Below is an excerpt of an article that was published in the Winter 2008 Points of Interest for California Mortgage Broker Association members:
Sold Out Junior Lienholder With a Deficiency Judgment? Now It’s Time To Collect
by Julia M. Wei, Esq, The Law Office of Peter N. Brewer
If you were the prevailing party, the attorney
who handled your litigation will usually prepare and record an Abstract
of Judgment for you. However, that is as far as their collection
efforts often go. It is then up to the judgment creditor to engage a
collection specialist to enforce the judgment against the judgment
1. The Sit and Wait Method
Recording an Abstract of Judgment is a passive means of judgment
enforcement. It is a lien against the debtor’s real property in a
particular county. Accordingly, if the debtor owns property in
multiple counties, a creditor should have multiple Abstracts of
Judgment issued by the Court and record them in all the counties the
debtor is believed to own real property.
TIP Abstracts are good for as long as
the Judgment. A judgment expires after 10 years if not renewed.
Accordingly, if the creditor knows the debtor has relatives that he or
she may inherit real property from, the creditor should also record in
that county because the abstract of judgment will attach to the new
property at the time the conveyance. The creditor should also set up a
calendaring reminder to RENEW the judgment in a timely fashion.
Back in the heyday of refinance loans, creditors were
often paid because the debtor eventually would take some equity out of
their home and the new loan paid off the liens. These days, that
scenario is less likely.
Additionally, abstracts can be lost to foreclosure,
wiped out by the senior lienholders, or expire after 10 years. Judgment
creditors may want to be more aggressive.
2. Examining the Debtor and Taking the Money Out of Their Wallet
A judgment creditor can have the Court issue an Order to Appear for
Debtor’s Examination (OEX) and serve post-judgment discovery regarding
the debtor’s financial accounts.
Service of the OEX and post-judgment discovery is
also a way to get the Debtor to start calling the creditor, rather than
the Debtor avoiding the creditor’s phone calls.
The OEX is challenging to execute because it must be personally
served on the debtor and the debtor may be an expert at dodging
service. However, assuming service is accomplished, two things could
happen. 1) the debtor could appear; or 2) the debtor could fail to
appear and the Judge can issue a bench warrant.
TIP If the debtor does appear (the
OEX is conducted at the courthouse), then creditor’s counsel can slap a
Turnover Order on the debtor and get whatever assets are present that
day – i.e., debtor’s watch, car, cash in their wallet.
3. Seize Their Car and/or Boat
This only works if the debtor actually owns their car. However, once
you have a judgment, you may also have grounds to have a licensed
personal investigator make inquiries of the DMV records. The first
step in any seizure is to obtain a Writ of Execution from the Court
after the asset report is obtained from an investigator.
The seizure method is costly but effective. Seizure
of personal property requires the Sheriff to get involved, and requires
up front deposits with the Sheriff’s department.
TIP When the car is garaged, the
creditor must obtain a seizure order that allows the deputy to enter
private property (garage or marina) to seize the vehicle.
FOR THE FULL TEXT – GO HERE.