With the right collection attorney (i.e., a collection attorney that can actually collect), a money judgment can accumulate a sizable 'return on one's investment'. As of January 1, 1983, the rate of interest on a money judgment is 10% per annum. California Code of Civil Procedure §685.010(a). Perhaps surprisingly, that rate of return is generally better than one offered by a bank.
If a debtor voluntarily paid his/her judgment, there would be no need for a collection attorney. Since the failure to pay a creditor back happens more often than not, should a creditor want to enforce a judgment, he needs a competent collection attorney. One of the best tests of competency is how a collection attorney responds to a debtor's claim of exemption. A judgment debtor utilizes a claim of exemption to protect his property from a judgment creditor.
Chances are you have heard the term 'alter ego'. In legal terms, finding alter ego gives the court cause to pierce the corporate veil and hold individual shareholders personally liable for debts of the corporation. For a creditor with an outstanding judgment, alter ego is where the court finds that a corporation lacks a separate identity from an individual or corporate shareholder, resulting in injustice to the corporation's creditors. Finding alter ego gives the court cause to pierce the corporate veil and hold individual shareholders personally liable for debts of the corporation.
The start of a collection lawsuit begins with the summons and the complaint. A complaint is the first document filed with the court by a person or entity claiming legal rights against another.
An experienced collections attorney can attest that, generally speaking, the most common basis for moving to vacate is that the defendant claims he/she/it was not served in the origin state. A motion to vacate is a request to the court to withdraw a previous order or judgment it entered. Generally, a motion to vacate will be granted if a party is able to convince the court that s/he did not have a fair chance to present his/her case.
What happens if you have a money judgment against someone that was entered in another state and the defendant moves to California? Is that judgment enforceable? Fortunately, the answer is: Definitely!
An experienced commercial collections attorney is always interested in watching the interplay between state court creditor remedies and how they are interpreted in federal proceedings. A recent 9th Circuit Bankruptcy Appellate Panel (BAP) ruling has reminded those of us in the industry once again of just how important it is to have a judgment debtor examination issued and personally served on the debtor even if you are unable to ultimately conduct the examination. A judgment debtor examination means that once there is a judgment, the creditor can ask that the debtor appear in court to answer questions under oath to answer questions about his or her assets or property such as paychecks and other sources of income, bank accounts, stocks and other investments, and personal and real property. This procedure may also be used to question a third party who may be in possession of the judgment debtor's assets, or owe debts to the judgment debtor.
In the world of post-judgment collection, creditors frequently encounter a debtor who in an effort to shield his/her assets transfers those assets to a trust for "asset protection." While creditor's counsel can generally enforce the judgment against the revocable trust assets as a fraudulent transfer when the transfer of the assets occurred after the clear existence of the debt whether pre or post-judgment, what happens when the debtor transfers those assets to the revocable trust before the creditors claim arose or the debtor even knew of the creditor's potential claim?
Asset protection is a set of legal techniques and a body of statutory and common law dealing with lawfully protecting assets of individuals and business entities from civil money judgments. The goal of all lawful asset protection planning is to lawfully insulate as much as possible assets from claims of creditors without concealment or tax evasion. If you have run up against this issue in your attempt to collect a judgment, your next steps must be strategic and carefully thought out.