Domesticating and Collecting a Foreign Judgment in Texas

How to Collect Judgments Across State Lines

  

Do you have a judgment against a debtor or debtors who now live in Texas? If you have obtained a judgment against a Texas resident or a business with assets in Texas, then you can seek to enforce your judgment in Texas under a procedure known as domestication. A foreign judgment is any judgment obtained in a court that is located outside of the State of Texas. Likewise, a foreign court is any court located in other state other than the state of Texas.


Trying to collect a debt can be frustrating. When demand letters and phone calls fail to solicit a response from the debtor, the creditor’s sole remedy is to get a judgment against the debtor. In order to get a judgment, the creditor must first file a lawsuit and then receive a verdict in the creditor’s favor or enter a default judgment against the debtor if the debtor fails to respond to the action. However, judgments do not automatically compel a debtor to pay. In many instances, the creditor must utilize post judgment collection remedies in order to locate and seize assets, levy bank accounts or force a sale of other assets owned by the debtor. A complicating factor is the location of the debtor or the debtor’s assets. If a judgment is entered against the debtor in one state, but the debtor resides in another state or the debtor’s assets are located in another state, then the creditor must transfer the judgment to that state, which is referred to as domestication, or “domesticate a judgment”.


Let’s say for example, that the debtor is a company located in Texas. The debtor owns assets located in Texas, which can include real or tangible property. The creditor is a business in Pennsylvania that provided goods and services to the debtor, but the debtor failed to pay. The creditor files a lawsuit against the debtor in Pennsylvania and gets a Pennsylvania judgment. Since the debtor is not located in Pennsylvania and does not have any assets in Pennsylvania, the Pennsylvania judgment will not be useful for the creditor when the creditor attempts to enforce the judgment because the Pennsylvania court has no jurisdiction over the company or the property in Texas. Instead of the creditor filing a new lawsuit in Texas against the same debtor, the creditor can follow the process under the Unified Enforcement of Foreign Judgments Act (UEFJA).


Texas has adopted the Uniform Enforcement of Foreign Judgments Act (UEFJA) to allow people and companies who have obtained foreign judgments to enforce their judgments in Texas without the necessity of having a separate trial for enforcement in Texas. The Texas Civil Practices and Remedies Code provides that a foreign judgment properly filed in Texas in a court of competent jurisdiction should be treated in the same manner as the judgment would have been treated in the foreign court.


The UEFJA allows a more streamlined method of enforcing foreign judgments as opposed to bringing a separate suit to enforce the judgment. However, enforcement under the UEFJA is not guaranteed. In order for a foreign judgment to be enforceable in Texas, it must be entitled to Full Faith and Credit. Essentially, this means that the foreign judgment must be final and must have been obtained in a way that respects the defendant’s Due Process rights. The party who obtained the foreign judgment must have properly served the defendant according to the laws of the foreign court and the defendant must have been subject to the personal jurisdiction of the foreign court; or the foreign judgment may be found to not be entitled to Full Faith and Credit and therefore unenforceable in Texas.


What is the procedure for domesticating a foreign judgment in Texas? We would need what is called an “exemplified” copy of the judgment. An exemplified copy is a copy of an official document, such as a court pleading or judgment, which is obtained from the County Clerk or the Judgment Clerk where the particular judgment was obtained. The clerk will certify in writing, affixing a corporate seal or some form of a raised stamp on the document, that the particular document as was properly signed and entered. Exemplified copies are more than certified copies -- the clerk certifies that the copies are genuine and the judge certifies that the clerk has the authority to say they are genuine.


Once we receive the exemplified (authenticated) copy of the foreign judgment, we will file the exemplified copy of the judgment in the Texas court, along with the proper paperwork, which includes an affidavit of the creditor’s and the debtor’s last known addresses.  After following the proper steps, the judgment is “domesticated.” It is then treated as a Texas judgment for all intents and purposes. It can then be abstracted and executed upon. Under the UEFJA, when a copy of a properly authenticated foreign judgment is filed with the clerk of any Texas court of competent jurisdiction, it will be treated in the same manner as a judgment of the court in which the foreign judgment is filed.


Once the judgment has been properly filed and accepted by the Texas court, we can then pursue post-judgment collection activities, including abstracting the judgment in the real property records of the county or counties in which the debtor resides as well as owns one or more properties.


One of our most successful post-judgment collection methods has been the option of going for a Receivership, which means that a third-party collector, called a Receiver, is appointed by the Judge. This involves us mailing out post judgment admissions to all debtors, as well as completing the necessary Motion and Order for Receivership and mailing a copy to all debtors, as well as submitting the necessary paperwork to the court. We then schedule a court hearing and ask the Judge to approve our recommended Receiver, as indicated in our Application for Receivership and Turnover in Aid of Judgment ("Turnover Order").


In our Turnover Order, we've included a number of provisions that give the Receiver a wide range of authoritative actions that he can implement, such as giving the Receiver the authority to do bank levies. In addition, our Turnover Order gives the Receiver the authority to submit paperwork to the U.S. Postal Service and request that all of the debtor's mail at the address provided be re-directed to the Receiver, who has the authority to open all of the debtor’s mail. These are just two of many authoritative actions that are available to the Receiver in our Turnover Order.


We handle commercial debt collection and debt collection activities, as well as the filing of foreign judgments, for businesses across the nation that have matters residing in Texas.


Questions? Give us a call at 972-594-1133 or email Kim Guest, attorney, at Kim@Guestandassociates.com.

or you can email your new claim information to:

NewClaims@Guestandassociates.com.

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