If you were sued for an unpaid credit card debt or other debt, and you have a court judgment against you in Texas, the court can appoint a receiver to take possession of and sell any of your non-exempt assets to pay the judgment. The receiver is not the same person as the plaintiff's lawyer, but the receiver works for the court to help collect the judgment.
And the receiver collects a 25% fee for his or her services, from whatever he or she collects from you, the "judgment-debtor." So it can be very expensive to have a receiver collect a judgment from you! They take the first 25% as their fee, and only the remaining 75% of every dollar that they collect from you is applied to the judgment balance.
Active court-appointed receivers in the Houston, Texas area include Robert E. Jenkins of the Jenkins Law Firm in Flower Mound, Texas; Jon Malone of Jon Malone, Ltd in Houston, Texas; Eva Engelhart, also in Houston (she is also one of our chapter 7 bankruptcy trustees); and Famose Garner of Houston, Texas.
Receivers can also contact your banks and stockbrokers and demand that they turn over all the money in your accounts to the receiver to pay the judgment. I've even heard of a case where the judgment was against someone that owned a small business, and the receiver took over the business cash register and just collected money from customers as they made their purchases, until enough money was collected to pay the judgment.
If you've had money seized or taken by a court-appointed receiver, it is possible in some cases to recover it. If you file a bankruptcy within 90 days of when the money was taken, the transfer of the money to the receiver may constitute a "preference" or "preferential transfer" under the Bankruptcy Code. If the money can be claimed as an exempt asset in the bankruptcy, your bankruptcy attorney can likely have the money returned to you. If the receiver won't voluntarily return it, an adversary proceeding or lawsuit can be brought in bankruptcy court to obtain a court order or judgment to compel the return of the money.
When can cash be claimed as exempt in Texas? The seized money could be claimed as exempt if it was Social Security, child support, alimony or worker's compensation, or the source of the money was otherwise exempt under state or federal law. Proceeds from the sale of a homestead are exempt for 6 months after the sale, for example.
Also, if you can choose the federal exemptions in the bankruptcy case, you can claim up to $13,100 (double that or $26,200 for a couple) as exempt under the "wild card" exemption of 11 USC Sections 522(d)(1) and (5), assuming that you do not have to use the wild card exemption to protect another asset. So you could potentially recover up to $26,200 that had been seized by a receiver, if you filed bankruptcy and claimed the maximum federal wildcard exemption.
So if you have had money seized by a receiver, and you file bankruptcy you may be able to get your money back. Even if the money is not exempt and you can't get it back, your bankruptcy trustee should be able to recover it if you file the bankruptcy within 90 days of when the money was taken.
That may benefit you because if the bankruptcy trustee recovers it, he or she must distribute the money in accordance with the priority provisions set out in the Bankruptcy Code. Generally speaking, taxes and unpaid child support must be paid first by the trustee. These are things that are not usually discharged by the bankruptcy discharge, so it is better for you to get those paid than to have the money go to the receiver to pay off a judgment.
As you can see, if you have a receiver appointed to collect a judgment against you, it is a pretty serious situation. Consult experienced lawyers right away. If you are in the Houston, Texas area, you can make an appointment with me or one of my associate attorneys by calling 713-772-8037 or toll free 1-877-597-9358. There is no charge for your first consultation with us.
Do you think receivers have too much power or not? Should courts allow them to charge a 25% fee from what they collect? Please leave your comments and questions below.