Turnover Receivers and Debt Collection
Here, learn about the role of a turnover receiver in debt collection. Understand what a turnover receiver is, how creditors use the receivership process to collect debts after a judgment has been entered, and what a receiver can and cannot do.
What is a turnover receiver?
A turnover receiver is a person appointed by the court to find and collect your property to pay a debt judgment you owe. The receiver does not represent the creditor directly; they are an officer of the court.
What property can a receiver take?
A receiver can take any "nonexempt" property to pay the debt. Texas and federal law protects ("exempts") certain property, as discussed below, but anything else is subject to being taken by a receiver. This is most often financial accounts but can also include real estate, stock certificates, rents, contractual interests, and other property that is difficult to collect in other ways.
Can a receiver take my paycheck?
Generally, no, a receiver cannot order your paycheck to be taken directly from your employer, just as your paycheck cannot be garnished.
However, there is some debate about turnover receivers and whether they can take your paycheck once it has been deposited into a bank account or cashed. This is one area where a turnover receiver is different from a garnishment. In a garnishment, once your paycheck has been deposited to your bank account, it is no longer considered "current wages" and is no longer exempt. But Texas Civil Practice & Remedies Code 31.002(f), the statute on turnover receivers, says that "proceeds" and "disbursements" from exempt property cannot be taken by a receiver, and the Texas Supreme Court has stated that this statute "prohibits the turnover of the proceeds of current wages."
If a receiver has taken your wages or an account that holds proceeds or disbursements from your wages, it is best to speak with a lawyer to help you try to get the property back. Use our Legal Help Directory to search for a lawyer referral service, legal aid organization, or self-help center serving your area.
What property cannot be taken by a receiver?
Both Texas and federal laws have set limits, called "exemptions," that protect certain types of property from turnover receivers. Exempt property includes things you need to live on, such as:
- Your homestead
- Vehicles (one per licensed driver)
- Current wages (except to pay child support, spousal support, alimony, and federal debts like taxes and student loans)
- Social Security Administration benefits, including Social Security Retirement, SSI, and SSDI
- Veterans Administration benefits
- Railroad Retirement Board benefits
- Office of Personnel Management retirement benefits
- FEMA disaster benefits
- Workers’ compensation benefits
- Unemployment benefits
- Child support, alimony, and spousal support
- Pension, retirement benefits, and retirement accounts like 401(k) and IRA accounts
- Temporary Assistance for Needy Families (“TANF”) funds
Other personal property can also be protected up to an amount of $50,000 for an individual (or $100,000 for a family), including items such as:
- Home furnishings
- Farming or ranching vehicles and implements
- Tools and equipment used for a job
- Jewelry (up to $12,500 for a single person or $25,000 for a family)
- 2 firearms
- Livestock and household pets
- Unpaid commissions for personal services (up to $12,500 for a single person or $25,000 for a family)
A full list and more information about these exemptions can be found here.
See also Texas Property Code Chapter 41 (homestead exemptions) and Chapter 42 (other exempt property)
A receiver was appointed and tried to contact me. Should I respond?
You may have received paperwork asking about any nonexempt property you own. It is important that you respond to the receiver. If you do not answer, you risk the receiver taking your exempt property. Even if you only have have exempt property, you should respond and let the receiver know that.
A receiver is also allowed to contact you to negotiate a payment plan for a debt you owe. While a payment plan can be a good option for some people, if your only property and income is exempt, you may be judgment-proof and should keep this in mind when speaking to a receiver about a payment plan. For more information about what it means to be judgment proof, see Texas Appleseed's Debt Collection Rights Toolkit.
Can a receiver sell my property?
Yes, a receiver can take money and property to pay the debt owed. If there is nonexempt property taken by a receiver, such as real estate, stock certificates, or other physical property, the receiver has the power to sell that property to pay the judgment creditor.
A receiver cannot sell property for at least 14 days after a debtor is served with the Notice of Protected Property Rights to allow the debtor time to claim any exemption.
Can the receiver take or sell property that is worth more than the judgment?
Yes, a receiver can take nonexempt property to pay the debt owed as well post-judgment interest and other costs. These costs usually include the creditor's attorney's fees, the receiver's fee, and other expenses.
If the property taken or sold is worth more than the total amount owed (including the added costs and fees), any leftover proceeds from the sale will be returned to the debtor.
How long can a receivership last?
The court determines the length of the receivership, but it can last up to 180 days. Under recent rules issued by the Texas Supreme Court, if a creditor wants to extend past the 180 days, they must show "good cause" for the extra time.
How much does a receiver cost? Who pays for the receiver's fees?
The fees of the receiver are first set by the court in the Order Appointing Receiver. These fees can be significant, sometimes as much as 25% of the judgment collected. The receiver's fees are paid by the debtor, and the receiver can take property to pay these fees in addition to the debt being collected. Once the receivership ends, the final fee must be "reasonable," as determined by the court or by agreement of the debtor.
The receiver has taken my exempt property. What can I do to get it back?
If a receiver has taken or frozen your exempt property, you should file a Protected Property Claim Form with the court as soon as possible. You should have received this form from the creditor after the receiver was appointed.
It is important to turn this form in as soon as possible after receiving it. The receiver can begin selling property and releasing money to the creditor after 14 days. However, even if more than 14 days have passed, you should still submit the form if exempt property was taken.
For more information on the Protected Property Claim Form and how to fill it out, read the Exempt Property guide.
Exempt Property in Debt Collection: Forms and Instructions
Garnishment in Debt CollectionThis article explains the basics of the garnishment process as a method for collecting debt after a judgment has been entered.
Property That Can Be Protected from Judgment CreditorsThis article discusses the types of property that are protected (or "exempt") from being taken by creditors to pay debt judgments.
My Bank Account Has Been Frozen: Now What?This article explains what to do when your bank account is frozen because of a debt collection judgment.