Your debtor is a fairly accomplished author and you’re pretty sure that he periodically receives royalties on some of his works, even though he tells you that he doesn’t earn any royalty income.
As is often the case, your debtor’s tax returns are a great place to find evidence of an asset. Royalties are taxable income. The debtor should therefore have reported any royalties he received in a given year on his tax filings. Depending on which type of royalties he earned, you will find the royalties reported on his form 1040 and either the Schedule E to the 1040 or the Schedule C/Schedule C-EZ.
If you have access, another great place to look for the income is in your debtor’s bank records. If your debtor is receiving royalties, he is probably receiving them on some kind of a regular basis. If he’s depositing checks each month in roughly the same amount from the same entity, he just may be receiving royalties as you suspected.
In our blog about tracking down a patent, trademark or copyright, we told you how to search the U.S. Copyright Office and U.S. Patent Office for patents, books, music, art and other “works of authorship” in which the U.S. has vested a property right. Both the Patent and Copyright offices allow you to search using the name of a person. If a copyright is registered to your debtor, you might be able to find it by doing a name search. This won’t show you the amount your debtor makes in royalties, but it will give you a better idea as to which copyrights earn your debtor income.
Once you have figured out a bit more about the types of royalties your debtor earns, it’s time to get on the phone. If you know the publishing company or entity that is paying your debtor royalties on his work, give them a call and ask them for the amount your debtor earned for the most recent earnings period. The person on the phone will probably be unaware of the circumstances surrounding your divorce and might not hesitate to answer this question for you. This will give you insight both into the amount earned by your debtor as well as how often your debtor receives the payments.
Finally, don’t assume that your debtor only earns income on works that he copyrighted. Maybe your debtor’s mother was a singer with a couple of hit singles several years ago. Maybe his father wrote a best-selling novel which is still sold at your local Barnes & Noble. Think back to stories your debtor has told you about his family members. It just may be that one of them left their lucrative royalty rights to your debtor.