Some assets owned by a judgment debtor may be subject to seizure by a judgment creditor. If unsecured, the assets (e.g., bank accounts, brokerage accounts) can be transferred or sold to benefit the creditor.
There are other assets that require a court order to transfer assets or the debtor’s interest in the asset to the creditor. Take, for example, a home owned jointly by two people. A judgment creditor could acquire the judgment debtor’s interest in the home. (The creditor would not live in the home. They would merely acquire the debtor’s financial interest.)
For assets that require a court order directing the debtor or a third party to “turn over the assets” to the creditor or their agent, the court order is similar to other orders requiring compliance. But what happens if the judgment debtor or other party fails to turn over assets?
In the News: Guiliani Fails to Turn Over Assets
Recently, former mayor Rudy Giuliani was directed to turn over assets, including his classic 1980s Mercedes convertible, artwork, NYC apartment, and more, to partially satisfy a very large money judgment entered against him.
According to CBS New York, Giuliani failed to turn over some assets, including artwork and his vehicle, to the judgment creditors. Although he has been given an extension, the question remains: What if he fails to comply with the court’s order?
Failure to comply with a federal court order is punishable by contempt of court. Contempt of federal court is punishable by a monetary fine, imprisonment, or both. If the court issues an order of civil contempt and imposes incarceration, the order can be served and enforced in any federal district. Incarceration typically lasts until the court’s order has been complied with.
A fine, if ordered, would be payable to the court, the creditors, or a third party as determined by the court. The court would calculate the amount based on the situation at hand.
To avoid being held in contempt of court, the defendant must produce evidence showing a good-faith effort to comply in order to be excused. A good faith attempt can consist of all reasonable efforts to comply, rather than merely an effort. With respect to Mr. Giuliani, we will see what happens.
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