4 Key Points To Remember About The Citation To Discover Assets

by
Richard Fonfrias, J.D.
Chicago’s Financial Rescue & Bankruptcy Lawyer
Fonfrias Law Group, LLC

After a creditor gets a judgment against you, the creditor asks the court to schedule a hearing that you attend called a “Citation To Discover Assets.” At this hearing, the creditor asks you questions to discover the whereabouts of your income and assets. This is how the creditor identifies your employer, salary and wages, as well as the location of your bank accounts and whether you have other income or property.

Here are four important points to remember about the Citation to Discover Assets:

1. You must appear, by order of the court. If you don’t appear and answer questions, you could be arrested, fined, and jailed. If you go to jail, the court could require a large bond before authorizing your release. This bond money could be given to your creditor to apply to your debt, even if the bond money came from exempt assets.

2. You must tell the truth. You are under oath when responding to questions at this hearing. If you lie, you could be charged with perjury.

3. Your protected assets are safe from seizure. The court’s order to turn over your property applies only to assets or income that are not legally protected. You should tell the judge which property is exempt so he or she doesn’t include it in the turn-over order. If you want certain property declared exempt, you must ask the judge to make it exempt.

4. Don’t agree to a court-ordered payment plan unless you know you can make all the payments on time. The creditor or his lawyer may try to get you to sign a court-ordered payment plan. If the plan is court-ordered, you could be held in contempt of court and put in jail if you miss a payment. So don’t agree to a court-ordered payment plan unless you know you can make all the payments on time.

Property Held by Third Parties

Third parties who hold some of your assets may also receive Citations to Discover Assets. These third parties may include a bank that has money in your accounts or an insurance company that has not yet paid your claim. If a third party is served with a Citation, it must also appear in court.

If your creditor sends a Citation to a third party, you must also receive a notice telling you when to appear in court for the hearing and explaining your exemption rights and how to claim those rights at the hearing. The judge is prohibited from directing a third party to turn over your property to a creditor unless the creditor proves that you were served with the Citation and received proper notice of your exemption rights.

When it receives a Citation, the third party is required to freeze all of your non-exempt assets. What’s more, the third party cannot release money to a creditor until it is served with a court order or turn-over order.

You should go to court and declare you exemption rights whenever a third party freezes your exempt assets or whenever you think exempt assets might get turned over to a creditor at a hearing.