Defending collection of civil judgments is the goals of asset protection planning. In most cases, debtors are defending assets from judgments obtained in state court civil proceedings. Asset protection becomes more difficult when the creditor is a federal government agency who obtains a civil judgment in federal court. One reason is that the government agency can obtain from the federal court an order that the debtor show cause why the judgment cannot be paid immediately. If the debtor fails to pay after the court order the debtor may be held in contempt of court. Contempt citations subject the debtor to possible incarceration until some payment is made. Although a debtor cannot be held in a “debtor’s prison” to force full payment, the contempt remedy may be used as a powerful collection threat. Contempt orders frequently require some partial payment according to the debtor’s income level and available assets to avoid imprisonment.
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