SC Ruling Shines Light on What Judgment Creditors Go Through

A South Carolina court’s recent ruling is being hailed as good news for judgment creditors throughout the state. It gives South Carolina creditors more leeway for collecting from deadbeat judgment debtors. But in a much broader sense, the ruling also shines a light on what judgment creditors go through in their attempts to collect what is rightfully owed them.

The case in question involves a creditor who simultaneously initiated execution and supplemental proceedings against an uncooperative debtor. The debtor objected on the grounds that execution must be completed before supplemental proceedings can be initiated. His argument did not convince the court. Rather, the court sided with the creditor.

Details of the Case

If you want to know more about the case, you can read about it in this post from the National Law Review. In short, the details are pretty straightforward. It started with a civil lawsuit filed by First Bank against a customer. First Bank won the case and ultimately sold the subsequent judgment to a financial firm known as Radiance Capital.

Selling judgments is common practice. Judgments are considered assets under the law, and they can be freely bought and sold just like property, securities, etc. That is exactly what First Bank did. They sold the judgment as an asset.

Later, Radiance Capital began its collection efforts. It obtained a writ of execution against the debtor for the purposes of seizing and selling his non-exempt property. Normally, judgment creditors would wait until the local sheriff completes the writ of execution before taking any further steps. But in this case, Radiance Capital simultaneously initiated supplemental proceedings designed to gain access to assets controlled by third parties.

Perhaps the company had reason to suspect the debtor had assets he was hiding. Either way, they uncovered a previously undisclosed bank account with more than $150,000 in it. The bank was served with legal notice and forced to freeze the account and forward its assets to the sheriff.

Debtors Already Have an Advantage

The ruling in South Carolina does not have any direct impact on how collection efforts are initiated in other states. But it could serve as a path forward for similar cases in other jurisdictions. It also could be used as a model for crafting new laws in other states.

What makes the ruling so important is the fact that debtors already have an advantage in their attempts to avoid paying. That advantage is found in the many rules and regulations creditors must follow as they try to collect. In most states, judgment law seems to favor debtors more than creditors.

Had the South Carolina court sided with the debtor, creditors throughout the state would have had their hands further tied by rules that only prevent them from exercising their legal rights to collect.

All the Help They Can Get

Half-way across the country, the Salt Lake City offices of Judgment Collectors have plenty of hurdles to overcome as they seek to collect on behalf of their clients. As a specialist judgment collection agency, the firm needs to follow the rules in every state in which they operate. According to Judgment Collectors team members, they need all the help they can get from the law.

Debtors are known to go to great lengths to avoid paying judgments. They provide false information or don’t respond to inquiries at all. They hide their assets. They move and don’t provide a forwarding address. In South Carolina, debtors now have less of an advantage thanks to the recent ruling. Judgment creditors throughout the state are probably thrilled.