Enforcement of Foreign Judgments: Information For Creditors Regarding Collecting Out-Of-State Judgments

Suppose you have a judgment against a debtor and the debtor either leaves the state or owns property inanother state. How can you collect on your judgment? The answer to this question lies in a basic understanding of how these “foreign judgments” operate.

Generally, a “foreign judgment” is one that is rendered in another state or country that is judiciallydistinct from the state where collection of the judgment is sought. Before a foreign judgment can be enforced, certain requirements must be met.

DOMESTICATING A FOREIGN JUDGMENT

Most states have adopted the Uniform Enforcement of Foreign Judgments Act, which allows a judgment of one state to be enforced in another state, based on the constitutional requirement that “full faith andcredit”: be given to judgments rendered by other states. Before a judgment of one state may be enforced in another state, however, the judgment creditor (the person in whose favor a judgment is entered) must file a new lawsuit in that state to “domesticate” the foreign judgment. What this means is that a creditor has to register his out-of-state judgment in the new state in order to enforce the judgment under the laws of the new state.

Generally, the creditor must initiate a new lawsuit, after paying the required filing fee, in the district or county where the debtor now resides or owns real property. The lawsuit includes a complaint seeking enforcement of the foreign judgment and gives notice to the debtor that he may contest the enforcement of the judgment. Attached to the complaint is a certified or exemplified copy of the out-of-state judgment. Usually, you will need to obtain several certified or exemplified copies of the judgment in order to file the action. Certified or exemplified copies of the judgment can be obtained from the Clerk of the Court where the judgment was rendered.

Additionally, you may be required to file an affidavit stating that the judgment is final and that the judgment is either wholly or partially unsatisfied. You may also need to provide the exact amount due, including costs and interest at the originating state’s rate. Usually, the Clerk of Court can provide you with information on what exactly is required in order to register your foreign judgment with that court.

HOW MAY A FOREIGN JUDGMENT BE ATTACKED?

Generally, an out-of state judgment may be attacked by the debtor for lack of personal or subject matter jurisdiction, improper service in the originating state, fraud in the procurement of the judgment, andbecause enforcement of the judgment would violate the public policy of the state where enforcement ofthe judgment is sought. Under these defenses, the debtor is arguing either that the judgment was improperly rendered in the first place and therefore should not be registered in the new state, or that the new state should not recognize the judgment because it violates public policy.

JUDGMENTS RENDERED IN FEDERAL COURT

A federal judgment is enforced in accordance with the practice and procedure of the state in which thefederal court is held. You may contact the federal court that rendered your judgment in order to request that a transcript of your judgment be issued and sent to the state court.

CONCLUSION

Once the debtor is served with your complaint, if the debtor fails to answer the complaint, the Court will “domesticate” your foreign judgment and allow you to collect on it according to that state’s laws. If, however, enforcement of the foreign judgment is contested, you must essentially prove to the court that full faith and credit should be given to your judgment since it was rendered properly. In this event, local counsel is well advised. Once a foreign judgment is registered with the new state, the judgment may be enforced to the same extent as any other judgment rendered originally in that state. Since laws differ among the several states with regard to collection procedures, a creditor may wish to consider hiring localcounsel.

Contributed by
JAMES R. VANN
VANN & SHERIDAN, LLP
Attorneys at Law
1720 Hillsborough Street, Suite 200 (27605)
Post Office Box 2445
Raleigh, North Carolina 27602-2445
Telephone (919) 510-8585
Facsimile (919) 510-8570

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