A judgment in one state can be enforced in another state because decisions of a court in State A are given “full faith and credit” in State B under the United States Constitution and accompanying federal and state statutes.
The need for enforcement of judgments in states other than where the case was determined has to do with “personal jurisdiction.” In other words, out of state judgments happen where the judgment debtor lives, or where the judgment debtor business has its center of operations.
Although this means that a Texas court may enter a judgment against a Texas resident or Texas-based business, the Texan’s property which can be seized to satisfy the judgment may be located out-of-state. For this reason, certain legal measures have been set up in nearly every state to make collecting on a judgment possible.
Texas itself provides a good example. This is because Texas enforces the judgments of other state courts. Under the Texas Uniform Enforcement of Foreign Judgments Act (the “Texas UEFJA”) a “foreign judgment” has “the same effect and is subject to the same procedures, defenses, and proceedings for reopening, vacating, staying, enforcing, or satisfying a judgment” as a judgment from a Texas court, as long as certain procedures are followed. See TEX. CIV. PRAC. & REM. CODE §35.003.
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We are often asked such questions as:
The answer to all these questions is yes. Enforcing a judgment across state lines involves providing the foreign court with certain assurances that the court judgment from the issuing state is valid. That is, the issuing court must have followed proper constitutional procedures and the court judgment will not undermine the public policy of the foreign state.
So, can a debt collector sue you in another state? Absolutely. We explain further by returning to our State of Texas as an example. Judgment enforcement in Texas is a two-step process.
The first step is to file and authenticate the foreign judgment with a clerk of a Texas court. A foreign judgment can be authenticated “in accordance with an act of congress or a statute of this state,” which then “may be filed in the office of the clerk of any court of competent jurisdiction of this state.” See TEX. CIV. PRAC. & REM. CODE §35.003. This process is called “domesticating” the out-of-state judgment, discussed further below.
The second step, which must occur at the same time the foreign judgment is filed, is the submission of sworn evidence identifying the name and last known post office address of the judgment debtor and the judgment creditor. This is followed by statutory notices to the judgment debtor and filing proof demonstrating that proper statutory notice has been given. See TEX. CIV. PRAC. & REM. CODE §35.004.
When this process is followed and completed, the domesticated judgment is treated the same way as a Texas judgment, allowing for collection procedures to be implemented, such as wage garnishment, levies on bank accounts, and judgment liens on property.
Full Faith and Credit is a term in the United States Constitution which dates to the founding of our nation and means that a judgment obtained in one state is to be given full faith and credit in another state. See U.S. Constitution, Article IV, Section I.
For the federal courts, Congress has enacted legislation that allows for a judgment to be “registered” and thus recognized in District Courts across state lines. For state decisions, Congress has created a framework called the Uniform Enforcement of Foreign Judgments Act (the “UEFJA”), which nearly every state, including Texas, have adopted.
Texas’ version of the Act, the Texas UEFJA applies to “foreign judgments” which means “a judgment, decree, or order of a court of the United States or of any other court that is entitled to full faith and credit in this state.” See TEX. CIV. PRAC. & REM. CODE §35.001.
Where applicable, the Texas UEFJA provides that a “foreign judgment” has “the same effect and is subject to the same procedures, defenses, and proceedings for reopening, vacating, staying, enforcing, or satisfying a judgment” as would a judgment from a Texas court. See TEX. CIV. PRAC. & REM. CODE §35.003.
Domesticating a judgment in Texas involves first filing and authenticating the foreign judgment with a clerk of a Texas court, see TEX. CIV. PRAC. & REM. CODE §35.003, and then submitting sworn evidence identifying the name and last known post office address of the judgment debtor and the judgment creditor, see TEX. CIV. PRAC. & REM. CODE §35.004.
When this process is followed and is complete, the judgment is treated the same way as a Texas judgment. It is now a domesticated judgment, fully enforceable under Texas law.
There are several reasons why a creditor might seek to enforce a judgment in a state other than the state where the judgment was originally ordered.
The first is that the debtor has moved to another state and left behind no verifiable assets in the original state. The debtor may also still be local, but either be deliberately (through fraudulent conveyance) or inadvertently maintaining their assets in another state. This is common in the case of enforcing a judgment against a company or while collecting debt from a closed business, which is likely to have inventory in infrastructure in numerous states depending on its size.
Filing a lawsuit is one of the ways a debt collector can sue you in another state. However, with most states having adopted the UEFJA, a suit in a foreign state tends to be an unnecessarily expensive and complex process in light of the administrative procedures available for domestication, which are essentially the filling out and filing of paperwork.
The Fair Debt Collection Practices Act (the “FDCPA”) acts as a safety measure on out-of-state collections practices. When enacting the law in 1977, Congress stated the purposes of the FDCPA were to eliminate abusive practices in the collection of consumer debts, to promote fair debt collection, and to provide consumers with an avenue for disputing and obtaining validation of debt information in order to ensure the information’s accuracy.
Some of the ways the Act keeps the playing field of debt collection a fair one is by prohibiting certain types of “abusive and deceptive” conduct when attempting to collect debts, including limiting the hours of phone contact, restricting contact with consumers at their place of employment, continuing to contact consumers who are represented by legal counsel, seeking unjustified amounts on a debt, threatening actions beyond what is permitted by the law, threatening arrest, making misrepresentations, publishing personal information to the media and other sources, and using abusive language.
The Act also has affirmative requirements for collection agencies, such as identifying themselves on a call, given the name of the original creditor, informing the consumer of the right to dispute the debt, and similar verification measures.
If you wish to know more about creditor judgments in the State of Texas and how they may affect your personal property or real estate, contact the Law Offices of Seth Kretzer today.
