Proceedings supplementary in Florida

Proceedings Supplementary in Florida

What Are Proceedings Supplementary?

Proceedings supplementary are legal tools creditors use to collect a judgment that has not been fully satisfied. They are initiated after a creditor obtains a court judgment but finds that the debtor lacks sufficient assets to cover the debt. Proceedings supplementary provide a pathway to identify and claim additional assets or income streams of the debtor that were not initially part of the judgment.

Key Facts

  1. Proceedings supplementary assist creditors in debt collection when a judgment has not been fully satisfied. They are initiated when the creditor suspects that the debtor has other assets or income that could satisfy the debt.
  2. Supplementary proceedings are governed by Florida Chapter 56.29. These proceedings follow specific legal procedures and are initiated in the court where the original judgment was obtained.
  3. A key component of supplementary proceedings is the discovery process, where creditors can uncover the debtor’s additional assets or income sources.
  4. The process may involve third parties suspected of holding assets belonging to the debtor or indebted to the debtor.
  5. Debtors have rights during these proceedings, including exemptions and the right to contest claims made by the creditor.
  6. If additional assets are found, the court can order their use to satisfy the outstanding debt. The process ends once the judgment is fully satisfied or all avenues for recovery are exhausted.

Proceedings supplementary in Florida provide an essential tool for creditors in the post-judgment phase of debt collection. By allowing the discovery of additional assets and involving third parties who may hold the debtor’s assets, these proceedings extend the reach of the original judgment. However, they also maintain a balance by upholding the legal rights and protections of the debtor.

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What Can Happen in Proceedings Supplementary?

Under Florida law, supplementary proceedings allow the creditor the following collection tools:

  1. Avoiding fraudulent transfers: Creditors may sue third-party recipients of alleged fraudulent transfers of personal property to either reverse the transfer or obtain a judgment against the recipient for the value of personal property transferred. The court may enter an order to apply the transferred property to satisfy a judgment or have the sheriff seize fraudulently transferred personal property.
  2. Reversing fraudulent conversion: Creditors may obtain a court order reversing your use of non-exempt assets to purchase or obtain an exempt asset if the purchase was intended to protect the non-exempt assets from creditors. An example of a fraudulent conversion is using non-exempt cash to buy an exempt annuity contract.
  3. Piercing corporate veil: Creditors may sue individuals to enforce judgment against a corporation that has been established to defraud creditors or where the company is the alter-ego and continuation of a prior business.
  4. Reverse piercing: Creditor sues a corporation to satisfy a judgment against an individual who conveyed personal assets to an alter-ego corporation to avoid collection.
  5. Charging liens: A judgment creditor can apply for a charging lien against the debtor’s ownership of limited partnerships and limited liability companies.
  6. Injunctive relief: Creditors may seek injunctions preventing subsequent transfer of your property. The creditor must demonstrate that fraudulent transfers are imminent. The injunction is essentially an asset freeze.
  7. Receivership: In extraordinary circumstances, a creditor may convince a court to appoint a receiver to take possession of your property. The receiver manages your property and preserves its value during collection procedures.
  8. Equitable liens. A creditor may have a court declare an equitable lien against real property, including when applicable, homestead property purchased with funds obtained by fraud.
  9. Debtor Examinations. The proceedings supplementary statute enables a judgment creditor to compel you to appear in court and give evidence to a judge or magistrate about your assets. The creditor may require you to bring specific documents or property to the court hearing. The examination must be set in the county where you live. The creditor and the judge may ask you any question that, directly or indirectly, may aid the creditor in satisfying the judgment. The creditor may also examine third parties who may be your “alter-ego” or who may be transferees of your assets.
  10. Turnover of Property. A judgment creditor may use proceedings supplementary to order third parties to turn over non-exempt personal property. The court is authorized to hold you or others in possession of your property in contempt for failing to obey a turnover order.

Initiation of Proceedings Supplementary

Here’s what a creditor must do to initiate proceedings supplementary:

  1. File a motion for proceedings supplementary, outlining what relief it seeks from the Court.
  2. Serve notice to the judgment debtor.
  3. Schedule a hearing on the motion for proceedings supplementary.
  4. Obtain an order on the motion. The Court may enter an order declaring property belonging to the debtor to be used to satisfy the judgment or may enter further judgments.

The statute requires the creditor to include certain allegations in the motion. Proceedings may be commenced at any time during the 20-year life of a final judgment.

Gideon Alper

About the Author

I’m an attorney who specializes in asset protection planning. I graduated with honors from Emory University Law School and have been practicing law for almost 15 years.

I have helped thousands of clients protect their assets from creditors. Before private practice, I represented the federal government while working for the IRS Office of Chief Counsel.