Appointment of a Receiver in Texas to take possession of, and sell, the judgment debtor’s assets is an effective collections tool.
The Texas turnover statute allows for the appointment of a receiver in Texas over the assets of the judgment debtor. It has been our experience over the last 20 years that courts have become much more receptive to the appointment of a receiver over a judgment debtor. We do not use this process very often because it can lead to the reduction in the assets available for recovery. But there are certain debtors for whom the receivership process is well-suited. For instance, debtors who engage in a large number of cash transactions or who have a lifestyle that seems to far exceed the financial data that has been provided.
A receiver in Texas is an officer of the court and works for the judge. So a receiver does not normally report directly to the creditor’s lawyer. However, it is the receiver’s job to collect the nonexempt assets of the debtor and make them available for collection by the creditor.
The reason that the receiver does not always make sense economically is because most of the time a receiver is paid 25% of whatever is collected. The sum paid to the receiver does not reduce the sum of the judgment. But it does reduce the assets available for collection.
So in smaller cases it is rarely in the best interest of the client for us to proceed with the receiver. But in larger cases, a receivership is something to which we give serious consideration and have used many times.
- The Abstract
- Writ of Garnishment
- Post-Judgment Investigation
- Post-Judgment Written Discovery
- Post-Judgment Deposition
- Motion to Compel
- Motion for Contempt
- Arresting the Debtor
- Discovery Has No Limits
- Motion for Turnover
- Appointing a Receiver
- Writ of Execution
- Property Exempt from Execution
- Spousal Property
Questions About Appointing a Receiver
What is a court-appointed receiver in a Texas collections case?
A receiver is a neutral third party appointed by a court to take possession of, manage, and liquidate a judgment debtor's non-exempt assets on behalf of the creditor. The receiver is an officer of the court — they work for the judge, not directly for the creditor or the creditor's lawyer — but their job is to collect the debtor's assets and make them available to satisfy the judgment.
When does a receivership make sense economically?
Receivership is most appropriate in larger cases. Receivers are typically paid approximately 25% of whatever they collect — that fee does not reduce the judgment amount, but it does reduce the assets available for recovery. In smaller cases, that cost usually makes receivership impractical. In larger, more complex matters — particularly where the debtor has ongoing business activity, significant cash transactions, or assets requiring active management — a receiver is a tool we use frequently and have used successfully many times.
What type of debtor is a receivership best suited for?
Debtors who engage in a large volume of cash transactions or whose apparent lifestyle significantly exceeds what their financial disclosures suggest. A receiver can monitor ongoing business operations, intercept income streams, and manage assets in ways that a one-time enforcement action cannot. When a debtor's financial picture doesn't add up, a receiver can get inside it.
Does a receiver report to the creditor's lawyer?
Not directly. The receiver is a court officer and reports to the judge. However, the receiver's mandate — collecting the debtor's non-exempt assets for the benefit of the creditor — aligns with the creditor's interest. We work cooperatively with receivers and provide them with the information and legal support needed to do their job effectively.
How does a receivership get started?
A receivership can be requested as part of a turnover proceeding. We file the motion for turnover and simultaneously request that the court appoint a receiver to take control of identified assets. The court then evaluates whether the facts support receivership and, if so, appoints a qualified individual to serve in that role.