The Civil Courts offer Creditors a variety of remedies to enforce collection when a customer fails to pay. Although Courts do not simply "enforce" debts, they are an important 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. This entitles the Creditor to employ certain Court processes to exact payment from the Debtor by liquidating the Debtor’s property or “garnishing” Debtor's property or property belonging to a third party, particularly bank accounts.
In commercial obligations in Pennsylvania, a Confession of Judgment clause, or "Cognovits" 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 a 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 example, in Installment Sale Contracts under the Motor Vehicle Installment Finance Act or in other third party lending and loans where collateral is taken, an action in Replevin, pursuant to the Pennsylvania Rules of Civil Procedure, can result in the entry of a judgment for possession of the collateral that can be enforced by directing the Sheriff to take 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, to request the Court to grant a Writ of Seizure which would allow the Sheriff to take possession of the property before a final judgment is entered. The Creditor could then be permitted to liquidate the property while the suit proceeds based upon recovery from the bond.
Other Creditor remedies are enforced through 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 a specified process, the Civil Rules also provide the opportunity to take the Deposition of 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.
Attorney Tom Reilly has routinely exercised these remedies on the behalf both Consumer and Commercial Creditors, in a wide variety of circumstances. He also was a member of the Rules Committee which developed the Pennsylvania Rules of Civil Procedure governing Confessions of Judgment.