Citation to Discover Assets (Debtor)*
After obtaining a judgment, the creditor can ask the court to direct the consumer (i.e., the judgment debtor), to appear back in court for an additional or "supplementary" proceeding. The purpose of this new hearing is to let the creditor ask questions of the debtor about his or her income and assets. In this way, the creditor can discover the consumer’s employer and salary and wages. The creditor can also find out where the debtor's bank accounts are located and what other income or property the debtor has or will be getting.
In Illinois, the document which directs the debtor to come back for this examination is called a "Citation To Discover Assets". The Citation might direct the debtor to bring certain documents to the examination.
With this information, the creditor starts proceedings to garnish the debtor’s wages or bank account (see section below on Wage Deductions and Non-Wage Garnishment). Or, the creditor can ask the judge to enter a turn-over order. A turn-over order directs the consumer to turn-over to the creditor some of his income or property that is not protected by law (i.e., not exempt).
If non-exempt assets other than cash or real estate are discovered, they can be ordered turned over to the Sheriff to conduct a public sale, the proceeds going to the creditor to pay off the judgment.
Special Notice About Exemption Rights
The Citation must be properly served on the consumer, and it must include a special notice. Among other things, this notice must advise the debtor about the debtor's exemption rights and how to assert them in court at the citation hearing or some earlier date. This notice must be in a particular form.
By law, no turn-over order can be entered unless there is proof in the court record that the consumer was properly served with the Citation and a copy of the special notice about exemption rights.
Four Important Things to Know About Citations to Discover Assets
- It is a court-ordered appearance. Failure to show up and answer the questions can result in arrest, a finding of contempt of court against the consumer, and a jail sentence. A Citation to Discover Assets should never be ignored. If the debtor is jailed for failure to appear, the debtor may be ordered to pay a large bond in order to be released. This money may then be applied to the debt, even if the bond money came from exempt income or property.
- The debtor is under oath when answering questions. The debtor has to be truthful when answering questions about income and assets. Lying under oath is perjury.
- Turn-over orders should not affect exempt income or property. The debtor should know the debtor's exemption rights and should tell the judge what property is exempt, to make sure that exempt income property is not included in any turn-over order. At any citation hearing where the consumer asks for a declaration that certain income or assets are exempt, the court must make a determination whether that income or property is or is not exempt.
- Be careful about agreeing to a court-ordered payment plan. The creditor or his attorney may try to get the debtor to agree to a payment or installment plan, and may try to have that agreement formalized by court order. A consumer should be very careful about making such an agreement, and should not do so unless absolutely certain that s/he can keep up with the payments. If s/he fails to make good on a court-ordered payment plan which s/he agreed to, s/he may possibly be held in contempt of court and jailed.
Citation to Discover Assets Held by Third Parties
Citations to Discover Assets can also be served on third parties who may be holding some of the debtor’s assets. For example, this might be a bank where the debtor has an account or an insurance company which owes the debtor on a claim. Any third party served with a Citation must also come in for an examination and be subject to a turn-over order.
If the creditor serves a Citation on any third party, the consumer must be given a special notice that tells when to come to court for this proceeding and explains exemption rights and how to assert them at the hearing. By law, no turn-over order can be entered directing a third party to turn over the debtor’s assets unless there is proof in the court record that the debtor was properly served with the Citation and with a copy of the special notice about exemption rights.
When a third party receives the Citation, it must "freeze" all assets which are not exempt under the law. The third party should not send any money to the creditor until it receives a court order or turn-over order to do so. The consumer should go to court to assert exemption rights whenever a third party has frozen "exempt" assets or there is a possibility that exempt assets might get turned over at a citation hearing.