Introduction
This guide will walk you through what to expect at a disclosure hearing, and what you will need to know to go in prepared. This is only a brief summary of your rights. There are other ways a creditor can collect a debt from you. If you have more questions, contact your nearest PTLA office.
A disclosure hearing can happen once a creditor has a judgment against you for money you owe. Sometimes the creditor must take you to court to find out what property and income you have. This is called a disclosure hearing.
Is this guide for you?
You can use this guide if:
- You lost a debt collection court case, and
- You are scheduled for a disclosure hearing, or think you might be soon.
You can start with Disclosure Basics to learn more about the disclosure process and get answers to some of the most frequently asked disclosure questions. There is also a video there that gives a general overview of some of the most important things to know about your disclosure hearing.
Disclosure Basics
What is disclosure?
If you were sued on a debt and lost your case, your next step may be 'disclosure.’' The person or company that you owe the debt to can use this “disclosure” process to get more information about your income and assets. They then use this information to figure out how to collect the debt you owe them.
The person or company you owe the debt to is called a ‘creditor.’ Sometimes the creditor must take you to court to find out what property and income you have. This is called a disclosure hearing. At the end of the disclosure hearing, the judge will decide whether you have anything the law allows the creditor to take. The judge will also decide how much your payments on the debt should be, and when you need to make those payments.
A good place to start is by watching this video that explains some of the most important things to know about the disclosure process. We have more detailed information about this in this guide, but the video covers the basics.
How will I know if there is going to be a disclosure hearing?
You will probably get a disclosure subpoena. This is a document that will tell you the date, time and location of the disclosure hearing. Usually a deputy sheriff delivers the subpoena.
It is very important to go to the court on the date and time in the subpoena. The subpoena is a legal document that you need to obey. You cannot obey the subpoena by calling the clerk or the judge.
In small claims cases, the judge may set up a date for a disclosure hearing in the original court judgment. This means there will be no subpoena, but all other rules about going to court still apply.
What if I can't go to the hearing when it is scheduled?
If there is a very good reason why you can’t go to the hearing when it is scheduled, you may be able to get the hearing re-scheduled. This is called a continuance.
If you have a very good reason, call the creditor's lawyer and ask for a "continuance by agreement." If the creditor's lawyer agrees, put your agreement in writing. You will both need to sign it. Next, file it with the court before the original date for the hearing. ‘Filing’ just means handing or mailing the signed agreement to the court clerk. If you don't do this, the court can take action against you because you did not show up.
If you can’t agree, send a letter to the clerk of the court to explain why you need a continuance. Send a copy of this letter to the creditor's lawyer. Do this as soon as you can. If you wait to send a letter to the clerk, you may not know whether the continuance was approved by the judge until the date of the hearing. If the judge denies your request and you do not appear, there may be penalties.
What if I don't go to the hearing?
Because a subpoena is a legal document that you need to obey, you should go to the hearing unless there is a very good reason that you can't, like if you are in the hospital. You cannot send your spouse or anyone else in your place. If you don't go to the hearing, a few different things can happen.
- The judge can order the sheriff to “arrest” you for up to three hours and bring you into court for the disclosure hearing. If the three hours runs out before you have had your hearing, the court will release you if you promise to come to a hearing at a certain time in the future. If you do not show up at the time you promised, you can be found in contempt of court. If this happens, you can be charged with a Class E crime, which means you could be punished by fines or jail time.
- Your employer may be ordered to withhold a part of your paycheck to pay the debt.
Note: In small claims cases, the judge may set up a date for a disclosure hearing in the original court judgment. This means there will be no subpoena, but all other rules apply.
What if I don't pay after I've been ordered to in a disclosure hearing?
If you don’t follow a disclosure order to pay a debt, you may be summonsed for civil contempt of court. This means you will have to go to court again for a contempt hearing, and could face some serious penalties.
At the contempt hearing, you will be given a chance to tell the judge the reasons you haven’t paid. If the judge finds you have a good reason for not paying (like if you were laid off from work or you were ill or injured), they can dismiss the contempt motion.
But, if the judge finds you do not have a good reason, they can jail you or fine you. The purpose of the punishment is to force you to pay. If you can come up with the money that you owe under the order, you should be released from jail or not have to pay the fine. You should get advice from a lawyer if this happens.
Also, if you miss two or more payments under an “installment order,” the court may order your employer to withhold some of your wages and to send that money to the creditor.
Is any of my income or property safe from the creditor?
Yes. Maine law recognizes that there are certain basic things a person needs in order to live. Some property and income cannot be taken from you unless you agree.
Exempt Property
Some property is totally exempt from debt collections (unless you have put the property up as collateral). This means the creditor can’t take this property. “Equity” means the amount of the value of your property which is available to you, after accounting for any existing liens. These items are exempt:
- Equity in your home up to $94,300.
- This exemption increases to $188,550 if:
- a minor dependent lives with you, or
- you are at least 60 years old or disabled, or
- you have a dependent who is at least 60 years old or disabled.
- If you don’t own a home, you can apply this exemption to a burial plot.
- Equity in one vehicle up to $11,800.
- Cash and money in bank accounts up to $3,550.
- Equity in “tools of the trade” of up to $11,200.
- Your clothing up to $600 in value for each item.
- Equity in household furniture, appliances, and other household goods up to $600 for each item.
- Jewelry up to $1,200 in total value, and your wedding and engagements rings, up to $4,750 in total value.
- Life insurance contracts (and up to $5,900 in any accrued dividends, interest, or loan value in such contracts).
- Certain farm equipment if you are a farmer.
- A fishing boat, not longer than 46 feet, if you fish commercially.
- Certain amounts of heating fuel and cord wood.
- Your furnace, heating stoves and one cook stove.
- Prescribed health aids.
- A supply of food, seed, and gardening tools.
- You may also claim a $600.00 exemption on any property whether or not otherwise exempt.
If you have not used all of your home equity exemption (the first item on this list), you may use up to $12,400 of the unused portion to protect your clothing, household goods, tools of trade, or personal injury award.
Exempt Earnings
From your weekly income or paycheck, this amount is protected from debt collection:
- $586.00 (40 hours x $14.65, the Maine minimum wage), or
- 3/4 of your take home pay, whichever is more.
Important Note: Different rules apply to some special categories of debt, like child support.
Exempt Sources of Income
These sources of income are exempt from debt collection:
- TANF
- Social Security & SSI
- Veterans Benefits
- Worker’s Compensation
- Maine State Retirement Benefits
- Unemployment Compensation
- Alimony or support necessary for support of debtor or dependents, including child support payments
- Other forms of public aid
- Earned Income Tax Credit and Additional Child Tax Credit
Some other kinds of income are exempt, like: income from certain pension funds and retirement plans, certain life insurance payments, and certain types of damage awards. Even if you have exempt sources of income, they may be counted in calculations about what you can pay if you also have non-exempt income like wages. Get legal advice if you have questions about this kind of income.
If your exempt property, income, or earnings are taken by order of the court, seek legal advice immediately. You can call Pine Tree Legal Assistance for help.
Important Note: These rules may not apply if you have put your property up as “collateral” to secure a loan, such as a car loan or a home mortgage. Remember, these rules do not apply to certain types of debt, such as child support.
Before you go to court, make a list of all your income and expenses and all your assets and debts. This is to make sure you don’t forget any of them when you get to the hearing. Take the list to court with you.
If the subpoena ordered you to bring certain documents, bring them. It is important that the judge knows what all your debts and expenses are, as well as your resources. Otherwise, you may be ordered to pay more than you can really afford.
What happens at court?
Showing up, and what to do if the creditor isn’t there
Get to the courthouse early if you can. It is very important to be at the hearing on time. If you are not sure which courtroom you need to go to, ask the court clerk. Go into the courtroom and sit down so you are ready when the judge calls your name. When the judge calls your name, stand up and answer.
If the creditor or their lawyer does not answer when called by the judge, ask the judge to "terminate" the disclosure hearing. If the creditor does not go to the hearing, you cannot be ordered to go to a hearing about this debt for at least six months (unless the court finds that the creditor had a very good reason for not going to court).
If this happens, your debt does not go away. The disclosure is just postponed for six months.
Talking to the creditor’s lawyer
When you get to court, the creditor’s lawyer may try to negotiate a payment plan with you. The court will probably encourage you to meet with the creditor's lawyer outside the courtroom. Here are some tips for talking with the lawyer:
- Do talk with the creditor’s lawyer, especially if the court asks you to do this. Talking is ok. If you talk it over, you may be able to agree on payments that you can afford.
- Do not agree to a payment plan just because you are afraid of having a hearing, or because the creditor’s lawyer really wants you to make an agreement.
- Do not agree to payments that are more than you can realistically afford. You can always get a hearing before the judge if the lawyer is requesting payments that you think are too high for you.
- You do not need to make an agreement before the hearing. The hearing will cover the same issues the creditor's lawyer discussed with you.
- If your income is exempt from collection, you do not need to agree to make payments. (But you can if you want to and can afford them.)
What if I make a deal with the creditor’s lawyer?
If you reach an agreement with the lawyer before a hearing, it will usually be reflected in an “affidavit and agreement.” You and the lawyer sign the agreement. Then the judge will use this to write a payment order.
If you enter into a payment agreement with the creditor's lawyer, don’t leave the courtroom until the judge knows what the agreement is. Go with the creditor’s lawyer to tell the judge the agreement, and make sure the judge's order matches your agreement. You will probably get a copy of the judge's order while you are there. Read it, and make sure it is correct before you leave.
What will happen if we go to a hearing before a judge?
The creditor’s lawyer will ask you what property you own, how much money you make, and what your expenses are. You are under oath and you must tell the truth. If the creditor’s lawyer does not ask about your expenses and debts, you should explain these when the judge asks if you have anything more to say. If the judge doesn't ask, you should tell them anyway. Use the list of expenses and debts you wrote down before coming to the hearing. This will help the judge to see how much you can afford to pay the creditor.
What can the judge order once the hearing is over?
When the disclosure hearing is over, wait and see what the judge will say. If the judge decides that you have no ability to pay anything right now, the judge will say so. The hearing will then be “terminated.” If that happens, the creditor will not be able to request another disclosure hearing on the same debt for another six months. But, your debt does not go away.
If the judge decides you are able to make payments, they can order a few different things:
- You can be ordered to pay cash. If the judge decides you can pay the debt in one payment, you will be ordered to do so. If the judge decides you do not have the ability to pay the debt in one payment, you can be ordered to pay installments. This means that you would have to pay a certain amount every week or every month, or whatever time period the judge orders.
- The judge can order you to turn over something you own to the creditor. This could be anything that is not exempt or is above or beyond what is exempt, such as a 4-wheeler or a second car that you own. The creditor would sell what you turned over, take the money you owe, and return any leftover funds to you. If the judge orders you to turn property over to the creditor, make sure that you tell the judge what the property is worth. If you do not know, ask the judge to order an appraisal. Someone who knows what that kind of property is worth will look at your property and decide what it is worth. This will give you an idea of how much the property should be worth at a sale.
- The judge can order that a lien be placed on property you own. This means that the creditor will have a claim to part of your property until you pay back what you owe. If someone has a lien on your property, you may not sell it without the consent of the creditor. The creditor may have already put a lien against your property - based on the earlier court order saying that you owe debt.
Summary and Conclusion
Going to court for a disclosure hearing can be scary, but you can do this! Keep these things in mind and come back to this guide or contact Pine Tree Legal Assistance if you need help.
It is very important that you obey the judge’s orders and pay what you are ordered to pay. If you do not, you may be found in contempt of court and could face fines or jail time.
It is also important to remember that if your income and assets are exempt, you do not have to agree to make payments - and you cannot be ordered to pay from your exempt income and assets. If your exempt property, income, or earnings are taken by order of the court, seek legal advice immediately. You can call Pine Tree Legal Assistance for help.
Remember, if you have a disclosure hearing you must:
- Attend the hearing
- Share all the information you can about your income, assets, and expenses
- Be accurate and honest about what you make, own, and spend
- Follow any court orders the judge makes