Winning a judgment is only half the battle. As you begin collection efforts, prepared debtors and their attorneys will raise numerous defenses designed to delay, reduce, or completely block your recovery. Understanding the most common defenses that judgment debtors assert and knowing how to effectively counter them can prevent costly delays and ensure you collect what you are owed. Here are the defenses you are most likely to encounter and proven strategies for overcoming them.
Claims of Exempt Property and Income
One of the most frequently asserted defenses involves claims that specific property or income is exempt from execution under federal or state law. New York provides numerous exemptions including protection for certain retirement accounts, a portion of home equity through the homestead exemption, specific personal property items like clothing and household goods, and various government benefits.
Debtors often overstate the scope of these exemptions or claim protections that do not actually apply to their situation. For example, many debtors incorrectly believe that all retirement accounts are completely exempt when in fact only certain qualified plans receive full protection. Similarly, debtors may claim homestead exemptions on investment properties that do not qualify as primary residences or assert exemptions on luxury items that exceed the statutory value limits.
Counter these defenses by demanding detailed documentation proving the claimed exemption applies. If a debtor claims an IRA is exempt, require proof that it is indeed a qualified retirement account and not simply a regular investment account labeled as retirement savings. For homestead claims, verify through public records and occupancy evidence that the property actually serves as the debtor’s primary residence. Challenge overstated valuations by obtaining independent appraisals showing that claimed exempt property exceeds allowable limits.
The “I Already Paid” Defense
Some debtors claim they have satisfied all or part of the judgment through direct payments, offsets, or other credits that were not properly documented. They may produce checks, receipts, or wire confirmations showing payments they allege were made toward the judgment. In some cases, these payment claims are legitimate but were not properly credited. More often, the claimed payments were for unrelated obligations or never actually occurred.
Respond by maintaining meticulous records of all payments received and demanding proof of payment that clearly identifies the specific judgment being satisfied. Require bank records showing the payment cleared, not just copies of checks that may never have been cashed. Compare claimed payment dates against your collection activity timeline to identify suspicious patterns where alleged payments conveniently coincide with enforcement actions.
If the debtor claims payments were made to someone other than you or your attorney, investigate whether that recipient had authority to accept payment on your behalf. Payments made to parties without authority to receive them do not satisfy the judgment even if the debtor subjectively believed they were making proper payment.
Statute of Limitations Defenses
Debtors sometimes argue that the judgment has expired and can no longer be enforced due to the passage of time. In New York, judgments are enforceable for 20 years and can be renewed before expiration, but debtors may claim the enforcement period has lapsed or that specific collection actions are barred by limitations periods.
These defenses usually fail because creditors who properly calendar their judgment dates and timely file renewals maintain enforcement rights indefinitely. Counter statute of limitations claims by producing the original judgment with its entry date, documentation of any renewals, and proof that the 20-year period has not expired. If you renewed the judgment, the renewed judgment extends enforcement for another 20 years from the renewal date.
Occasionally debtors argue that specific enforcement actions like fraudulent conveyance claims are time-barred even if the underlying judgment remains enforceable. Research the specific limitations periods for whatever cause of action you are pursuing and ensure you filed within the allowable timeframe.
Bankruptcy Threats and Discharge Claims
The mere mention of bankruptcy often causes creditors to pause collection efforts, which is exactly what debtors intend. Some debtors threaten bankruptcy filing to extract favorable settlements or delay enforcement, while others claim a previous bankruptcy already discharged the debt. Neither defense should automatically stop your collection activities.
If a debtor threatens bankruptcy but has not actually filed, continue enforcement until you receive notice of an actual filing. Empty bankruptcy threats are common negotiating tactics. If the debtor does file, the automatic stay will halt collection, but you can then participate in the bankruptcy process and potentially object to discharge on grounds like fraud or willful injury.
For claims that a prior bankruptcy discharged the debt, demand proof including the bankruptcy case number, discharge order, and evidence that your specific debt was included in the bankruptcy schedules. Not all debts are dischargeable, and debts based on fraud, willful and malicious injury, or certain other grounds survive bankruptcy. Working with experienced Warner & Scheuerman counsel can help you determine whether a discharge defense has merit or should be challenged.
Third-Party Ownership Claims
When you attempt to seize property, debtors often claim the property actually belongs to someone else such as a spouse, family member, or business entity. These claims may be legitimate in cases where property is genuinely titled to others, or they may be fraudulent attempts to shield assets through sham transfers or strawman ownership arrangements.
Combat third-party ownership defenses by examining title documents, registration records, and the history of how the property came to be titled in the third party’s name. If the transfer occurred shortly before or after your judgment, investigate whether it constitutes a fraudulent conveyance. Look for badges of fraud like transfers for inadequate consideration, continued use of the property by the debtor, or transfers to family members or insiders.
Demand that third parties claiming ownership prove they paid fair value and provide documentation of the funds they used to purchase the property. Many ownership claims collapse when the supposed owner cannot explain where they obtained the money to buy expensive assets.
Procedural Defect Arguments
Sophisticated debtors challenge collection actions based on alleged procedural defects such as improper service, incorrect paperwork, missed deadlines, or failure to follow technical requirements. While some of these objections may be valid, many are simply delay tactics based on minor technical issues that do not actually prejudice the debtor.
Prevent these defenses by scrupulously following all procedural requirements when serving restraining notices, filing executions, conducting debtor examinations, and pursuing other enforcement remedies. Maintain proof of service, file required notices timely, and comply with statutory requirements for all collection actions.
