Unfortunately for the creditor, filing a lawsuit to collect a debt is often an encouragement to the debtor to move and conceal assets. Creditors often delay filing legal action for fear of triggering such diversion of assets. However, Virginia law may have a solution: the pre-judgment attachment. Virginia law allows a creditor to bring the debtor's property into court custody at the outset of a lawsuit, thereby assuring that the property will be available to satisfy any judgment the court eventually grants.
Virtually any significant asset of a debtor can be subjected to attachment. Although real estate and business equipment are the most popular targets, a creditor can also attach bank accounts or even other monies owed to the debtor by a third party. One useful application of pre-judgment attachment occurs in construction cases, when a sub-contractor attaches payments to an out-of-state general contractor. An interesting case was the attachment of an elephant from a traveling circus; unfortunately, the creditor neglected to compute the cost of feeding the animal before taking this ill-advised action.
To secure a pre-judgment attachment the plaintiff files a sworn petition setting forth the cause of action and the grounds for the attachment. The justifications for attachment must fall within one or more of the categories allowed by Virginia Code Section 8.01-534. In summary form, it is sufficient grounds for pre-judgment attachment that the defendant/debtor is:
· a nonresident corporation or individual, which has assets or debts owed to it in Virginia
· removing or about to remove out of the Commonwealth with intent to change domicile or business location
· intending to remove, or is removing, or has removed the specific property sued for or his assets or the proceeds of the sale of his property out of the Commonwealth so that the debtor will not have therein assets sufficient to satisfy the judgment
· converting, is about to convert or has converted his property into money, securities or debt with the intent to hinder, delay or defraud creditors; (5) assigned or disposed of or is about to assign or dispose of his assets with intent to hinder, delay or defraud creditors
· absconded or is about to abscond from the Commonwealth or has concealed himself to the injury of his creditors, or is a fugitive from justice.
If the petition is approved by a judge, the creditor must post a bond of twice the amount of the claim. Upon posting of the bond a warrant will be issued ordering the sheriff to seize the property and bring it into the custody of the court. Generally, the debtor will request a hearing within twenty-one (21) days of the seizure at which time the court will determine whether the property will be released or remain in custody until the lawsuit is completed. Many attachments are dismissed at that hearing because of failure to comply with the technical requirements of Virginia attachment procedure, but equally as many cases are resolved because of the seizure.Pre-judgment attachments do involve certain economic risks to the creditor. The bond is posted in order to compensate debtors for the improper seizure of their assets. Therefore, creditors should not use attachments for questionable claims. Nevertheless, the judicious utilization of this legal tool can be the difference between an empty judgment and a satisfied judgment.
