“Fraudulent” in this phrase doesn’t mean criminal. It’s considered a type of civil fraud which can be undone by the courts.
Same root as”attorney”:
I was told explicitly by a judge that he will not put anyone in jail for not paying a judgement because we don’t have debtor’s prison anymore.
Can they actually do that? I though that was for contempt of court, for deliberately refusing to pay something they could actually pay, or hiding assets, or other such activity.
So did he have anything? Who owned the farmland? Could you wait until he sold his crop and intercept the payment?
I kind of think it’s difficult to live a high-end lifestyle and not have any financial vulnerability.
yes, I meant it did not even have to be nefarious, or trying to hide assets. It could be as simple as giving some creditor(s) excessive preference when anticipating a looming bankruptcy. Or as FinsTo mentions, “improper preference”.
He was a harvester, not a farmer. Farmers paid him to harvest their crops, then the farmer sold the crops (usually wheat) at market. We could have garnished his earnings from harvesting for others, but the difficulty lay in finding out who he had harvested for. That, plus the fact that he spent six months a year harvesting in the US using leased equipment there, made things doubly-difficult.
In the end, the best thing I could do for my client (the creditor), was to say, “Next time, don’t do a handshake deal for six figures. Get it in writing.”
Yep. This whole mess started with a handshake deal. That added another level of difficulty to the collection.
Which is why it’s called fraudulent.
Local judges (think they) can do whatever they want.
I completely get that handshake agreements for large contracts is really bad, but how would that add difficulty after you had a judgment against him? I can understand why it would make obtaining a judgment more difficult, but once you had the judgment, what would be different?
It added difficulty before we got a judgment against the debtor. Basically we had to convince the court that there was a deal, that these were the terms agreed to verbally, and that a handshake settled the deal. That took time, costing time and money for my client.
We did succeed in that effort, but it cost a lot more than if the two parties had their deal in writing in the first place.
Yeah, that’s what I thought. When you said it added difficulty to the collection process, then you are counting obtaining the judgment as part of the process and I was separating th. I understand now.
Sorry, I missed this part.
Really, nothing should be different. Note the word, “should.” In this case, things were different. Like I said, the harvester (the debtor) spent half the year in a foreign country (the US), making service of process possible but difficult. It is possible to attach proceeds from work in the US, but again, we have the question of who was he working for? Plus, he’d be in this location for a week, then another location for another week, then yet another location for another week. He had no home base, no mailing address. He was an itinerant harvester, travelling from place to place, as work guided him, and leasing what he needed wherever he found himself. Nailing Jello to the wall would have been easier than finding and nailing down this guy.
Like I implied, my best advice to my client was to suck it up, buttercup (though I was politer), and never make a handshake deal again.
While the handshake deal was a compounding factor, from what you say it seems the fundamental problem was that the guy was not a mark for damages — no assets that could be seized, no property that could be charged, no earnings that could be easily attached. A written contract wold not have solved any of these problems. So the takeaway lesson might be not so much “never make a handshake deal” as “never extend significant credit to someone who you can’t easily collect from”.
Yeah, that makes sense. The other lesson I took away was, “Never represent a client in a collection matter, again, especially if made on a handshake deal.”
And I never have. I hate collections. If asked if I can do them, I refer them to other firms. I won’t touch collections any more.
That’s what I was trying to get at, although to be fair, it looks like having the handshake deal made the process that much more difficult.
Having a contract may not have made actually getting money any easier but it would have made getting a judgment easier.
Even so, turning down that type of business seems the smart move.
It has been a long time, and I haven’t really thought of it lately, but I think some of the main tactics are to title everything in someone else’s (a spouse’s or a trust’s) name, incorporate, style your income as something other than income, and lease rather than own.
As I recall, Al Capone’s wife owned their home. He had no assets.
(And when asked to provide a profession would say that he was a used furniture dealer)
Only in criminal cases. Debtor’s prisons were done away with in 1833.
Even in criminal cases the court has to find the refusal to pay was deliberate before sending someone into custody for not paying. You won’t (hopefully) end up in jail just because you’re too poor to pay a fine. (Although I’m sure it happens)