Judgment Proofing

This term refers to the process whereby a person keeps their assets immune from civil judgments of any sort whether from a family court, civil court or other civil action.

Definition of Judgment Proofing – This term refers to the process whereby a person keeps their assets immune from civil judgments of any sort whether from a family court, civil court or other civil action. By immune we mean that there is no way for the judgment to be collected. There are no identifiable assets to garnish, lien, liquidate, auction, seize, grab, etc.

Effectiveness of Judgment Proofing - It is most effective when done right. Anonymous Panama Corporations and Anonymous Panama Foundations have no identifiable owners. The records are as a rule immune from civil subpoena. Assets of a Panama Foundation are protected against pre-trial freeze orders unless the foundation did something directly like violated a real estate lease so we have our clients keep foundations from being involved in anything directly that could be likely to result in litigation. Panama Bank Secrecy is the tightest in the world today and it is not likely to be broken over a foreign civil judgment. There is a reason why Panama has over 400,000 corporations and 150 international banks. Panama has no tax treaties of any sort with any country, no treaties for collection of foreign judgments, no child support treaties, no alimony treaties, no spousal support treaties and basically there are no treaties for enforcement of foreign civil judgments in Panama. Your financial enemies are on their own, no governmental assistance forthcoming. How can an aggressive collection attorney or financial enemy collect a judgment against an asset they can not find or identify? You don’t find things unless you know what to look for.

A Look at Collection Attorneys – In most countries the graduates of the most prestigious law firms who graduated at the top of the class do not wind up practicing collection law. We are trying to be nice. This type of work appeals to someone who likes being a bully and pushing people around who often are too broke to fight back. These lawyers like to take advantage of people ignorant of the system. They like to get paid by the hour or case but often have to resort to contingency work in countries where it is allowed. The USA is one of a handful of countries in the world that allows lawyers to work on contingency. The other countries realize what a mess the court system becomes when you allow contingency legal practices. The collection lawyer follows patterns of behavior that when studied show their vulnerabilities. Remember it is business to them and they need to make money and be cost effective for their clients. Going offshore makes things very confusing for these collection attorneys, time consuming and very expensive. Offshore asset protection can often position one to settle these collection cases cost effectively. Remember when a court case is lost negotiations really begin and if you are offshore protected you are in a position to negotiate hard. Most lawyers overlook this aspect of offshore asset protection but it is a very real and effective strategy.

Collection Agency Practices – The collection attorney operates with clients coming to them with a judgment. The collection law firm then arranges compensation with the judgment holder and begins the work. First they search public databases to find assets. The gold for them is a publicly registered asset of value such as land, a home, income producing property, a boat, a car, an airplane, or a motorcycle. The collection lawyer can easily determine if such things are encumbered (have a loan against them) and has ways of determining if there is equity in excess of the loan. Often these methods employed by them are illegal in the jurisdiction they employ them in. If the collection attorney sees there is an asset available that has equity he will begin to use the court process to encumber or lien the asset to see if this forces a settlement voluntarily from the debtor. If the debtor does nothing, the collection attorney may begin court proceedings which generally allow for the court to sell the asset in some impartial way using the proceeds to pay off any pre-existing loan and then in turn the judgment holder. If there is only enough equity to partially pay off the judgment after any loans negotiations may prove successful. If there is enough money to pay off all of the judgment then negotiations will prove futile in terms of reducing the debt by a significant amount. Bear in mind that if the asset does not bring in enough money at a sale or auction the judgment holder has lost a lot of money on legal fees and court costs. If the asset does not sell for enough to pay off the pre-existing loans then the sale is negated and nothing happens so the judgment holder wasted their time and money in legal fees. This of course causes some to encumber real estate so as to make the property upside down in terms of equity. Some call this equity stripping. It means the equity in the property is removed by placing loans on the property to such an extent that if the property was forced to sell at auction it would never sell for enough to pay off the existing loan. Some use Panama Corporations for this because the Panama Corporation ownership can not be determined from public records. Additionally to make things more confusing a Panama Corporation can be owned by a Panama Foundation. This enables one to say they do not own the Panama Corporation and they can not own the Foundation since a Panama Foundation has no owner. If the Foundation and Corporation have no bank account well then no one is the signatory on any bank account and one could arrange for themselves to not be a beneficiary of the foundation nor a founder of the foundation and then it would be extremely difficult for the collection attorney to prove the debtor was not at arms length (properly distanced) from the corporation or foundation. See how hard it gets for the collection lawyer. Real hard and it is so confusing for them they will just throw their hands up in the air out of frustration. Remember they received no training on foreign corporations, foundation etc and these attorneys were not the academic scholars of the law school to start with so they will be most unlikely to go and do hours and hours of research to try and figure things out and even if they did they would need to prove to a judge conclusively what was going on. In the absence of publicly available ownership records they really have no way to go so what do they do? Not much. Now if you have no assets that come up in any public records search the collection attorney may not know that you have these assets. This of course enables you to bargain a settlement for less than the face value of the judgment. Getting a settlement of 10% today beats holding a judgment with nothing to collect it against.

More Collection Attorney Tactics – In the interest of trying to collect the money the attorney will attempt to get you to reveal what is going on regarding your asset protection. He may not have any knowledge but may have suspicions. This will come in the form of some post-judgment collection action possibly in the form of written questions, serving you with an order to appear before the judge or taking your deposition on the record or some other means of grilling you under oath. Before we go too far into this let us set the stage and identify the cast of characters. The vast majority of collection attorney debtors that they question will lie even under oath. The jails are not full of people who lied under oath in civil collection proceedings, not criminal proceedings. So bear in mind collection attorneys rarely ever get anywhere this way so don’t go off expecting this to happen for sure. People often fail to answer written questions or even questions in deposition. People fail to show up when served for post-judgment questioning sessions at court or in the lawyer’s office. People will secret their assets before answering questions. People will answer questions as to where their assets are and then go run to the bank and take the money out 30 minutes later before the attorney can do anything. In some places the judge will tell the collection attorney to take the client out in the hall and instruct the client to answer the attorney’s questions if the attorney brought the debtor in on a motion of some sort. When the client lies, objects with grounds, denies knowledge etc. the judge loses patience and tends to leave the collection attorney on his own. If the debtor indicates he has the knowledge and refuses to answer well then the judge threatens him. If the debtor has an attorney present then it will take a different tone. The judge sees this as a waste of time and tries to dispense with these matters as quickly as possible. Courts are not collection agencies. Now the collection attorney has a client and he wants to be paid by said client and does not want this client screaming mad at him for wasting his money. This means he is going to tell the client about this option but will not be encouraging about it being a probable productive solution to collecting the debt. Many collection attorneys will not go beyond attacking a fixed asset they can find like real estate or a bank account because it is so rarely productive. Wage garnishing happens in some jurisdictions but it often results in a bankruptcy, the person changing jobs or the person petitioning the court to give them relief in the form of a much lower payment or even no payment. The debtor gets a charitable attorney prepares a budget presents it to the judge and shows that they can not pay. The debtor makes sure his shabbily dressed kids and wife show up in court. The judge reduces payments or suspends the collection with review possibilities later on. Courts are government agencies and are anything but impartial and they do not want homeless people moving towards welfare and public assistance so why should they put someone on the welfare rolls just because you have an expensively obtained judgment against them. It boils down to who the heck are you, and the answer is generally nobody in the eyes of the court so go take your judgment and put it under your pillow and make a wish that it becomes collectible someday. This is how the judges in these privacy invasive jurisdictions look at regular civil judgments.

Thwarting the Collection Attorney – The way to do this is to keep your assets in the name of anonymous Panama Corporations or Panama Foundations. This keeps them from popping up when a collection attorney does an asset check. Before a lot of litigation is started an asset check is made to see what they can get if they sue you and win. If they see no good identifiable assets then they may think better about spending money to sue you. This is your best defense – litigation target minimization. The way to do this is before you are being sued. An ounce of prevention can replace a pound of cure. The ultra rich routinely do this and keep very little in their own names for these very same reasons. It is really hard to collect against assets you have no knowledge of.

Financial Enemies Coming to Panama – Let’s say your financial enemies somehow found out you had assets in Panama like real estate, bank accounts and stock brokerage accounts. Ok let us get more specific. They have reason to believe or think corporation or foundation held assets belong to you or they can conclusively prove that to be the case? It is most difficult to prove that you own a corporation since the ownership is not publicly recorded anywhere. Essentially you would have to tell them you were the owner. Why would you do that? Next what if you transferred ownership to another entity like a Panama Foundation one hour after you told them that you were the owner. Not good for them and of course there is no requirement to report any such transfer and it would not be in any public registry or database. See the problems for the other side. With a Panama Corporation ownership is based on who owns physically the stock certificates which are made out in blank hence the term bearer share. Think of the old bearer bonds – whoever had the bonds owned them. Panama Bearer Share Corporations are a nightmare for a collection attorney but let us say one tried to come to Panama. Ok they file something in the court having of course retained a Panama law firm which would be expensive and discouraging at the same time. What the heck are they going to file in court? Chances are great that whatever events resulted in the underlying lawsuit causing the judgment did not occur in Panama thus Panama Courts would have no authority. The venue would be incorrect and the case would kick out on the first go around. Panama will not enforce the foreign judgment. If they did enforce such judgments then the 150 banks and 400,000 corporations would be gone almost overnight. Now why would a judgment holder spend probably $25,000 to hire a Panama law firm and go through this exercise of futility? They wouldn’t. Even if they could show that you were the owner of a Panama corporation and/or associated with a Panama Foundation, the assets of the foundation or corporation are those of the judicial entity not yours. You can’t sue general motors because the share holders in GM have debts out for collection. The foreign judgment holder has no discovery rights in Panama. The foreign judgment has no standing in Panama.

Fraudulent Conveyance – This is a term that means you took monies or assets out of the reach of a creditor to avoid them getting your assets to satisfy a judgment. This could affect you if you move assets to a corporation or foundation after a judgment has been awarded against you. Someone could come to Panama and argue that you fraudulently conveyed money to a Panama corporation or Panama foundation to avoid them getting it. This is not an automatic event, very far from it actually. They must go to court and file arguments to support this allegation and you of course can be represented and fight back providing other reasons as to why assets were moved here. There is a three year statue of limitations on this. This means if three years has passed such an action can not be brought. These actions are expensive, and time consuming not going to trial for years and not easy to win for the person bringing the fraudulent conveyance lawsuit.

Fraudulent Conveyance Issues of Importance – If the underlying judgment was served on you by mail, publication or some method other than service by a live process server the whole court case and judgment is not recognized as valid in Panama and this of course means there is no valid debt in Panama. The fraudulent conveyance case would be moot lacking a valid debt.
Panama Foundation assets are not freezable pre-trial which would present a problem for some creditor in that what does he do if you just move the assets to another country while he sues you in Panama. This is another big reason why these fraudulent conveyance actions are not common in Panama. In Panama a fraudulent conveyance is not an illegal action the law just allows for the creditor to collect the amount of their debt if they can successfully prosecute a civil fraudulent conveyance case.
If you put the assets in the name of a Panama Corporation and then moved them to another Panama Corporation or Panama Foundation it would take a very long period of time for the creditor to realize this and figure out he was litigating against a basically empty bank account. Again another reason why fraudulent conveyance actions are not common in Panama. Panama law does not allow for discovery to freely violate Panama Corporate Secrecy, Panama Foundation Secrecy or Panama Bank Secrecy. Panama is a privacy jurisdiction and getting such information through the court system is burdensome and far from easy and not often granted. If this was not the case we would not have over 400,000 corporations and 150 large international banks in Panama. For an action against you personally in Panama you must be served by a live process server lawfully.

Planning – This is your best protection. Have your asset protection structure built up securely before trouble comes. In any event keep a positive attitude and there is always something that can be done.

http://www.panamalaw.org
http://www.panamalaw.org/asset_protection.html
http://www.panamalaw.org/why_use_a_law_firm.html
http://www.panamalaw.org/panama_law_civil_judgment_collection.html

Pages of Interest:

Panama Foundations
Foundation Protectors
Bullet Proof Asset Protection
Bearer Share Corporation
Confidentiality Agreements

Article Source: http://www.articlesemporium.com/.