Print Article

Any discussion of judgments in Texas needs to be broadly divided into two parts: first, obtaining a judgment (which, after all, is only a piece of paper signed by a judge) and second, actually collecting on the judgment.  Lawyers are fond of declaring that they could “paper the walls of their office” with judgments obtained but uncollected. This is only a slight exaggeration.  Texas is a state notoriously favorable to debtors.  It is unconstitutional to garnish wages in Texas, and a person’s home and vehicles are usually beyond reach. Unless a judgment debtor has a going business with valuable inventory or cash flow, rental property, or cash in the bank, collecting on a judgment is going to be problematic.  Often, the creditor’s attorney receives word from the constable that he is unable to collect and is returning the writ of execution “nulla bona.” 

Finality of Judgments

Of course, one can only obtain a judgment after filing a lawsuit and complying with the rules of civil procedure in order to either prevail at trial or obtain a judgment by default (See our companion article, Litigation in Texas).  After the judgment is signed by the judge, the court clerk will not issue a writ of execution until it is at least 30 days old (10 days old in justice court) at which time the judgment is considered final.  This post-judgment waiting period exists so that the debtor has ample time to file a motion for new trial as a prerequisite to appealing the judgment.  If the motion is granted, or if the debtor files an appeal, then of course efforts to execute on the judgment cease.

Homestead Exemptions

Many Texas debtors have numerous judgments against them but live in million dollar homes. They can do this because the entire equity in the homestead is exempt from execution. What constitutes a debtor’s homestead? Texas law states that a person’s homestead is primarily a question of intent.  Even a vacant lot can be homestead if the owner has reasonable expectations of building a home on it. Property Code Sec. 41.002 supplies the following definition:

(a) If used for the purposes of an urban home or as both an urban home and a place to exercise a calling or business, the homestead of a family or a single adult person not otherwise entitled to a homestead shall consist of not more than 10 acres of land which may be in one or more continuous lots, together with any improvements thereon. 

(b) If used for the purposes of a rural home the homestead shall consist of:

(1) for a family, not more than 200 acres, which may be in one or more parcels, with the improvements thereon; or

(2) for a single, adult person, not otherwise entitled to a homestead, not more than 100 acres, which may be in one or more parcels, with the improvements thereon.

Sec. 41.001(5)(c) that “The homestead claimant’s proceeds of a sale of a homestead are not subject to seizure for a creditor’s claim for six months after the date of sale.”  This expressly permits homestead protections to be rolled over from one homestead to the next

Certain personal property is also exempt under Chapter 42 of the Property Code. Personal property valued at $60,000 for a family or $30,000 for a single adult (exclusive of liens) is exempt from garnishment, attachment, execution or other seizure so long as it is on the following list:  

Retirement plans (IRA’s and 401k’s) are exempted under Sec. 42.0021 so long as contributions do not exceed the amount that is deductible under current law. Rollover proceeds are exempt for sixty days. College tuition funds (including IRS Sec. 529 funds and accounts established under Subchapter F, Chapter 54 of the Texas Education Code) are exempted under Sec.42.0022.

It is important to note that homestead protections are available only to individuals, not LLC’s or corporations.  See our companion article, Homestead Protections in Texas.

Writ of Execution

Once issued, the writ of execution is sent to the constable (or sheriff, in some counties) who charges a fee for attempting to collect.  The sad reality is that they do not try very hard - no flashing lights, no guns drawn. Often, the constable will knock at the debtor’s door early in the morning, present the judgment, and ask if there are any assets available to satisfy it.  If the debtor says “no,” then the officer usually withdraws and sends the unsatisfied writ back to the court.  Unless the creditor’s attorney can direct the officer to a specific, known, non-exempt asset for attachment or garnishment - then the process usually ends there. 

Post-Judgment Discovery

Judgment creditors, often at a disadvantage in Texas, have an important collection tool: post-judgment discovery which includes interrogatories and requests for production designed to identify and locate assets available for execution. It is also possible to take the debtor’s deposition. If information is obtained as a result of this discovery, the creditor can request a writ of attachment, garnishment, or a “turn-over order” from the court. The problem is that this procedure is only as good as the information obtained from the debtor - he may have assets that he is not disclosing, which is of course perjury but it happens all the time.  Note that if a debtor who has been properly served fails to answer post-judgment discovery, then he may be held in contempt by the judge, resulting in a fine or even jail.

Abstracting the Judgment

It is normal procedure for the creditor to request an abstract of judgment from the clerk and then file the abstract in the real property records (Note: judgment records and real property records are often found in different computers).  It stays on file for 10 years, but may be re-filed.  Filing such an abstract puts the public on notice that the judgment exists and attaches to real property of the debtor.  Title companies will search for these abstracts - called “AJ’s” - in order to determine if they should collect money from the sales proceeds to satisfy them.  This represents a problem for any judgment debtor who is trying to sell property out of his own name - including homestead property.  Even though a judgment lien does not attach to, and does not constitute a lien on, a judgment debtor’s homestead, it can be difficult to persuade a title company to ignore a judgment and go ahead and close. A title company’s knee-jerk reaction is to require that all liens be cleared. 

Filing an abstract of judgment is often the only realistic way that a judgment creditor has to collect - and it may occur years after the judgment is obtained.

The Debtor’s Homestead

A homestead is not exempt from a perfected lien, but it is exempt from forced sale so long as the property remained the homestead of the debtor. Exocet Inc. v. Cordes, 815 S.W.2d 350, 352 (Tex.App.-Austin 1991, no writ).  Section 52.0012 now provides an expedited statutory method for securing a release of any judgment lien against homestead property. Note that this procedure is available only to abstracts of judgment filed after September 1, 2007. 

Sec. 52.0012 provides for the filing of an Affidavit that must substantially comply with the form that appears in this section of the Code. Filing of the affidavit must be preceded by a 30 day notice letter, sent certified mail and addressed to the judgment creditor and its attorney of record.  The letter must contain a copy of the affidavit that the homestead owner intends to file in the real property records. The requirements of the letter and the affidavit are highly technical and should be done by an attorney knowledgeable in this procedure. The judgment creditor may contest the homeowner’s action by filing a contradicting affidavit if there is reason to believe that the homeowner’s affidavit is false.  The ultimate result, if this procedure is followed to the letter, is that the homeowner’s affidavit serves as a release of the judgment lien as to the homestead property.  See our companion article, Lien Removal in Texas.

Enforcement of Judgments from other States

Unfortunately for debtors, this is not as difficult as it used to be.  Enforcement of “foreign judgments” is governed by Chap. 35 of the Civil Practice and Remedies Code, which provides that such a judgment may be “authenticated” as follows: (a) at the time the foreign judgment is filed, the judgment creditor or the judgment creditor’s attorney shall file with the clerk of court an affidavit showing the name and last known post office address of the judgment debtor and the judgment creditor; (b) the clerk shall promptly mail notice of the filing of the foreign judgment to the judgment debtor at the address given and shall note the mailing in the docket; and (c) the notice must include the name and post office address of the judgment creditor and if the judgment creditor has an attorney in this state, the attorney’s name and address.  So long as this procedure is followed, and so long as the judgment is not being appealed in its original jurisdiction, it may be enforced and collected in Texas just as any other judgment.