Below is an excerpt of an article that was published in the Winter 2008 Points of Interest for California Mortgage Broker Association members:
Sold Out Junior Lienholder With a Deficiency Judgment? Now It’s Time To Collect
by Julia M. Wei, Esq, The Law Office of Peter N. Brewer
If you were the prevailing party, the attorney who handled your litigation will usually prepare and record an Abstract of Judgment for you. However, that is as far as their collection efforts often go. It is then up to the judgment creditor to engage a collection specialist to enforce the judgment against the judgment debtor.
1. The Sit and Wait Method Recording an Abstract of Judgment is a passive means of judgment enforcement. It is a lien against the debtor’s real property in a particular county. Accordingly, if the debtor owns property in multiple counties, a creditor should have multiple Abstracts of Judgment issued by the Court and record them in all the counties the debtor is believed to own real property.
TIP Abstracts are good for as long as the Judgment. A judgment expires after 10 years if not renewed. Accordingly, if the creditor knows the debtor has relatives that he or she may inherit real property from, the creditor should also record in that county because the abstract of judgment will attach to the new property at the time the conveyance. The creditor should also set up a calendaring reminder to RENEW the judgment in a timely fashion.
Back in the heyday of refinance loans, creditors were often paid because the debtor eventually would take some equity out of their home and the new loan paid off the liens. These days, that scenario is less likely.
Additionally, abstracts can be lost to foreclosure, wiped out by the senior lienholders, or expire after 10 years. Judgment creditors may want to be more aggressive.
2. Examining the Debtor and Taking the Money Out of Their Wallet A judgment creditor can have the Court issue an Order to Appear for Debtor’s Examination (OEX) and serve post-judgment discovery regarding the debtor’s financial accounts.
Service of the OEX and post-judgment discovery is also a way to get the Debtor to start calling the creditor, rather than the Debtor avoiding the creditor’s phone calls.
The OEX is challenging to execute because it must be personally served on the debtor and the debtor may be an expert at dodging service. However, assuming service is accomplished, two things could happen. 1) the debtor could appear; or 2) the debtor could fail to appear and the Judge can issue a bench warrant.
TIP If the debtor does appear (the OEX is conducted at the courthouse), then creditor’s counsel can slap a Turnover Order on the debtor and get whatever assets are present that day – i.e., debtor’s watch, car, cash in their wallet.
3. Seize Their Car and/or Boat This only works if the debtor actually owns their car. However, once you have a judgment, you may also have grounds to have a licensed personal investigator make inquiries of the DMV records. The first step in any seizure is to obtain a Writ of Execution from the Court after the asset report is obtained from an investigator.
The seizure method is costly but effective. Seizure of personal property requires the Sheriff to get involved, and requires up front deposits with the Sheriff’s department.
TIP When the car is garaged, the creditor must obtain a seizure order that allows the deputy to enter private property (garage or marina) to seize the vehicle.
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