What is a Scire Facias (Specifically, What Does it Mean When an Employer gets a Scire Facias on a Judgment against an Employee)?

“Scire Facias” means, on a very general level, “to show cause.” It’s a Writ (known as a “Writ of Scire Facias”) that a judgment creditor can file in various instances. Specifically, a judgment creditor will file a Scire Facias on conditional judgments where the employer has failed to answer wage garnishments.

This happens most often on wage garnishments and bank levies. The procedure is that, once the employer has failed to file an Answer or other response to a Wage Garnishment, the Plaintiff files a Conditional Judgment that grants a “conditional” judgment against the employer for the amount of the Judgment against the Defendant.

It is called “conditional” because the Judgment isn’t final until the Plaintiff prepares and serves on the employer a “Scire Facias” directing the employer to appear and “show cause” (i.e. explain) why they failed to file an answer to the wage garnishment.

There are three general outcomes:

  1. The employer doesn’t appear and the Judgment goes final against the employer;
  2. The employer appears and has no good explanation for the failure, and a judgment (or consensual payment) in some amount is reached (Note: The employee lying to the employer about the status of the debt is not a defense for the employer–the employer has to comply with the response obligations under the law); and
  3. The employer appears and presents some good reason, such as the garnishment was defective, the Defendant was not employed during the relevant timeline, or there was another garnishment.

Regarding item number 3, that’s not always a good and sufficient response, since a garnishee should always answer legal process, but a Court will accept a late answer in that situation, unless there is a showing of collusion or a pattern of failure to respond.

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Mark Your Calendars: Tennessee Bar Association to host Creditors Rights 101 Webcast on April 17, 2013

On April 17, 2013, the Tennessee Bar Association has asked me to present a webcast CLE called “Creditor Rights 101: 10 Collection Strategies Every Lawyer Should Know.”

This is part of the TennBarU series, designed to give Tennessee general practitioner attorneys an overview of issues in Tennessee creditor rights. Discussion will include:

• Pre-Lawsuit Considerations
• Statute of Limitations Issues
• Jurisdiction and Venue Selection
• Judgment Enforcement Options
• Basic Bankruptcy Issues
• Common Roadblocks to Collecting Money

And, don’t forget, your Tennessee Bar Association membership gets you 3 hours of free CLE.

Is it Bankruptcy Fraud to Dismiss a Case Where Your Plan is to Incur More Debt and then Refile?

I’ve done collections law too long to think of it in moral terms. I don’t think a person who doesn’t pay his bills is necessarily “bad” (though some are). Sometimes, I think the creditor is equally at fault for lending money or providing services to these poor folks.

But, I recently saw a Bankruptcy pleading  that stopped me dead in my tracks.

It was a Motion to Voluntarily Dismiss Chapter 7 Bankruptcy Case, which is a filing a debtor makes to stop his bankruptcy case. People want out of bankruptcy for a number of reasons, but this one took the cake.

In it, the Debtor asked the United States Bankruptcy Court  to dismiss his Chapter 7 because he wanted to, basically, wait a few more months to run up some more medical bills. Then, after that, he’d re-file his case and discharge those new debts.

The exact text from the Motion is this:

1. The Debtor filed a Chapter 7 bankruptcy on November 6, 2012.

2. The Debtor’s meeting of creditors is set for December 12, 2012.

3. Since the filing of this case, the Debtor has incurred extensive medical care and expects to have a surgery and additional medical care in the coming months.

4. The Debtor, therefore, desires this chapter 7 proceeding be voluntarily dismissed.

Without a doubt, that’s a tough situation for the Debtor, facing medical bills that he can’t pay.

But, what about that doctor or hospital who will be asked to provide those services? This is as close as “pre-meditated” default and bankruptcy as it gets.

The Bankruptcy Code allows a creditor to oppose discharge for some debts that are incurred immediately before Bankruptcy, including those incurred via fraud or bad intent. But, to do that, the creditor has to file a lawsuit to claim that the debt shouldn’t be discharged and that’s a burdensome, costly process.

In case you’re wondering, the Motion was granted.

Long story short, some doctor is going to provide goods and services in the near future that certainly will never be paid.  Yikes.