Collecting the Money Judgment
So you filed a lawsuit, either with an attorney or by yourself in Small Claims Court, and you got a judge to agree with you and award you a judgment against the person and/or entity who owed you money, "the judgment debtor". What do you do now!
The fact that you have a judgment does not mean that you will be paid. It only gives you the legal right to collect the money owed.
It is your responsibility as the "judgment creditor" to take legal steps to force the debtor to pay the judgment.
There are three major components to consider in enforcing money judgments:
- The judgment must be domesticated in the State where the debtor resides or has assets.
- All judgment liens should be perfected as soon as possible.
- The creditor may enforce the judgment by executing upon the assets of the debtor.
If your judgment was entered in another state, the out-of-state judgment must be entered in California. If you have a judgment in California, it must be entered in the state where the debtor resides or has assets.
To enter a judgment in California, you must file a certified copy of the judgment from the other state, along with the required Court forms. If the judgment is contested, a hearing will be held.
If you locate property belonging to the judgment debtor, an Abstract of Judgment can be issued by the Court where you obtained the judgment and you can record it in each and every County where the judgment debtor owned real property, or each county where you suspect the judgment debtor may own real property.
Liens on for personal property assets of the debtor are perfected by filing with the Secretary of State a Notice of Judgment Lien, and thereafter serving the judgment debtor.
Liens can also be placed on lawsuits. If the judgment debtor has a pending lawsuit in which money is sought, you can place a lien on any potential recovery or settlement.
In all of the previous three examples set forth above, the judgment debtor can not sell, refinance or transfer the real property, or settle or obtain a judgment in the debtor's favor, without paying your judgment lien.
You can obtain a Writ of Execution from the Court and submit same to a levying officer, usually the Sheriff's Office, to have assets owned by the debtor seized to satisfy your judgment. This includes, but is not limited to:
- Bank Accounts
Residential Real Property
Before you can force the sale of the debtor's primary residence to pay your judgment, the law requires that a hearing be held to determine if there is sufficient equity in the property, after deducting the mortgage, statutory homeowner's exemption and costs of sale, to allow the property to be sold and the net proceeds to be used to satisfy your judgment. If the Court finds that there is insufficient equity in the property after considering all of the deductions, the property will not be ordered sold.
Investigation of the Debtor's Assets
In order to proceed with any of the above remedies, you must know of the existence of the assets of the debtor. This may require the retaining of a private investigator to locate assets, as well as the scheduling by you of a court supervised examination of the debtor as to the nature and extend of the debtor's assets.
A debtor may be examined, under oath, by the creditor, provided he is served with an Order to Appear in Court, and such an examination is not held more than every three months. A non-corporate judgment debtor may examine the debtor without using an attorney, but a corporate creditor must utilize an attorney to examine the debtor. You can also serve the debtor with a Subpena Duces Tecum, requiring the debtor to bring to the examination certain specified documents, such as bank records, checking accounts, etc., for the judgment creditor to review and which may disclose the nature, extent and location of any assets owned by the judgment debtor.
A judgment is valid for a period of ten (10) years from the date that is was entered by the Court. In addition, prior to the expiration of the 10 year period, you can apply to the Court for an extension of the judgment for an additional 10 year period. Therefore, you have 20 years to collect on your judgment, provided the judgment debtor does not file for bankruptcy, which may effectively wipe out your judgment.
Not all judgments are collectible. Not all judgment debtors want to play by the rules. You must consider the amount of the judgment, as well as the costs of pursuing collection of the judgment, to determine what action you will take.
The collection of a judgment involves many different legal means and procedures that must be dealt with in order to collect the money owed. If you have a judgment that remains unpaid, you may wish to consult with an attorney to determine the collectibility of the judgment.
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