The Civil Courts offer creditors a variety of remedies to enforce collection when a customer fails to pay. It is important to remember that the Courts do not exist to enforce debts, but are in our culture the method of resolving disputes.
In most instances, the first step in the court process is to obtain a judgment, which is a legally enforceable obligation, which entitles the Creditor to employ certain court processes to exact payment from the Debtor by liquidating the Debtor’s property or “garnishing” property of the Debtor belonging to a third party, in particular bank accounts.
In commercial obligations in Pennsylvania, a confession of judgment clause, or cognovit clause, may be employed in a document that entitles the Creditor to simply go to court and obtain a judgment immediately without serving the Debtor.
There is a procedure following the commencement of the confessed judgment that allows the Defendant / Debtor to defend against the confessed judgment. Compliance with these rules is essential in making certain that the Creditor both executes its remedies effectively and avoids the potential pitfalls of violating a Debtor's constitutional rights by employing civil process when it is not appropriate.
Civil courts also provide remedies to recover possession of collateral. For instance in installment sale contracts under the Motor Vehicle Installment Finance Act or other third party lending and loans where collateral is taken. An action in replevin is provided for in the Pennsylvania Rules of Civil Procedure, which results in the entry of a judgment for possession of the collateral that can be enforced by the sheriff taking possession of the property. There is also a more immediate remedy under the replevin rules, which would entitle the creditor upon posting of a bond and demonstrating a probable likelihood of its claim for possession the court may grant a writ of seizure allowing the sheriff to take possession of the property before a final judgment is entered and allowing the Creditor to liquidate that property while the suit proceeds based upon recovery from the bond.
Other creditor remedies are enforced through the civil courts, such as fraudulent transfer actions or the imposition of constructive trusts in instances where property is possessed by a third party that rightfully should be owned by the creditor. In addition to enforcing the judgment by the process available under the civil rules, the rules also provide the opportunity to depose the debtor or other party who has knowledge of the debtor’s assets for the purpose of determining assets that would be available for execution, levy and sale by the sheriff.
Tom Reilly has exercised these remedies on the behalf both Consumer and Commercial Creditors. HE also participated in the drafting of the current Rules governing confessions Judgment.