Obtaining a judgment against a borrower is only the first step in realizing collection on account of a defaulted debt. Assuming the borrower is unwilling to pay the debt in full or otherwise settle the debt with the lender, the lender then may engage in a process known as “discovery in aid of execution,” which allows the lender to investigate what assets the borrower has (or does not have) to satisfy the debt.
Rule 1.560, Florida Rules of Civil Procedure, which authorizes discovery in aid of execution, provides that “[i]n aid of a judgment, decree, or execution the judgment creditor or the successor in interest, when that interest appears of record, may obtain discovery from any person, including the judgment debtor, in the manner provided in [the Florida Rules of Civil Procedure].” This includes depositions, interrogatories, and requests for production. In addition, Rule 1.560 allows the lender to request that the court order the debtor to complete Form 1.977 of the Florida Rules of Civil Procedure, commonly referred to as the “Fact Information Sheet,” which requires that the debtor provide certain information relating to the debtor’s property and income without further request of the lender.
The first (and least costly) step in obtaining information about the borrower is through completion of the fact information sheet. Rule 1.560(c) allows the lender to include language in its judgment requiring that the borrower complete the Fact Information Sheet within forty-five days from the date of the judgment and reserving jurisdiction to compel the borrower to complete the form through contempt. The Fact Information Sheet requires that the borrower disclose information related to his or her (and his or her spouse’s) employment, income, banking, real property interests, vehicles, and property transfers. Assuming the debtor completes the Fact Information Sheet in good faith, the lender can obtain a preliminary picture of the debtor’s finances before conducting any formal “discovery.”
Many times, the borrower will not provide a complete picture of his or her finances through the Fact Information Sheet. Accordingly, Rule 1.560 authorizes the lender holding a judgment to conduct formal discovery through interrogatories, requests for production, and depositions.
Ideally, the lender should use interrogatories and requests for production to gain information about a borrower before the more expensive task of conducting the borrower’s deposition. Through interrogatories, the lender can ask the borrower up to thirty questions, which the borrower must answer under oath. Examples of common interrogatory topics include questions about the debtor’s real property interests, business interests, personal property interests, information related to trusts, and transfers of the borrower’s property. Additionally, through requests for production, the lender may request that the borrower provide certain documents and information to the lender. Examples of common requests for production include requests for documents relating to the borrower’s prior tax returns, bank statements, real property interests, business entity interests, and transfers of the borrower’s property.
Armed with information gleaned from the Fact Information Sheet, interrogatories, and requests for production, the lender then may choose to take the debtor’s deposition in aid of execution. A good rule of thumb is that the lender may take the borrower’s deposition in aid of execution once per year. The deposition provides the lender an opportunity to ask the borrower questions about his or her finances and to inquire further regarding the answers to interrogatories and the documents provided pursuant to the requests for production, under oath. Ultimately, a deposition following comprehensive written discovery is a great way to gain a complete picture of the borrower’s financial situation and the likelihood of collection.