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Reach and Apply Injunctions Can Collect Bad Debt

by | Jan 30, 2019 | Reach and Apply Injunctions

The remedy called reach and apply injunctions is often used by creditors to ensure their debtors are required by the law to pay them back even when they show their bank balance is nowhere near the amount they owe. Therefore, reach and apply injunctions make for a great legal instrument for creditors. They give you – as a creditor – teeth and claws to fight against a debtor who is unwilling to fulfill a responsibility, which is likely to result in a significant financial loss to you. With reach and apply remedies, you have an effective tool in hand to go after your monies and payments – to recover what is lawfully yours – that are at the risk of becoming a total loss value in your balance sheet.

Therefore, it is imperative that you understand the dynamics of reach and apply attachments. In this post, we discuss the structure of this remedy for creditors seeking repayment for bad debts and other significant considerations that come into play during a reach and apply action. As the reader, this post provides you all the important bits of information you will need to become comprehensively familiar with reach and apply injunctions and to be more active in the decisions your lawyers make in this direction if you ever need the remedy.

For more information about how the Massachusetts debt collection lawyers at the Law Offices of Alan M. Cohen & Associates LLC  use reach and apply injunctions, please click here.

What are Reach and Apply Injunctions?

Beginning with the basics, the most important thing is to understand the technical definition of this remedy. Reach and apply injunctions are in effect an attachment tool  that becomes applicable upon discovery of information about the debtor’s pending accounts receivable.

In simpler words, if your debtor owes you money and is unwilling – or unable – to pay you back, and you discover a third party that owes your debtor monies, you can request the court of law to reach these monies/properties and have your debtor’s debtor pay you instead so that you can apply them to the monies due to you. Hence the name reach and apply.

Under Section 3 of Massachusetts General Law – Chapter 214, the courts in the Commonwealth of Massachusetts can decide reach and apply injunctions with special jurisdiction. The commonwealth’s law provides the courts this special jurisdiction in line with its goal to uphold justice and help businesses get what they are owed.

Conditions that allow you to seek reach and apply remedies

As a category of attachments for lawsuits, reach and apply injunctions are only applicable when the situation qualifies for a short set of requirements. If the plaintiff fails to satisfy these conditions, the remedy of reach and apply is not applicable in their case.

Therefore, to seek a reach and apply remedy, the plaintiff (the creditor – you) is obliged to satisfy the following conditions, which require that:

I. The existence of the debt is established; and

II. The existence of the defendant’s accounts receivable is established (See Estate of Johnson v. Rose (2007, Mass. Super. Lexis 184).

In other words, the first condition requires that the creditor looking to recover their monies has to first provide sufficient evidence in the court to prove the debt they seek is lawful. This can be established in multiple ways but is often done by means of a contract in writing, as service providers routinely issue service briefs before any services are rendered and materials suppliers also produce invoices to keep track of materials supplied (on credit).

The second condition requires that, as the plaintiff, you provide sufficient evidence for the court to determine that your debtor is owed monies by another party (or other parties). You have to prove there is enough evidence available to demonstrate that your debtor also has at least one debtor who is lawfully required to pay them back what is owed.

This debt of your debtor can be in any form that is recorded under their accounts receivable in the balance sheet. Incidentally, any ownership share in a business, or real assets, can also be used in this regard and you can request the court to reach these properties for your repayments.

Who can qualify for using reach and apply remedies?

Reach and apply remedies are often sought in commercial debt collection lawsuits. Businesses operating in any field can qualify for pursuing reach and apply injunctions in their bad debt problems as long as they fulfill the conditions stated above.

Types of reach and apply injunctions in Massachusetts law

Reach and apply injunctions are attachment remedies that can be put to use in a number of ways. Generally, the application of injunctions depends heavily on your lawyers’ grasp of the subject. With advanced knowledge of the reach and apply remedies, an experienced debt collection lawyer can find a way to include these attachments in the lawsuit appropriately.

In terms of when a reach and apply attachment may be included in an action, this type of injunctions can be divided into two categories: pre-judgment and post-judgment. As the name suggests, pre-judgment application of reach and apply injunctions indicates these attachments are included as a supplementary component during the primary filing of the action.

Similarly, post-judgment application of reach and apply remedies involves invoking the court for reaching your debtor’s accounts receivables and applying them for your debt’s repayment once the court has issued a judgment in your primary lawsuit.

We discuss both these types of reach and apply actions in considerable detail in the paragraphs that follow along with important matters related to each.

For more information about the fundamentals of reach and apply injunctions, please click here.

Pre-Judgment Applications of Reach & Apply Injunctions

Pre-judgment application of reach and apply injunctions indicates inclusion of these attachments during the primary lawsuit that you file to pursue repayment of a bad debt. Such an inclusion makes it a supplementary component of your initial lawsuit, which shows your debtor and their lawyers that you came prepared.

This strategy, however, only comes from seasoned debt collection lawyers who ensure their clients have to wait as little as possible to get back what they are owed. Another important reason for using this strategy is to give the debtor no chance to plead for relief.

Now, it is possible your debtor owes money to other creditors as well, but, since you discovered the evidence of the debts they are owed and proved in court this is their property, your lawyer can make a convincing argument to put you in the first spot of the repayment queue.

Hence, as you can see by now, the success of your reach and apply injunction remedies heavily depends on the information that you have. If you hire a lawyer who has little experience with reach and apply injunctions, you will likely miss accurate pre-judgment application of this highly effective tool.

To learn how the Law Offices of Alan M. Cohen & Associates LLC can effectively build you a pre-judgment strategy for a reach and apply remedy, click here.

With or without other pre-Judgment attachments

Pre-judgment attachments amplify your ability to secure payment from your debtor to pay your debt as agreed upon by both parties at the time the debt was created. These attachments enable you to move the court to seize any properties owed to your debtors before the final judgment for your lawsuit is reached.

Reach and apply injunctions can be included in your lawsuit for repayment as pre-judgment attachments, but you will need to pursue it after thorough research and preparation. The court would like to see solid evidence indicating that reaching this discovered property owed to your debtor before the case closes is the right course of action before your application is approved.

Reach and apply injunctions can be used as pre-judgment attachments along with other such attachments. This means, when you are preparing to use a reach and apply pre-judgment attachment, you can pursue other applicable pre-judgment attachments as well.

A reach and apply injunction is not a mechanic’s lien remedy

There are many types of pre-judgment attachments, and, while a layman might get confused telling the two apart, a reach and apply injunction and a mechanic’s lien are two distinct types of pre-judgment attachments. Reach and apply injunctions are used for recovering a bad debt by suing the debtors (customers and other entities that owe monies) of your debtor directly for repayment of your debt.

On the other hand, a mechanic’s lien is an attachment for protecting service providers and materials suppliers working in the construction industry to claim payment from property managers/owners if they are not paid according to their contract even if paying their dues was the contractor’s responsibility and not the property manager’s. Mechanic’s liens can only be filed for payment of dues earned for labor or materials done on real estate property.

For more information about how to enforce mechanic’s liens effectively, click here.

Differentiating reach & apply injunctions from ex-parte bank attachments

Similarly, your reach and apply injunction is not the same as an ex-parte bank attachment. While we have already defined reach and apply injunctions in varying terms twice above, ex-parte bank attachments are pre-judgment remedies that you can pursue to have your debtor’s bank accounts seized before court proceedings on your lawsuit conclude. An ex-parte bank attachment is exclusively used to incapacitate your debtor from moving their money out of the bank to avoid repayment of the debt to you.

Understanding the difference between reach and apply remedies and these other common pre-judgment attachments is important because it helps see all the ways with which you can lawfully restrict your debtor to pay you back the monies you are owed. Remember: you can use any combination of these pre-judgment attachments in your lawsuit, depending on the circumstances and the depth of your lawyer’s research capabilities. For more information about using ex-parte bank attachments effectively, click here.

Post-Judgment Applications of Reach & Apply Injunctions

In contrast to pre-judgment attachments, post-judgment attachments are used for conclusion of a lawsuit to seek remedies. These attachments are frequently used by plaintiffs to reach favorable decisions on appeals.

Reach and apply injunctions are also sometimes applied post-judgment to introduce new evidence about debts owed to the plaintiff’s debtor. As the creditor, you certainly don’t want to see your debtor walk away without paying you what is owed to you. Post-judgment reach and apply injunctions allow you to go after the monies owed to your debtor if you were unable to produce sufficient evidence in this regard during the course of your lawsuit.

How are post-judgment reach and apply attachments achieved?

Post-judgment reach and apply attachments become important for numerous reasons. The most important reason is the fact that your debtor may find ways to delay payment and wait for the court’s order to expire. Once that happens, they can simply ignore the order to repay you until you can get a new order to the same effect and have it enforced.

Therefore, using reach and apply injunctions as post-judgment attachments can help you get the money you are owed and not letting your debtor get away with their delaying tactics. Also, as stated above, using post-judgment reach and apply injunctions can also help if you only discovered evidence about the monies owed to your debtor after your lawsuit was concluded.

With equitable injunctions for both local or foreign judgments

Now, the effectiveness of your reach and apply injunctions – whether applied pre-judgment or post-judgment – depends immensely on the lawyers you use. The knowledge and experience of a seasoned commercial debt collection lawyer will ascertain you have the best chance of getting repaid for monies you lent or services and/or materials for which you have not yet been paid. For instance, while a novice lawyer may refuse a foreign judgment enforcement case as a reach and apply attachment, an experienced lawyer will confidently take the case and help you reach the monies owed to your debtor and apply them to repay you even if the decision comes from a foreign court.

For more information about how the Law Offices of Alan M. Cohen & Associates LLC effectively uses reach and apply injunctions to collect bad debts in Massachusetts, please click here or call 508-763-6604 or email [email protected].