After a judgment has been rendered against you, it may seem like you are tied to the debt for life. However, this is not necessarily the case. Ideally, you will enter a quick payment plan with the court. If you do not do this, a creditor can take extreme measures to collect on the judgment, such as directly getting money from your paycheck ("garnishment"), putting a lien on your house, taking money directly from your bank account or your personal property (a "levy"). However, there is a potential end in sight as judgments in California eventually automatically expire. This happens unless the creditor stays on top of things and renews the debt, which can be extremely detrimental to the debtor. This article will discuss the length of judgments and the issues with creditor renewal.
What Is The Typical Length Of A Judgment?
A judgment is valid in accordance with California Law for ten years, and then it will automatically expire. However, a judgment can be extended another ten years at the creditor's request as long as it's before the ten years expires. The ten-year length of judgment is significant because, under California Law, interest accrues at the rate of 10 percent per year on the principal amount of a money judgment remaining unsatisfied. This means that after ten years, upon renewal, the judgment is effectively doubled, which is why it's best to pay it as quickly as possible.
Can A Creditor Renew A Judgment?
As stated above, in California, a creditor can renew a judgment at any time within ten years of the initial judgment. The creditor can renew the enforceability of the initial judgment for up to another ten years from the date they apply for the renewal. The judgment can be renewed for another ten years until it is paid in full. However, California law mandates that the renewal judgments cannot be done until after five years of the prior application for renewal, so creditors can't just renew every year and must be aware of the time frame.
Can The Creditor Renew If The 10-Year Period Has Expired?
No. Once the initial ten-year judgment has expired, a creditor cannot renew it under the laws of California.
Can The Creditor Renew More Than Once?
Yes. Creditors can renew more than once if the renewal isn't before five years of the prior renewal application and more than ten years after the last renewal, making the judgment expire.
Will A Debtor Be Notified Of A Creditor's Renewal Of The Judgment, And Can They Object To A Renewal?
Yes. The judgment creditor must serve a notice of renewal on the debtor. This service needs to be either made personally or by first-class mail. After the debtor receives notice of the renewal, they have 30 days to make a motion to vacate or modify the renewal. This would happen if the debt is paid or the renewal is not in the correct timeframe, so remember that the judgment cannot be renewed within five years or after ten years of the prior judgment or renewal.
Why Is Renewal So Bad For The Debtor?
Creditors opt to renew judgments as much as possible because any interest accrued up to that point is added to the principal amount owed when a judgment is renewed. The judgment creditor is entitled to interest on the principal (which now includes the accrued interest), which compounds the interest. By renewing the judgment more frequently, the judgment creditor can maximize the interest earned, which is detrimental to the debtor. For this reason, it is essential to pay off debt as quickly as possible and to have an attorney help you negotiate the debt down as early as possible.
How Can A California Debt Resolution Attorney Help You?
If you have a judgment against you, a debt resolution attorney can be an invaluable asset in navigating your best course of action. The attorneys at Fitzgerald & Campbell are highly experienced and have helped many individuals successfully navigate the ins and outs of debt judgments. For more information, reach out to Fitzgerald & Campbell for a free consultation by calling (844) 431-3851 or contacting us online.