For California creditors, enforcing a judgment is largely a procedural task. When a judgment is entered by the court, California law gives the creditor certain procedural powers that can be used not only against the debtor, but also against people and entities connected to the debtor. One tool in a creditor’s toolbox that can be very effective in enforcing a judgment is referred to as a turnover proceeding.
In a turnover proceeding, a judgment creditor petitions the court to order a third party to ‘turn over’ property to the creditor that the third party possesses, but the debtor owns. This can be money that the third party owes to the debtor, or property that the third party is holding on behalf of the debtor.
In laymen’s terms, a turnover order directs the Judgment debtor or third person to transfer (or “turn over”) personal property to the levying officer.
California’s Enforcement of Judgment Laws set forth two applicable statutes:
Code of Civil Procedure § 708.250(a) states in pertinent part: “at the conclusion of a proceeding pursuant to this article, the court may order the judgment debtor’s interest in the property in the possession or under the control of the judgment debtor or the third person or a debt owed by the third person to the judgment debtor to be applied toward the satisfaction of the money judgment if the property is not exempt from enforcement of a money judgment. Such an order creates a lien on the property or debt.”
Code of Civil Procedure § 699.040(a) states in pertinent part: “the judgment creditor may apply to the court ex parte, or on noticed motion if the court so directs or a court rule so requires, for an order directing the judgment debtor to transfer to the levying officer…”
A turnover order is enforceable by contempt. See In re Burns, supra, 291 BR at 855 (citing text); Imperial Bank v. Pim Electric, Inc., supra, 33 CA4th at 549-550, 39 CR2d at 439 (citing text); Jogani v. Jogani (2006) 141 CA4th 158, 174, 45 CR3d 792, 801.
To discuss the most effective way for you or your company to collect an outstanding debt, contact experienced commercial collections attorney Kevin Hoang at [email protected] or 213-624-1515.