Turnover Orders and Receiverships

 

Any collections attorney will tell you that their favorite collection tool is provided by Texas Civil Practice and Remedies Code §31.002 -- Collection of Judgment Through Court Proceedings.  This is also known as the Turnover/Receivership statute.

 

The reasons for this preference are straightforward.

 

-  You get to recover your post-judgment attorney's fees.  Id. §31.002(e).  This includes fees incurred taking actions (i.e. garnishments, executions, post-judgment discovery) that would not normally allow for the recovery of attorney's fees, but were arguably done in preparation for the motion for turnover/receivership.

 

-  The receivers power is ongoing until discharged or relieved from the Court.  This can be a great advantage and avoid having to perform multiple execution or garnishment attempts.  Since the receiver takes over operative power of the debtor's estate, the receiver is able to withdraw funds from the debtor's bank account at will.  Or the receiver can have a constable retrieve non-exempt property for possession and sale (conducted by the receiver, not the constable) whenever non-exempt property is discovered.

 

-  a turnover order functions as an execution, however without a constable sale.  As such, the property can be re-sold at reasonable market value privately rather than risk the lowball bidding of a public auction.  The constable retrieves the property and delivers it to the creditor attorney.  Who may then either sell it in a court approved sale, or ask that a receiver be appointed for the purposes of conducting the sale.

 

The only real disadvantage to the Turnover/Receivership statute is that, being a Court Proceeding, it is conducted through a notice and hearing process.  The debtor gets advanced notice.  The debtor may seek to surreptitiously hide/conceal the assets or do it in plain site through a bankruptcy proceeding.  Either way, if this is done before the creditor can take possession of the asset, additional difficulties ensue.  (Per the adage, the debtor would retain the power of nine-tenths of the law).

 

Nonetheless, this is still the preferred process by JH&A attorneys who have experience with many of the Court appointed receivers in the Houston area

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