The issuance of a Citation to Discover Assets against a judgment-debtor often represents the first step a creditor will take to collect on a civil judgment in state court. However, the citation may also trigger the judgment-debtor to file a bankruptcy petition, thus temporarily foiling a creditor’s collection efforts. A creditor, though, who is diligent in building a record during the citation proceedings has a chance of a greater recovery in a subsequent bankruptcy.
Judgment-debtors must tell the truth under oath, no matter the court, and the transition of post-judgment proceedings from a state court to a bankruptcy court does not relieve a judgment-debtor of this burden. Further, a creditor may have grounds to object to the judgment-debtor’s bankruptcy discharge should it be found that the judgment-debtor has not kept his or her story straight between the state court citation proceedings and the bankruptcy case.
This Client Alert was republished by Pratt's Journal of Bankruptcy Law in its September 2015 issues. Click here to read the republished article.