Winning a lawsuit does not always mean getting paid.
A judgment establishes what the losing party owes. If the judgment debtor does not pay voluntarily, however, the judgment creditor may need to take additional legal steps to identify assets and enforce the judgment.
Texas law provides several tools for judgment collection. One is a Texas turnover order, which can allow a court to reach certain nonexempt property and, in some cases, appoint a receiver to help satisfy the judgment.
For businesses and individuals holding an unpaid judgment, understanding how to collect a judgment in Texas starts with identifying the debtor’s assets, determining which assets may legally be reached, and selecting an enforcement strategy suited to the circumstances.
How do you collect a judgment in Texas?
Judgment collection in Texas depends heavily on what property the judgment debtor owns and whether that property is legally available to satisfy the judgment.
A judgment creditor may use post-judgment discovery to identify assets and determine which collection remedies may be available. Depending on the circumstances, those remedies can include traditional execution and garnishment as well as relief under the Texas turnover statute.
Section 31.002 of the Texas Civil Practice and Remedies Code allows a judgment creditor to seek assistance from a court to reach a judgment debtor’s nonexempt property, including present or future rights to property, when the statutory requirements are met.
That makes identifying the debtor’s assets an important early step in post-judgment collection.
What is a Texas turnover order?
A Texas turnover order is a post-judgment remedy used to help a creditor reach certain nonexempt property belonging to a judgment debtor that may be difficult to reach through ordinary legal process.
Under Section 31.002, a court may order the judgment debtor to turn over nonexempt property within the debtor’s possession or control, apply property toward satisfaction of the judgment, or appoint a receiver with authority over nonexempt property to the extent necessary to satisfy the judgment.
The turnover statute can be particularly useful when assets are not readily susceptible to ordinary execution. It also provides for recovery of reasonable costs, including attorney’s fees, by the judgment creditor.
What does a judgment creditor have to prove?
A turnover order is not automatic simply because a creditor has obtained a judgment.
Texas appellate decisions have emphasized the need for evidence establishing the statutory requirements. In Vaccaro v. Raymond James & Associates, the Fort Worth Court of Appeals reversed a turnover order where the record did not contain sufficient evidence that the judgment remained unpaid and that the debtor owned nonexempt property subject to turnover.
As a practical matter, a creditor seeking turnover relief should develop evidence concerning the unpaid judgment and the property at issue. Post-judgment discovery can be critical to determining what assets exist, who owns them, and whether they may legally be reached.
What property can be reached to satisfy a Texas judgment?
Not every asset a debtor owns can be taken to satisfy a judgment.
Texas law protects certain property from creditors. Chapter 42 of the Texas Property Code provides exemptions for specified categories of personal property, subject to statutory requirements and limitations. Section 31.002 also prohibits turnover of property that is exempt under statute.
Property belonging to third parties likewise cannot simply be treated as the judgment debtor’s property. Questions involving wages, business interests, accounts, and other assets may require separate analysis under the statutes and cases governing the particular property.
What does a turnover receiver do?
A Texas court may appoint a turnover receiver as part of a turnover proceeding.
Under Section 31.002, a receiver may be authorized to take possession of nonexempt property, sell it, and pay the proceeds to the judgment creditor to the extent necessary to satisfy the judgment.
A receiver can be useful when the debtor’s property is difficult to reach through ordinary collection procedures. The receiver’s authority, however, comes from the court’s order and remains subject to the limits of Texas law.
Can a turnover order reach an ownership interest in an LLC?
Business ownership interests can make judgment collection more complicated.
Section 101.112 of the Texas Business Organizations Code generally makes a charging order the exclusive remedy by which a judgment creditor of an LLC member may satisfy a judgment from the debtor’s membership interest. A charging order creates a lien on the membership interest, but the statute provides that the lien may not be foreclosed.
Texas cases have also addressed unusual circumstances involving turnover relief and business ownership interests. The availability and scope of a remedy can depend on the entity structure, the nature of the debtor’s interest, and the specific facts of the case.
Can a Texas turnover order be appealed?
In some circumstances, yes.
Texas appellate courts have addressed both direct appeals and mandamus proceedings involving turnover orders. Whether a particular order is appealable, or whether extraordinary relief may be available, depends on the nature of the order and the alleged error.
That matters on both sides of a turnover proceeding. A judgment creditor needs an enforceable order that stays within the statute, while a judgment debtor may have appellate remedies when an order exceeds the court’s authority.
What should a judgment creditor do when a Texas judgment remains unpaid?
An unpaid judgment should be evaluated as a collection problem, not simply as the final page of the lawsuit.
The appropriate strategy depends on the amount of the judgment, information available about the debtor, the types of assets involved, applicable exemptions, the cost of collection, and the likelihood that a particular enforcement method will produce a meaningful recovery.
Post-judgment discovery can help identify assets before a creditor seeks a turnover order or another collection remedy. The objective is to understand what assets exist, determine which may legally be reached, and select an enforcement strategy that makes practical and economic sense.
Collecting an unpaid judgment requires an understanding of the debtor’s assets, available legal remedies, and the practical costs of enforcement. Lindsey Law represents businesses and individuals in civil litigation, including post-judgment and judgment enforcement. If you have obtained a judgment that remains unpaid, contact Lindsey Law to discuss your situation.
About this article
This article is adapted from Show Me the Money: Texas Turnover Orders, presented by Scott Lindsey, with materials prepared by Mac Thomson. It has been updated for publication by Lindsey Law to reflect current Texas law at the time of posting.
Disclaimer: This article is for general informational purposes only and does not constitute legal advice. The availability and appropriateness of any judgment-enforcement remedy depend on the facts and law applicable to a particular case.