While the Phantom of the Opera was a work of fiction, the phantom discharge is the real deal. If you are collecting a judgment in California, generally all property that is acquired during the course of a marriage belongs jointly to both spouses, even if only one spouse is on the title. This property is called "community property," and it is owned by both spouses as tenants in the entirety. In California, even if only one spouse signed the paperwork for a debt, most debts that arise during the course of the marriage are owed by the community (that is by both spouses). Read more about debt collection and community property here.
An affirmative defense is an allegation for justification for the defendant have acted or not acted as is alleged in the complaint. The defendant is simply arguing that he has a good reason for having done what is alleged in the complaint, and therefore should be entirely or partially excused from all criminal liability. Defendants in commercial collections cases often try to use these types of justifications as to why he/she should not have to pay the money alleged in the complaint.
In this post, we discussed the value of a motion for summary judgment in a commercial collection case where the claims litigated relate to failure to pay on a written instrument. We touched on the need for the client to provide declarations in the form of business records. These business records, of course, are inadmissible if hearsay if they are not exceptions to the rule against admissibility of hearsay.
For many types of commercial collection cases, the claims litigated relate to failure to pay on an instrument, i.e., a promissory note, a line of credit, a personal guaranty, or breach of a contract to pay certain amounts. It follows that the goal of litigation is to conduct a minimal amount of written discovery (typically requests for admission being the most important discovery tool) and then move for summary judgment or partial adjudication of the issues.
Have you attempted to collect a judgment against an individual to no success? One option is to consider the means of the spouse. California is a community property state, meaning the community property of a debtor's spouse or domestic partner may be available to satisfy a judgment. Indeed, California law clearly states that the community property interests of the debtor and non-debtor spouse are generally liable for debts incurred by either spouse either before or during the marriage and prior to separation, whether the debt is based on contract or tort. California Family Code §§902, 910; Litke O'Farrell LLC v. Tipton (2012) 204 Cal. App. 4th 1178, 1181-82.
Now that we have established the value in utilizing a writ of attachment (read our article on the basics of write attachment here), let's take a look at how to use it.
When it comes to the commercial collections process, nothing says "I mean business" like a pre-judgment application for right to attach order and writ of attachment. Successfully utilized, a writ of attachment is one of the best tools for encouraging the debtor(s) towards prompt resolution of a business debt.
One of the difficulties of commercial collection in California is the basic premise that by the time a debt holder has reached the point of being able to collect on the debt, most debtors don't voluntarily pay the judgment. This means that you must employ a variety of strategies to force the debtor to pay on the judgment, including the turnover order.