Information Subpoenas, Restraining Notices and the Role They Play in Debt Collection

image of a red letter to represent Information Subpoena Restraining NoticeHave you received an information subpoena and restraining notice related to a New York debt collection case? If you are unfamiliar with the case and this is the first notice you received, you might be concerned that being served with a subpoena means you’re getting dragged into a lawsuit. Don’t worry. Here’s some information to help you understand what information subpoenas and restraining notices are, what you’re required to do, and more.

What is an information subpoena?

An information subpoena is a type of subpoena used by judgment creditors and their attorneys to reveal more information about the judgment debtor. It’s an information-gathering tool used to uncover information about assets that the judgment debtor may own that are held by a third party. The assets could be monies on deposit at a bank or monies owed to a judgment debtor by a third party.

For example, a judgment creditor can serve a bank with an information subpoena to ascertain if the judgment debtor has an account at the bank and, if so, the amount on deposit, the account numbers, the last known address for the judgment debtor, and more.

What is a restraining notice?

A restraining notice is a legal document served by a collection attorney or creditor that requires the recipient of the subpoena to hold any monies or other specific types of assets that belong to the judgment debtor. The judgment debtor does not need to be in possession of these assets. In most cases, a third party holds the assets for the judgment debtor.

Judgment creditors can serve restraining notices on financial institutions, like a bank. The bank searches its database and, if they locate an account or safe deposit bank, absent an exemption, the bank must restrain the asset for up to one year.

Should restraining notices and information subpoenas be served together?

Restraining notices and information subpoenas are effective together or on their own. However, if a judgment creditor serves an information subpoena on its own and uncovers information about assets belonging to a judgment debtor, they need to move quickly to restrain the assets or direct the marshal or sheriff to levy upon them before someone else does or before the judgment debtor moves the assets to another location or takes possession of them.

Do you need to consult a lawyer if served with an information subpoena and/or restraining notice?

A third party does not need to be represented by counsel when responding to an information subpoena or restraining notice. However, it is a good idea to understand which assets can be restrained to satisfy a judgment and how much information should be divulged in responding to an information subpoena.

Consulting counsel is a good idea. You do not want to provide incorrect information or fail to restrain assets or restrain too many assets. Doing so could cause you possible financial liability.

Can you notify the judgment debtor that you were served with the notice?

Yes, you can absolutely inform the judgment debtor that you were served. We would suggest that you do not take advice from the judgment debtor about how to respond to the subpoena and/or restraining notice. Providing false or misleading information is grounds for perjury and possible financial liability for trying to help hide assets.

Now that you have responded to the information subpoena and restraining notice and are holding the assets what do you do? The restraint is good for one year. During that time here are a few of the most common scenarios:

  1. The judgment debtor authorizes you to release part or all of the asset to the judgment creditor
  2. The judgment debtor and judgment creditor resolve the judgment, allowing you to release the hold
  3. The judgment creditor needs to get an order from the court for permission to have you transfer the asset(s)
  4. The judgment creditor directs the marshal or sheriff to collect the asset from you
  5. Another judgment creditor serves a levy to pick up the asset.

If you have questions about a debt collection matter, contact Frank, Frank, Goldstein and Nager for a free consultation. We have the experience that pays.