After the Bank forecloses on its collateral, it is important to administer the collateral in a commercially reasonable manner. The collateral is the source of repayment for the Bank. It is important to preserve its value and to liquidate it to pay off the loan to the extent possible. Workout professionals who are charged with caring for Bank-owned or controlled collateral must plan a strategic approach to their task. Once in a while, the collateral is exciting, and tempts the workout officers to cross the ethical line.
As any experienced workout professional knows, getting a judgment against a recalcitrant borrower is only the halfway point in the collection process. Some borrowers would rather fight their lender than pay back the money they borrowed. To collect, the lender must persevere and take a number of steps to perfect its judgment lien and put itself in a position of priority over others.
My partner, Joe Demko, is a senior trial lawyer on the JMBM Special Assets Team™, who knows the ropes well. In this article, Joe passes along an important tip: it is critical for a lender who gets a judgment to take the next step and schedule a judgment debtor exam. As Joe points out, the simple act of serving notice of a judgment debtor exam creates a secret lien that enables the judgment creditor to collect money that has been transferred by the judgment debtor to a third party.