So if you have found the assets, the next step is to understand the outstanding liabilities, or potential liabilities that may be down the road.
- Civil Litigation – The key here is to identify any ongoing state or federal litigation that the party may ultimately be liable for. Recent or historical litigation may also provide a clue as to the mode of operation for the individual or business – if they are likely to settle or if they may be dragging things out for years.
- Bankruptcy Filing – For obvious reasons, knowing if a party has already filed for bankruptcy would be a key part of your decision whether it’s worth pursuing legal means to retrieve assets. If the individual or business has a history of filing for bankruptcy, this may be a clue for the future.
- Judgment and Lien Filings – Recent court judgments or state/federal tax liens may be a sign that financial trouble is very near. A history of judgments or liens may a glimpse of what may come down the road.
- UCC Filings – In general, Uniform Commercial Code filings are made against a property to create a lien to secure private financing. Before you get too excited about that $200,000 piece of equipment that you have found in the opposing party’s possession, you should check with the appropriate Secretary of State to see if the equipment has been used as collateral in any financing agreements.
- Property Liens – It’s great that you are aware of multiple properties owned by the party, but if those properties are highly leveraged, you are going to have a difficult time getting anything.
This post is part of a series of posts entitled The Anatomy of an Asset Investigation. Our next post delve into some ways of identifying hidden assets that you may not have though of.