REACH AND APPLY INJUNCTIONS AND REAL ESTATE ATTACHMENTS
FRAMINGHAM Business has been very good and you have not had the time to closely monitor accounts receivable. Upon review, you notice a five-year-old debt in the amount of $20,000.00, which you think is uncollectable. Don't give up. Company X didn't. They called Attorney Alan M. Cohen at 508 620-6900.
Within two business days after being retained, I filed suit and appropriately obtained an ex parte attachment. The first bank attachment caught a large sum of money. Upon further research, my client and I found a second bank to attach. I again went to court and obtained a second ex parte bank attachment. That caught even more money. Within thirty days, through aggressive legal tactics and negotiations, I obtained a satisfactory recovery of almost $20,000.00, which was more than the monies attached.
FRAMINGHAM Sometimes a customer just "disappears" owing you money.
Company Y had this very problem. Collection "efforts" had reached a dead end. The collection agency called me. I found that although the deadbeat owned no real estate, he was an officer in a corporation. I sued to reach and apply the deadbeat's interest in the corporation. I obtained a Temporary Injunction preventing the corporation from paying any money to the deadbeat until my client was paid. The debtor came to the table. Within sixty days, my client was paid. Others gave up.
Now this does not always happen. but it could happen for you. Armed with solid paperwork, an aggressive competent collection attorney who knows how to collect debts is a valuable ally in the battle for control of your money.
CONTROL YOUR MONEY
Injunctions
Injunctions are used in reach and apply actions. In essence, the injunction requires a third party who owes your debtor money, to pay you directly, thereby cutting the debtor out of the loop. However, obtaining an injunction is not easy. A court may require that you prove that you have no other ability to receive payment from the debtor.
The story of Dr. Deadbeat demonstrates the usefulness of reach and apply injunctions:
FRAMINGHAM A doctor hires a lawyer to help him buy a high tech company. Although promising to pay the attorney's bill, the doctor makes only sporadic payments. Before long, the good doctor became Dr. Deadbeat to the tune of $80,000.00.
The Attorney hired me to collect his money. I immediately sued. The District Court allowed my ~ parte motion to attach Dr. Deadbeat's bank account and real estate. Although the bank attachment only caught a few hundred dollars, I attached Dr. Deadbeat's house that he owned with his wife as tenants by the entirety. Because of the tenancy by the entirety, I could attach, but could not sell the property.
One day after Dr. Deadbeat failed to file his answer within the time provided by court rules, I filed for a default and default judgment.
Knowing that I could not sell Dr. Deadbeat's house, I filed a Complaint on the judgment in the Superior Court. I sought and obtained an injunction preventing Dr. Deadbeat from receiving any money from his practice. The Court ordered him to pay all monies that he received from any source directly into escrow.
Dr. Deadbeat now worked for the sole benefit of my client. Two months went by without receiving any of the court ordered payments. I scheduled the deposition of the person most knowledgeable about Dr. Deadbeat's practice - -his former secretary. She told me that Dr. Deadbeat had been putting monies that he received from his practice directly into his wife's account, violating the Court's order. The bank's records confirmed that he had put almost $15,000.00 into his wife's account.
Dr. Deadbeat filed for bankruptcy in a last ditch attempt to stiff my client. My tactics worked. Due to a little known provision of the then existing Bankruptcy Code, the Bankruptcy Trustee could sell Dr. and Mrs. Deadbeat's home and apply Dr. Deadbeat's share to pay his creditors.
Trapped, Dr. Deadbeat's lawyer offered $10,000.00 now and another $10,000.00 paid over five years. We rejected the offer. Because of my aggressive negotiations, Dr. Deadbeat finally agreed to cough up almost $70,000.00 within sixty days, proving the old adage you can run but you can't hide!
In the world of debt collection litigation, the essence of the battle is control. At some point, some debtors either fail or neglect to pay. Some do not pay because they are using you for debtor financing, (using your money to buy other supplies and services from your competition).
Others do not pay because they have no money. Fortunately, several statutes and court rules exist to help you collect from the Can Not Pays ("CANOPS") and the Will Not Pays ("WILLNOPS") of this world.
In your battle to regain control from your CANOPS and WILLNOPS, several weapons exist in your legal arsenal. These include, but are not limited to, bank attachments, real estate attachments, personal property attachments, keeper attachments, and injunctions.
Real Estate Attachments
There are two ways that you can obtain any attachment: (1) with notice to the defendant, and (2) without notice to the defendant ("ex parte").
Generally courts are reluctant to issue ex parte attachments on real estate because fraudulent transfers of real estate are traceable and real estate is generally hard to sell.
However, a court may issue a real estate attachment if a sale is pending or a clear danger exists that if the defendant is notified in advance of the attachment, it will convey or conceal the asset. A court mayalso allow an attachment if an immediate danger exists that the defendant will damage or destroy the property.
As with all matters of discretion, different judges interpret the attachment standard differently. Some judges will not issue an ex parte attachment under any circumstances. Others will properly issue an ex parte attachment upon a demonstration that the debtor cannot be trusted not to take any action if notified in advance of an attachment motion.
However, attaching the debtor's real estate, does not automatically entitle you to sell the property. Rather, it is merely a form of gaining security - an amount of the debtor's equity in his/her or its property is set aside to pay you after you have won the battle.
One of your fellow readers called me upon receiving an earlier edition of the newsletter. Their call, followed by my obtaining a bank and real estate attachment led to $30,000 within forty-five days!