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. 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.
An appointment of a receiver does not always make economic sense because a receiver is typically 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. In smaller cases, therefore, it is rarely in the best interest of the client to proceed with the receiver. In larger cases, however, a receivership is something we seriously consider and have used many times.