Collecting on Money Judgments
After winning a money judgment in their lawsuit & getting that judgment “entered,” the judgment becomes a new debt owed to that plaintiff who is now a Judgment Creditor. Absent a bankruptcy by the defendant & a few statutory exceptions & assuming the defendant debtor does not pay voluntarily, the Judgment Creditor may attempt to collect pursuant to California’s Enforcement of Judgment Law. Code Civ. Proc. §§ 680.010 – 724.260.
The ECJ applies to money judgments rendered in California. Such judgments from other states are governed by the Sister State Money-Judgments Act, Code Civ. Proc. § 1710; whereas, such judgments from other countries are governed by the Uniform Foreign-Country Money Judgments Recognition Act, Code Civ. Proc. §§ 1713 – 1725.
Under California’s ECJ, plaintiff’s first step in the process of collecting after winning in court is to get the judgment “entered” & to serve notice of entry. For non-jury trial, the court generally orders the prevailing party (here, the plaintiff) to lodge a proposed judgment. The losing party gets an opportunity to object to any inaccuracies in the proposed judgment before the court will sign it & it is entered. For jury trials, the clerk generally enters the judgment. After entry, it is up to the prevailing party to serve notice of entry of judgment on the other parties.
The judgment debtor may appeal, & by posting a bond in combination with their appeal, this will result in a stay that prevents creditor from executing on their judgment until the appeal is decided. Code Civ. Proc. §§ 697.040, 916, 917.1. After the time to appeal has passed, the judgment becomes final & the creditor may attempt to execute.
This involves (optionally) perfection of liens followed by execution of writs on personal property, garnishment of wages, & foreclosure on real property.
Perfection of Liens
Before going through the process of executing, a judgment creditor will typically attempt to perfect their lien by filing an abstract of judgment in any counties where the debtor owns property, so as to preserve their priority of judgment over other creditors who may be owed money from the same debtor. With some exceptions, once the abstract of judgment has been filed, it serves as a lien for the amount of the judgment on all real property in that county for ten years. Code Civ. Proc. § 683.020.
Priority among competing liens is generally determined based on the date the judgment was recorded in the county’s official records. If after ten years the judgment still has not been satisfied, the creditor may obtain a ten-year extension by obtaining renewal of the judgment & again recording it in the appropriate counties. Code Civ. Proc. § 697.
The process is different for perfecting a lein on the debtor’s personal property. For this, the creditor files a notice of judgment lien with the California Secretary of State & serves it on the debtor. This works to perfect a judgment lien on debtor’s personal property located throughout the state. Code Civ. Proc. § 697.510-.580; 684 (methods of service).
Executable interests on personal property within California, including most accounts receivable, equipment, inventory, negotiable documents, & more. Code Civ. Proc. §§ 697 .530 -.540. There are however numerous exemptions to enforcements on money judgments. Code Civ. Proc. §§ 703.010 – 704.995.
Judgment lien on personal property last usually five years from with the Secretary of State with priority based on the date of filing, except for property acquired by the debtor after filing, in which case such liens apply equally. Code Civ. Proc. §§ 697.510, .530, .600. After five years, the liens laps, unless within six months prior to lapse the creditor files a continuation statement, in which case it is renewed for another five years. If the debtor satisfies the judgment or the judgment is released, the creditor must file a statement to that effect.
Levies on real property are also known as foreclosures. This is an expensive process that involves preparing a notice of sale; serving, posting & publishing the notice; & selling the property at a public auction. Code Civ. Proc Code §§ 701.540 – .810.
The process of executing a lien on personal property involves filling out forms to obtain a “writ of execution” from the court clerk where judgment was rendered & any counties where the levy on the property will actually be made. Code Civ. Proc. § 699. The writ itself does not usually identify the property to be levied. That is done in instructions to the levying officer, who is usually a sheriff or marshall in the county. The instructions itemizing the property & their location, & the creditor deposits money for the anticipated cost of performing the levy. Code Civ. Proc. § 685.100. The levying officer then has 180 days to execute writ by physically or constructively seizing possession. Code Civ. Proc Code § 687.030, 700-701.