What is a Turnover Order?

No matter what is going on in the economy, there are some businesses and entrepreneurs who find themselves falling behind with creditors and bills.  While one would hope that they would fully intend to pay these obligations, and are betting on seeing money coming in the near future to satisfy these obligations and get caught up, it doesn’t always happen. And, if managed inappropriately, these businesses and entrepreneurs can easily start sliding down a slippery slope of not paying their obligations.

After some attempts to collect on the outstanding debt, it is in the best interest of creditors to file suit as quickly as possible in order to secure judgments for their obligations. Why? Because the longer you wait, the less likely the business or entrepreneur will remain in business, especially if they are experiencing a hardship.

Once you obtain a judgment, however, it does not mean that the debtor will automatically pay.  In Texas, a  judgment creditor has  the option of seeking a Turnover Order and receivership pursuant to Chapter 31 of the Texas Civil Practices and Remedies Code. The Turnover Order is considered the most effective collection tools available to creditors. In the Turnover Order, the court appoints a Receiver and includes provisions whereby the Receiver has much more authority and collection options in order to collect on the outstanding debt owed. The Turnover Order allows for greater collection methods than a normal collection agency.

In fact, a Turnover Order includes a provision for the Receiver to take possession of non-exempt assets of the judgment debtor. If the judgment debtor has non-exempt assets, the Receiver can arrange for the sale of those assets in order to satisfy the judgment.

What is a "receivership" and what authority does a Receiver have?  Click here for more information!