This is Part II of my series on collection lawsuits in Michigan.  In my first post, we outlined the general procedure a creditor uses to get a judgment, and the timeline for getting it.  The reason this is important is because, prior to getting a judgment, most creditors can't do much more than pester you. 

But that changes once they get an effective judgment.  At that point, the creditor has the power of the court to enforce its right to payment.  This takes two general forms:  garnishment and execution. Garnishment is taking property of yours in the hands of a third party (like an employer or bank).  Execution is taking property directly from you.  We'll discuss those in more detail in a future post.

Before a creditor can get your property, however, it must learn where your property is at.  Creditors do this by conducting a creditor's examination.  This is subpoena, signed by a judge, ordering you to appear in court and produce documentation regarding your finances.

Upon arriving at the court, you are put under oath.  The creditor's attorney usually is allowed to take you into a private room.  The attorney will often batter you with questions for as long as he or she feels its necessary.  If you refuse to answer, you will be subject to civil or criminal contempt.  If you give false answers, you expose yourself to criminal charge of perjury.  

The attorney will ask a barrage of questions to make the trip worthwhile: "What is your social security number?  Do you own any automobiles?  Any land?  Anyone put your name on land?  What are all of your checking and savings account numbers?  Where do you work and what is your employer's contact information?  Have you given any property to friends or family in the past year?  Who and how do I contact them?  Insurance policies?  Pensions?  Antiques?  Collections?"

And the list will go on.  If (or when) you reveal something of value, the attorney will make meticulous notes and follow-up with more questions, so he or she knows exactly how to get it.  If you try to move property or hide it, you'll like be brought back into the court, this time so the judge can enter an order that the property not be moved.

Once the creditor's attorney knows where the property is at, the collection process can begin with garnishments and executions.  I'll go into detail about garnishments in Part III.

The creditors have been calling, but no matter how much you pay it's not enough to stop them. You start ignoring the calls and the threatening letters.  What happens next?

But don't panic if a creditor sues you.  The creditor cannot use these tools until a judgment is obtained. To get a judgment, the creditor must file and serve you with the complaint.  If you're served by mailed, you then have 28 days to answer. After that, the creditor must apply for a default judgment, and then wait another 21 days for it to become effective. If you answer the complaint, you can buy more time as the court will set the matter for a pretrial.