Finding Hidden Assets to Collect Your Judgment

If you have a business dispute, or when you are loaning money to someone, one of the biggest questions that you may have is whether or not this person or business will have the assets necessary to actually pay you should you successfully sue and win.

The bad news is that there is no definitive answer to this question. Once a lawsuit is filed, you cannot do discovery on someone’s ability to pay a not-yet-entered judgment (absent a claim for punitive damages, which is rare).

Ask for Documentation Beforehand

The best strategy is to do your due diligence before you loan money or enter into any kind of agreement. There is nothing preventing you from asking the other side to show you profit loss statements, financial affidavits, or other documentation showing their ability to repay you before you enter into any type of business agreement.

Hiding Assets

But then there is still one problem: what if someone hides assets once a judgment is entered against them in order to claim that they are unable to satisfy the judgment you have obtained against them?

The good news is that it isn’t as easy to avoid paying a judgment as just throwing up your hands and saying “I have nothing.” A good attorney knows how to find assets that are hidden or concealed.

Using Bank Accounts

After your judgment is entered and it’s time to find the other side’s assets, there are strategies to see if property is being hidden or to see if it has been fraudulently transferred away.

Bank accounts are a good starting point. Do they show that property was sold (indicated by a lump sum deposit of some kind)? If so, what property was sold, and to whom was it sold? You will often find that property was sold to insiders—family or close friends—as a way of hiding it.

Other Professionals

People who have money or assets use other people to handle, manage, or keep those assets. That means that there is often a money trail to financial advisors, family, trustees, lawyers, or others, who perform these services—and who can be tracked down to find hidden assets.

While the person who owes you money may lie, not all of these other people—friends, family, and other professionals—are going to lie also, just to protect the person you have sued.

Business Contracts

Businesses have contracts. Is the other side’s business still paying on those contracts or doing services for them? Does the business have open accounts receivables? These are all indications that the business is healthy, and has assets, despite its owner who may be pleading otherwise.

Using Experts

There are also forensic accountants who can be retained to comb through more complex financial records, and show if there are deposits coming in that don’t reflect on bank records, or if there are losses being claimed, that are not legitimate.

Need help with your commercial litigation judgment? Let our business and commercial litigation attorneys help you. Call the West Palm Beach business litigation lawyers at Pike & Lustig today for help and advice.

Sources:

activeintel.com/how-to-conduct-a-hidden-asset-search-2/

yeoandyeo.com/resource/how-forensic-accountants-use-a-lifestyle-analysis-to-find-hidden-assets