While it’s not a new phenomenon, debtors are increasingly moving out of state to avoid liability, lawsuits, and collection agencies...
While it’s not a new phenomenon, debtors are increasingly moving out of state to avoid liability, lawsuits, and collection agencies. The process can be frustrating for businesses seeking to collect a debt; however, it is important to understand that you do have legal recourse.
Full Faith and Credit Clause
To start, debtors can’t simply escape a debt my moving their business or their assets. After you have successfully obtained a judgment against a party that owes you money, you can enforce that judgment in another state where the party has assets. Under the Constitution’s Full Faith and Credit Clause, states within the United States have to respect the “public acts, records, and judicial proceedings of every other state.” That means that courts must honor the decisions and rulings of other courts in different states.
After you have successfully obtained a judgment against a party that owes you money, you can enforce that judgment in another state where the party has assets. However, to do so, you will need to jump through a few legal hoops. The process, which is often referred to as “domesticating” a judgment, may depend on where the assets are located.
Unified Enforcement of Foreign Judgments Act
To facilitate this process, most states have adopted the Unified Enforcement of Foreign Judgments Act (UEFJA). A total of 47 states, as well as the District of Columbia, follow the UEFJA. New Jersey, New York, Pennsylvania and Delaware are all on the list.
Under the UEFJA, you can enforce your judgment by filing it in the county in which the court would have jurisdiction over the debtor. For instance, if a New York company wants to enforce a judgment in New Jersey, it must comply with N.J.S.A. , the state statute codifying the UEFJA. It permits a judgment, decree, or order of the United States or of any other Court which is entitled to full faith and credit in this State to be filed with the Clerk of the Superior Court of New Jersey. Pursuant to Enron (Thrace) Exploration & Production v. Clapp, 378 N.J.Super. 8 (App. Div. 2005), foreign country money judgments are enforceable in the same manner as the judgment of a sister state which is entitled to full faith and credit, provided that the provisions of the Uniform Foreign Country Money Judgments Recognition Act, N.J.S.A. 2A:49A- 16 to 24, are met.
In New Jersey, the process of domesticating a foreign judgment involves the following steps:
Obtain an authenticated copy of the foreign judgment with the seal of the issuing court affixed thereto.
Attach an affidavit from the judgment creditor or the judgment creditor’s lawyer. The affidavit must set forth: the name and last known address of the creditor; the name and last known address of the debtor; the date and amount of the judgment; whether the time to appeal the foreign judgment has expired in the court of origin; whether the court of origin has granted a stay; and whether or not the foreign judgment was entered by default. If the foreign judgment was entered by default, the affidavit must indicate the date under the rules of the court of origin for vacating the default with a copy of the cited court rule.
Mail or deliver to the foreign judgment, affidavit, and filing fee to New Jersey Superior Court’s Office.
Once the debtor has been served, the debtor has 14 days to respond and seek relief from the judgment. In some cases, the debtor may fail to respond to the court filing. Even if they do, they can’t reargue the whole case again. Rather, the debtor may only raise certain procedural issues, such whether the judgment has been satisfied or whether the Notice of Foreign Judgment was filed in time. Once the judgment has been domesticated, you can attach the judgment as a lien to the debtor’s property and otherwise enforce it as if it was originally issued in that state.
Key Takeaway
If you are aware that a debtor has relocated or transferred assets to another state, it is imperative to domesticate the foreign judgment as soon as possible. Acting quickly helps ensure that your lien will have priority over other parties who may also be seeking to collect a debt. In addition, initiating the process of domesticating a judgment shows you mean business and may encourage the other party to settle the debt.
If you have questions, please contact us
If you have any questions or if you would like to discuss the matter further, please contact me, Howard Bader, or the Scarinci Hollenbeck attorney with whom you work, at 201-896-4100.
Does Your Homeowners Insurance Provide Adequate Coverage?
Your home is likely your greatest asset, which is why it is so important to adequately protect it. Homeowners insurance protects you from the financial costs of unforeseen losses, such as theft, fire, and natural disasters, by helping you rebuild and replace possessions that were lost While the definition of “adequate” coverage depends upon a […]
Understanding the Importance of a Non-Contingent Offer
Making a non-contingent offer can dramatically increase your chances of securing a real estate transaction, particularly in competitive markets like New York City. However, buyers should understand that waiving contingencies, including those related to financing, or appraisals, also comes with significant risks. Determining your best strategy requires careful analysis of the property, the market, and […]
Fred D. Zemel Appointed Chair of Strategic Planning at Scarinci & Hollenbeck, LLC
Business Transactional Attorney Zemel to Spearhead Strategic Initiatives for Continued Growth and Innovation Little Falls, NJ – February 21, 2025 – Scarinci & Hollenbeck, LLC is pleased to announce that Partner Fred D. Zemel has been named Chair of the firm’s Strategic Planning Committee. In this role, Mr. Zemel will lead the committee in identifying, […]
Novation Agreement Process: Step-by-Step Guide for Businesses
Big changes sometimes occur during the life cycle of a contract. Cancelling a contract outright can be bad for your reputation and your bottom line. Businesses need to know how to best address a change in circumstances, while also protecting their legal rights. One option is to transfer the “benefits and the burdens” of a […]
What Is a Trade Secret? Key Elements and Legal Protections Explained
What is a trade secret and why you you protect them? Technology has made trade secret theft even easier and more prevalent. In fact, businesses lose billions of dollars every year due to trade secret theft committed by employees, competitors, and even foreign governments. But what is a trade secret? And how do you protect […]
What Is Title Insurance? Safeguarding Against Title Defects
If you are considering the purchase of a property, you may wonder — what is title insurance, do I need it, and why do I need it? Even seasoned property owners may question if the added expense and extra paperwork is really necessary, especially considering that people and entities insured by title insurance make fewer […]
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Sign up to get the latest from our attorneys!
Explore What Matters Most to You.
Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.
Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.
Collecting a Debt Across State Lines – What Businesses Need to Know
Author: Howard D. Bader
While it’s not a new phenomenon, debtors are increasingly moving out of state to avoid liability, lawsuits, and collection agencies...
While it’s not a new phenomenon, debtors are increasingly moving out of state to avoid liability, lawsuits, and collection agencies. The process can be frustrating for businesses seeking to collect a debt; however, it is important to understand that you do have legal recourse.
Full Faith and Credit Clause
To start, debtors can’t simply escape a debt my moving their business or their assets. After you have successfully obtained a judgment against a party that owes you money, you can enforce that judgment in another state where the party has assets. Under the Constitution’s Full Faith and Credit Clause, states within the United States have to respect the “public acts, records, and judicial proceedings of every other state.” That means that courts must honor the decisions and rulings of other courts in different states.
After you have successfully obtained a judgment against a party that owes you money, you can enforce that judgment in another state where the party has assets. However, to do so, you will need to jump through a few legal hoops. The process, which is often referred to as “domesticating” a judgment, may depend on where the assets are located.
Unified Enforcement of Foreign Judgments Act
To facilitate this process, most states have adopted the Unified Enforcement of Foreign Judgments Act (UEFJA). A total of 47 states, as well as the District of Columbia, follow the UEFJA. New Jersey, New York, Pennsylvania and Delaware are all on the list.
Under the UEFJA, you can enforce your judgment by filing it in the county in which the court would have jurisdiction over the debtor. For instance, if a New York company wants to enforce a judgment in New Jersey, it must comply with N.J.S.A. , the state statute codifying the UEFJA. It permits a judgment, decree, or order of the United States or of any other Court which is entitled to full faith and credit in this State to be filed with the Clerk of the Superior Court of New Jersey. Pursuant to Enron (Thrace) Exploration & Production v. Clapp, 378 N.J.Super. 8 (App. Div. 2005), foreign country money judgments are enforceable in the same manner as the judgment of a sister state which is entitled to full faith and credit, provided that the provisions of the Uniform Foreign Country Money Judgments Recognition Act, N.J.S.A. 2A:49A- 16 to 24, are met.
In New Jersey, the process of domesticating a foreign judgment involves the following steps:
Obtain an authenticated copy of the foreign judgment with the seal of the issuing court affixed thereto.
Attach an affidavit from the judgment creditor or the judgment creditor’s lawyer. The affidavit must set forth: the name and last known address of the creditor; the name and last known address of the debtor; the date and amount of the judgment; whether the time to appeal the foreign judgment has expired in the court of origin; whether the court of origin has granted a stay; and whether or not the foreign judgment was entered by default. If the foreign judgment was entered by default, the affidavit must indicate the date under the rules of the court of origin for vacating the default with a copy of the cited court rule.
Mail or deliver to the foreign judgment, affidavit, and filing fee to New Jersey Superior Court’s Office.
Once the debtor has been served, the debtor has 14 days to respond and seek relief from the judgment. In some cases, the debtor may fail to respond to the court filing. Even if they do, they can’t reargue the whole case again. Rather, the debtor may only raise certain procedural issues, such whether the judgment has been satisfied or whether the Notice of Foreign Judgment was filed in time. Once the judgment has been domesticated, you can attach the judgment as a lien to the debtor’s property and otherwise enforce it as if it was originally issued in that state.
Key Takeaway
If you are aware that a debtor has relocated or transferred assets to another state, it is imperative to domesticate the foreign judgment as soon as possible. Acting quickly helps ensure that your lien will have priority over other parties who may also be seeking to collect a debt. In addition, initiating the process of domesticating a judgment shows you mean business and may encourage the other party to settle the debt.
If you have questions, please contact us
If you have any questions or if you would like to discuss the matter further, please contact me, Howard Bader, or the Scarinci Hollenbeck attorney with whom you work, at 201-896-4100.
Let`s get in touch!
Sign up to get the latest from the Scarinci Hollenbeck, LLC attorneys!
