citations can be served upon the debtor itself, as well as any financial institutions, customers or other third parties who might hold the debtor’s assets.

With business debtors, collections can be challenging. Many debtors (especially those who are not paying judgments they owe) do not have liquid assets such as cash sitting in a bank account. That is not to say, however, that they do not have assets. For example, they may own intellectual property, inventory, or revenue streams that can be attached. If the debtor is trying to remain in business, the threat of being shut down (by, for example, having incoming receipts transferred to the judgment creditor) may compel them to offer a payment plan.

Often, a debtor’s assets have mysteriously disappeared. In such instances, and judgment debtor might use legal proceedings to determine if those assets were wrongfully transferred to the debtor’s owners. If so, they can then pursue those owners under alter ego or fraudulent transfer claims.

Finally, it is important to make sure that the debtor has not filed for bankruptcy protection before instituting collection proceedings. If they have done so, then serving a Citation to Discover Assets would violate federal law.