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The Power Of A Monetary Judgment

California Consumer Protection Lawyer

If a creditor has obtained a judgment against you or has otherwise taken legal action against you on a debt, you could consult with a consumer protection lawyer. They are able to help you discover your legal rights and options. Fitzgerald & Campbell has substantial experience defending debtors from creditor lawsuits. To get started, get in touch with Fitzgerald & Campbell for a free consultation by calling (844) 431-3851 or contacting us online.

Having a monetary judgment ruled against you is always a stressful situation. However, knowing the extent of the court's ability to enforce a judgment can help you choose the best option for moving forward. This article will discuss how a court may collect a judgment and how a debtor can protect themselves. 

What Is A Monetary Judgment?

A monetary or "debt" judgment occurs when a party loses a civil case either by default (not showing up) or by trial and is ordered to pay money to the winning side. The winning side is called the "judgment creditor," and the losing side is called the "judgment debtor." The court that ordered the judgment will then collect the money owed and can use several different methods to do so. 

How Long Is The Monetary Judgment Valid?

This judgment is valid for ten years, after which it will automatically expire. However, a judgment can be extended for another ten years at the creditor's request. Further, under California Law, interest accrues at 10 percent per year on the principal amount of a money judgment remaining unsatisfied. After ten years, upon renewal, the judgment is effectively doubled, so it's best to pay it as quickly as possible.

How Long Does A Creditor Have To Collect A Monetary Judgment?

There is generally a four-year limit for filing a lawsuit to collect a debt based on a written agreement in California.

What Should I Do After A Monetary Judgment Has Been Ruled Against Me?

After the court orders a monetary judgment, you should arrange to pay it as soon as possible. An initial option is to ask the creditor to allow you to pay what you owe on a weekly or monthly basis. The most straightforward way to get the payment process set in California is to immediately fill out a Stipulation for Time Payments form. If you do not pay what is owed, the creditor can start collecting the judgment using different legal options, which could also lead you to be responsible for the costs of the collection methods, which will be discussed below.

What Are The Ways A Judgment Can Be Enforced?

There are several methods the court can use to enforce a judgment. They are as follows:  

  • A Wage Garnishment
  • A Levy (Seizure) Of Personal Property
  • A Lien Against Your Personal Property

 

How Does A Wage Garnishment Work?

If the party who is ordered to pay does not initially pay the judgment against them, the court has the power to "garnish" their wages. The successful party can request this through an Earnings Withholding Order. This is also known as a "Garnishment Order" where the court instructs an employer to pay some of the money owed from the debtor's wages. 

How Much Can My Wages Be Garnished?

Under California law, the most a person's wages can be garnished is the lesser of either 25% of your disposable earnings for that week OR 50% of the amount by which your weekly disposable earnings exceed 40 times the state hourly minimum wage. If the debtor works in a location where the local minimum hourly wage is greater than the state minimum hourly wage, the local wage is used for the calculation. However, under California law, the amount of wage garnishment can be decreased if the debtor can show that the wages are necessary for their support or the support of their family. 

When Does A Wage Garnishment Begin?

A debtor's earnings will start being withheld ten calendar days from when an order is received. If the employee's pay period ends before the 10th day, earnings for that pay period will not be withheld. A debtor should start withholding from the first pay period that ends on or after that 10th day after receiving the earnings withholding order. The debtor should keep withholding for all pay periods until the amount due has been withheld as stated in the order, plus any additional amount for costs and interest. The Sheriff will let the employer know the additional amount the employee owes for costs and interest. Do not withhold more than the total of these amounts.

How Does A Levy (Seizure) Of Personal Property Work? 

If a debtor does not pay the judgment, the creditor can also obtain a levy or "seize" the property to pay the debt. A levy is different from a lien because a lien is a claim against property to secure the payment of the debt and a levy takes the property. 

When a court orders a levy, the Sheriff is told to take the debtor's personal property, such as the money in a bank account, a car, or a boat. When the Sheriff takes the debtor's property, a Notice will be given. It is possible to have some property exempted from seizure, and to do so, a debtor has ten days after the Notice is given to file a Claim form with the Sheriff, not the court, to try and keep specific property from being seized. If the creditor opposes the exemption, it will go back to the court to decide. 

A list of what can be excepted from seizure (levy) includes things such as health insurance benefits and veterans benefits. The list of items can be found here.

What About A Debtor's Home And Other Real Property?

  1. If a debtor does not pay the judgment, the judgment creditor can force the sale of real property. The court will have to issue an order to sell land, buildings, or homes. Before a debtor's home can be sold, there must be a hearing, and the home occupants must be personally served at least 30 days before the hearing. The purpose of the hearing is to decide if a home should be sold and if the debtor qualifies for a homestead exemption.

How Does A Debtor Qualify For A Homestead Exemption?

  1. California law protects homeowners when judgment creditors seek to collect by selling the debtor's home. This is called a "homestead exemption." When this occurs, the court will hold a hearing to determine if the homestead exemption applies, the homestead exemption amount, and the property's value such that a sale will produce a payment to the creditor. 
  2. Under California law, a person may have a single "homestead" that they own and reside in. This home is exempt from sale if its equity does not exceed the greater of: 

1)    The countywide median sale price for a single-family home in the calendar year before the calendar year in which the judgment debtor claims the exemption, not to exceed six hundred  thousand dollars ($600,000); OR 

2)    Three hundred thousand dollars ($300,000). These factors adjust for inflation and provide protection. If the equity in the home is greater than either of the above, you will collect from the sale money up to the maximum statutory amount, and the creditor will take the remaining balance.

  1. Homestead hearings can be complex, so it is best to consult an attorney as soon as possible if your home is at risk for sale due to a judgment. 

How Does A Lien On Personal Property Work?

  1. After a judgment is entered, a judgment creditor can file an "Abstract of Judgment" document following California law in the county where the debtor owns land, a house, or a building. Obtaining a lien on the property means that the property cannot be sold until the lien is removed. Additionally, a judgment lien can also be attached to jewelry, art, antiques, and other valuables under California law. This is not the case in all other states.

If I Sell My Property Will The Judgment Lien Disappear?

  1. No. A judgment lien will remain attached to the debtor's property (even if the property changes hands) for ten years and can be renewed by the creditor for another ten years from the entry of the judgment. It is important to note that title reports often list the date when the entry of the abstract of judgment is entered in the county of the property rather than the original judgment, which is the guiding date. 

Can A Judgment Lien Attach Before I Buy Property?

  1. Yes. A creditor can record an Abstract of Judgment before the debtor owns property in a County. The judgment lien only attaches to the property when the debtor purchases in the County that the Abstract of Judgment was recorded.

Is There Any Way To Protect Against A Judgment Lien?

  1. Yes, a creditor's ability to collect under a judgment lien under California law can be decreased by a "homestead exemption," a fixed amount of value that won't be touchable if the property is the debtor's primary residence. As stated above, this value is either:

1)    The countywide median sale price for a single-family home in the calendar year before the calendar year in which the judgment debtor claims the exemption, not to exceed six hundred  thousand dollars ($600,000); OR 

2)    Three hundred thousand dollars ($300,000). 

  1. Further, the amount of a lien can be affected by the amount of other liens in place and any foreclosure or bankruptcy proceedings. 
  2. As judgment liens can get very complicated, it is helpful to speak with a California debt attorney should you have a potential or existing judgment lien against your property. 

How Is A Judgment Lien Satisfied?

  1. Once the judgment is paid, the debtor can file documentation that such has occurred called a "Satisfaction of Judgment" with the court, which will lift the lien. There is no statutory right to bring a motion to expunge an Abstract of Judgment in California.

What If I Choose To Ignore A Judgment Against Me?

  1. If a debtor does not pay the judgment, the judge can order them to appear in court via a hearing. Suppose a debtor fails to attend this hearing and has not paid the judgment, including post-judgment costs and interest. In that case, a bench warrant may be issued for their arrest until the debtor pays the creditor in full or the judge agrees to recall the warrant. 
  2. If a judgment is ruled against you concerning an auto accident judgment, you could also have your driver's license suspended. 

How Can I Stop A Creditor From Obtaining A Judgment In The First Place?

  1. With an understanding of the powers of a judgment, if you have not yet had a legal action to collect a debt filed against you, the best ways to prevent this are to:
  2. Arrange a payment plan – asking that this be put in writing is helpful as a creditor may agree not to take legal action as long as you are making agreed payments
  3. Dispute the debt – if you believe the debt is incorrect, this is a good option. You may still need to go to court to fight the debt, but the creditor is the one who must prove what you owe and that they have the legal authority to collect on the debt.
  4. File for bankruptcy – this is usually a last resort but can be the best option for some debtors. It will also benefit you to have an attorney assist you in this matter. 

How Can A California Debt Resolution Firm Help Me?

If you have a monetary judgment against you, there are many potential outcomes that have extreme consequences. Therefore, a debt resolution attorney can be an invaluable asset to help you protect your rights. The attorneys at Fitzgerald & Campbell are highly experienced and have helped many individuals successfully navigate the ins and outs of monetary judgments. To get started, get in touch with Fitzgerald & Campbell for a free consultation by calling (844) 431-3851 or contacting us online.

 

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