Articles Posted in Bankruptcy & Creditor Rights


By Stephen J. Muhonen, Creditor’s Rights / Collections Attorney, Racine Olson, PLLP

I have been practicing law for almost 17 years.  Throughout this time I cannot tell you how many times I have been contacted by creditors/judgment holders, asking to retain me so as to have their debtor sat down and grilled as to what assets they have and where are the assets at.  Though I understand the creditor’s desire to have its debt satisfied and be made whole, unfortunately, or perhaps, fortunately, there is a process in place that must be followed in order to give force and effect to the collection process.

By Stephen J. Muhonen, Creditor’s Rights / Collections Attorney, Racine Olson, PLLP

I had an interesting collections issue arise the other day that is worth discussing.  A self-represented judgment creditor was attempting to garnish a judgment debtor’s wages.  The judgment creditor had repeatedly served a Writ of Continuing Garnishment on the judgment debtor’s employer, just to have the writ returned each time, unsatisfied.  The judgment creditor was naturally frustrated because they had expended a considerable amount of emotional energy, time, effort and expense in the repeated attempts to collect upon the judgment; all for naught.

As I listened and the related facts unfolded, the reason as to why the Writ of Continuing Garnishment was not being accepted became apparent.  There were two problems.  One (1), the judgment debtor was not an employee, but rather, an independent contractor.  Two (2), because the judgment debtor was an independent contractor, a Writ of Continuous Garnishment was the improper mechanism to garnish the amounts due to the independent contractor, from the independent contractor’s creditor.

By Stephen J. Muhonen, Creditor’s Rights / Collections Attorney, Racine Olson, PLLP

One of the first things I discuss with new clients whom are seeking legal representation to collect money from their debtors is whether the debtor has any assets that can be collected upon.  In my opinion, an attorney taking on a new client in this circumstance, without initially exploring collection opportunities or options, is performing a great dis-service to the client.  The client came to the attorney in the hopes of being paid that for which they are entitled.  If all that is obtained is a “toilet-paper” judgment, then what has the client gained?  Now of course I realize and recognize that sometimes the collectability of a pursued judgment cannot always be readily discovered, but there should at least be some attempt to see if collection is even going to be a possibility.

When performing the due diligence of exploring debtor’s assets, the investigation should take place with an eye on what assets may be subject to exemptions.  Now just because there are or may be statutory exemptions in place pertaining to the debtor’s property, that does not necessarily mean that one should avoid pursuing the debtor’s property.  It is up to the debtor to assert the claim of exemption and to do it timely.  If this is not done, the creditor may continue to execute/levy/garnish the property.  Some of the exemptions available to debtors are:

By Stephen J. Muhonen, Creditor’s Rights / Collections Attorney, Racine Olson, PLLP

One of the most important priorities for a creditor or lender when entering into a contract with a borrower or debtor is ensuring they have a perfected security interest in the property that is being purchased.  The purpose of the security interest is to provide notice to the world of the encumbrance and to allow for recovery of the collateral in the event of default.  For real property (homes, land, etc.), this means recording with the county recorder’s office a mortgage or deed of trust.  See generally Idaho Code §55-811.  For motor vehicles this means providing notice of the creditor’s lien by having his/her/its name placed on the title.  See Idaho Code §49-510.  For the perfection of a security interest in goods, the creditor can file a Uniform Commercial Code (UCC) finance statement per Idaho Code §28-12-501 et. cet.

When it comes to repossession of collateral, as a creditor it is important to keep in mind the terms in the contract.  Following and abiding by the express terms of a contract, especially as they relate to notice, default and repossession rights, is critical to enforcement of the contract.  Idaho courts are generally inclined to enforce the terms of a contract that is knowingly and voluntarily entered into, even if such enforcement does not seem fair.

By Stephen J. Muhonen, Creditor’s Rights / Collections Attorney, Racine Olson, PLLP

As a judgment holder, it goes without saying that attempting to collect upon that judgment can be terribly frustrating, cumbersome, and unfruitful.  Said otherwise, sometimes the process is just an emotional and physical drain.  You invested so much time, effort and energy to get your judgment, just to find out that the judgment debtor won’t voluntarily pay as owed.  Then, to add insult to injury, you find out his/her/its assets are located in another state.  So now what?

Fortunately, Idaho has in place a statutory mechanism that allows foreign judgments to be domesticated, enforced and collected upon in Idaho.  For purposes of this discussion, “foreign judgment” is “any judgment, decree or order of a court of the United States or of any other court or an order of an administrative body of any state regarding the support of a child, spouse, or former spouse or the establishment of paternity which is entitled to full faith and credit in this state.”  See Idaho Code §10-1301.  Idaho also has the Uniform Foreign Country Money Judgments Recognition Act and the Uniform Foreign-Money Claims Act, neither of which are discussed herein.

By Stephen J. Muhonen, Creditor’s Rights / Collections Attorney, Racine Olson, PLLP

Have you ever been the victim of a crime?  Ughhh!  It can be so frustrating!  First there is the event itself that caused your property to be either stolen, injured or damaged.  This is where one is first “victimized” by the bad guy or at-fault party.  Next, the person is charged with a crime and then, generally, after a few months, maybe even much longer, the case is adjudicated and the judge orders the prosecuting attorney to submit any claim(s) for restitution.  As the victim you collect receipts, get bids, obtain estimates, obtain other proof of loss and provide them to the prosecuting attorney.  The prosecutor then submits your damages to the court, which the defendant can then contest as to the amount due and owing.  Once the dust settles on the dispute (if any) as to how much is owed by the defendant to the victim, the court then enters its Order of Restitution or Judgment.  It is at this time where the victim of the crime can often feel victimized again.

Sometimes the defendant abides by the judgment or order imposed against him/her and pay as obligated.  Sometimes they pay it in one lump sum.  Sometimes they make the payments a little bit at a time over a certain period of probation; and sometimes they don’t pay it at all.  So you contact the prosecuting attorney who can then provide notice to the court that the defendant is not paying as ordered and ask the judge to find that the defendant is in violation of the terms and conditions of his/her probation.  Unfortunately, the most a judge can do is hold the defendant in contempt or in violation of probation and have him/her incarcerated.  Hopefully this gets the defendant’s attention, but it does not put money in your pocket.  So, what are your alternatives?

By Stephen J. Muhonen, Creditor’s Rights / Collections Attorney, Racine Olson, PLLP

Congratulations!  You won your court case and now have a money judgment entered in your favor.  All of that time, effort, emotional energy, attorney fees and costs incurred, and just the drain of the process has finally funneled to a conclusion where a court has concluded you are entitled to money from the adverse party.  It’s a great day! Or is it?  You or your attorney have approached the liable party for payment, but they won’t pay.  All of that time, effort, money and energy spent for what?  How are you going to get them to pay up?

Judgment Creditors in Idaho have multiple resources to draw upon in attempt to satisfy their judgment when insurance resources are not available.  Those options include:

By Joseph G. Ballstaedt

When deciding whether to sue a person or entity, you must be aware that the person or entity may not be able to pay a judgment awarded by a court or may be able to avoid paying the judgment, even if it has the means to pay. A resounding victory in court is utterly worthless if the opposing party is “judgment proof” because it has no assets, little equity in a home or other real property, minimal personal property, no job or source of income, etc. Similarly, even if a party has enough assets to satisfy the judgment, it can hide the assets. Also, a party can file for bankruptcy and be discharged from many of its debts, including most types of civil judgments, leaving a party to fight in bankruptcy proceedings for recovery. Many parties use the threat of bankruptcy as leverage to attain a favorable settlement agreement outside of court.

However, although parties who go bankrupt t are ones that will likely have difficulty finding funds to repay debts, bankruptcy does not legally free a party from all debts and civil judgments. Federal law explains that a bankruptcy does not discharge certain debts, including but not limited to debts for:

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