Enforcement of Judgment
Overview
In California, the term “judgment creditor” refers to a party in whose favor a judgment is entered whereas “judgment debtor” refers to the party against whom the judgment is entered. A “money judgment” is any court order requiring the payment of money.
Enforcement
Subsequent to entry, the judgment creditor has the obligation to enforce the judgment because a Court will not as stated above.
Thus, the judgment creditor must act diligently to obtain, and perfect its lien, identify assets subject to levy, and execute on its judgment.
California judgments accrue interest at the rate of 10% from the date they are entered.
Examples of what the Law Office of D. Joshua Staub can do to assist in collecting a California judgment include:
- Levy (seize) assets that you have personal knowledge of (or stated on a Judgment Debtor’s Statement of Assets form, if applicable) which can include bank accounts, brokerage accounts, other deposit accounts, vehicles, vessels, or real property.
- Examine judgment debtor in court to locate unknown assets and subpoena financial records. The personal service of the order to appear for examination creates a lien on the judgment debtor’s personal property for one (1) year from the date of the order to appear.
- Suspend the judgment debtor’s driver’s license if the judgment is for a California auto accident.
- Suspend the judgment debtor’s license in a particular case (example: Contractor’s License).
- Place a lien on real property through the issuance and recording of an abstract of judgment.
- Perfect liens on the judgment debtor’s assets.
- Garnish the judgment debtor’s wages.
- Conduct discovery into the judgment debtor’s assets.
- Collect from the spouse of the judgment debtor.
- Creditor’s suit. This action lies where a third person has possession or control of property in which the judgment debtor has an interest or where they are indebted to the judgment debtor. The purpose is to have the interest or debt applied to the satisfaction of the money judgment.
- Seek and obtain order adding costs of enforcement to the judgment.
- Obtain charging orders.
- Obtain a lien against the judgment debtor’s right to proceeds from a lawsuit.
Fraudulent Transfers or Voidable Transactions
Often times, a judgment debtor will resort to transactions intended to prevent or hinder the judgment creditor’s efforts to enforce the judgment.
To combat this, California enacted the Uniform Voidable Transactions Act (UVTA) which replaced the Uniform Fraudulent Transfer Act whose predecessor was the Uniform Fraudulent Conveyance Act. This law provides that a transfer made or obligation incurred by a debtor is voidable as to a creditor, whether the creditor’s claim arose before or after the transfer was made or the obligation was incurred, if the debtor made the transfer or incurred the obligation as follows:
(1) With “actual intent” to hinder, delay, or defraud any creditor of the debtor.
(2) Without receiving a reasonably equivalent value in exchange for the transfer or obligation, and the debtor either:
(A) Was engaged or was about to engage in a business or a transaction for which the remaining assets of the debtor were unreasonably small in relation to the business or transaction or
(B) Intended to incur, or believed or reasonably should have believed that the debtor would incur, debts beyond the debtor’s ability to pay as they became due.
“Actual intent” is shown by reference to the following factors:
(1) Whether the transfer or obligation was to an insider.
(2) Whether the debtor retained possession or control of the property transferred after the transfer.
(3) Whether the transfer or obligation was disclosed or concealed.
(4) Whether before the transfer was made or obligation was incurred, the debtor had been sued or threatened with suit.
(5) Whether the transfer was of substantially all the debtor’s assets.
(6) Whether the debtor absconded.
(7) Whether the debtor removed or concealed assets.
(8) Whether the value of the consideration received by the debtor was reasonably equivalent to the value of the asset transferred or the amount of the obligation incurred.
(9) Whether the debtor was insolvent or became insolvent shortly after the transfer was made or the obligation was incurred.
(10) Whether the transfer occurred shortly before or shortly after a substantial debt was incurred.
(11) Whether the debtor transferred the essential assets of the business to a lienor that transferred the assets to an insider of the debtor.
A fraudulent transfer under the UVTA is a transfer by the debtor of property to a third person undertaken with the intent to prevent a creditor from reaching that interest to satisfy its claim. Under the U[V]TA, a transfer can be invalid either because of actual fraud or constructive fraud. [Potter v. Alliance United Ins. Co. (2019) 37 Cal.App.5th 894, 903–904]
The claim can be brought against the debtor, e.g., the transferor or the transferee unless the transferee who took the asset in good faith and for a reasonably equivalent value.
What is important is that a creditor can invoke the protections of this law before its claim against the debtor has matured to a judgment. This has the effect of preserving the asset to satisfy the claim if it matures to judgment.
Also, a transfer that is made by a debtor is voidable as to its creditor whether the claim arose before or after the transfer was made or the obligation was incurred.
If the creditor proves the debtor engaged in conduct to hinder, delay, or defraud it by a preponderance of the evidence then the transfer can be avoided. These claims must generally be brought within 4 years of the transfer although other, shorter time periods apply in certain instances. It is also possible that the time periods do not begin to run until the claim has matured to judgment where the transfer was made after an action on the debtor was commenced.
Sister State Judgments
“A State may not disregard the judgment of a sister State because it disagrees with the reasoning underlying the judgment or deems it to be wrong on the merits.” (V.L. v. E.L. (2016) 136 S.Ct. 1017, 1020).
In California, a “Sister state judgment” means that part of any judgment, decree, or order of a court of a state of the United States, other than California, which requires the payment of money, but does not include a support order. “Support” generally means an obligation owing on behalf of a child, spouse, or family. Thus, if one has a judgment against judgment debtor who has property subject to levy in California, one can apply for entry of that judgment in California to reach those assets in satisfaction of the judgment once entered.
A judgment creditor or assignee can apply to have the sister state judgment entered as a judgment in California.
Foreign-Country Judgments under the Uniform Foreign-County Money Judgments Recognition Act
A judgment of a foreign court can be entered in California subject to various exceptions which include judgments for taxes, fines, penalties, support, divorce, maintenance, or domestic relations. Under principles of comity, however, a judgment for support, divorce, maintenance, or domestic relations may be recognized.
Tribal Court Money Judgments under the Tribal Court Civil Money Judgments Act
A judgment creditor can apply to enter the judgment of a court or tribunal of any federally recognized Indian nation, tribe, pueblo, hand, or Alaska Native village, duly established under tribal or federal law, including Courts of Indian Offenses under Part 11 of Title 25 of the Code of Federal Regulations (CFR) in California.
Registration of federal judgments
Federal judgments can be registered in other districts once they become final.
This firm has experience in these proceedings, and can assist judgment debtors or judgment creditors in matters involving the enforcement of California judgments, and the entry of sister state judgments, foreign-country judgments, and tribal court money judgments.
D. Joshua Staub
Overview
In California, the term “judgment creditor” refers to a party in whose favor a judgment is entered whereas “judgment debtor” refers to the party against whom the judgment is entered. A “money judgment” is any court order requiring the payment of money.
Enforcement
Subsequent to entry, the judgment creditor has the obligation to enforce the judgment because a Court will not as stated above.
Thus, the judgment creditor must act diligently to obtain, and perfect its lien, identify assets subject to levy, and execute on its judgment.
California judgments accrue interest at the rate of 10% from the date they are entered.
Examples of what the Law Office of D. Joshua Staub can do to assist in collecting a California judgment include:
- Levy (seize) assets that you have personal knowledge of (or stated on a Judgment Debtor’s Statement of Assets form, if applicable) which can include bank accounts, brokerage accounts, other deposit accounts, vehicles, vessels, or real property.
- Examine judgment debtor in court to locate unknown assets and subpoena financial records. The personal service of the order to appear for examination creates a lien on the judgment debtor’s personal property for one (1) year from the date of the order to appear.
- Suspend the judgment debtor’s driver’s license if the judgment is for a California auto accident.
- Suspend the judgment debtor’s license in a particular case (example: Contractor’s License).
- Place a lien on real property through the issuance and recording of an abstract of judgment.
- Perfect liens on the judgment debtor’s assets.
- Garnish the judgment debtor’s wages.
- Conduct discovery into the judgment debtor’s assets.
- Collect from the spouse of the judgment debtor.
- Creditor’s suit. This action lies where a third person has possession or control of property in which the judgment debtor has an interest or where they are indebted to the judgment debtor. The purpose is to have the interest or debt applied to the satisfaction of the money judgment.
- Seek and obtain order adding costs of enforcement to the judgment.
- Obtain charging orders.
- Obtain a lien against the judgment debtor’s right to proceeds from a lawsuit.
Fraudulent Transfers or Voidable Transactions
Often times, a judgment debtor will resort to transactions intended to prevent or hinder the judgment creditor’s efforts to enforce the judgment.
To combat this, California enacted the Uniform Voidable Transactions Act (UVTA) which replaced the Uniform Fraudulent Transfer Act whose predecessor was the Uniform Fraudulent Conveyance Act. This law provides that a transfer made or obligation incurred by a debtor is voidable as to a creditor, whether the creditor’s claim arose before or after the transfer was made or the obligation was incurred, if the debtor made the transfer or incurred the obligation as follows:
(1) With “actual intent” to hinder, delay, or defraud any creditor of the debtor.
(2) Without receiving a reasonably equivalent value in exchange for the transfer or obligation, and the debtor either:
(A) Was engaged or was about to engage in a business or a transaction for which the remaining assets of the debtor were unreasonably small in relation to the business or transaction or
(B) Intended to incur, or believed or reasonably should have believed that the debtor would incur, debts beyond the debtor’s ability to pay as they became due.
“Actual intent” is shown by reference to the following factors:
(1) Whether the transfer or obligation was to an insider.
(2) Whether the debtor retained possession or control of the property transferred after the transfer.
(3) Whether the transfer or obligation was disclosed or concealed.
(4) Whether before the transfer was made or obligation was incurred, the debtor had been sued or threatened with suit.
(5) Whether the transfer was of substantially all the debtor’s assets.
(6) Whether the debtor absconded.
(7) Whether the debtor removed or concealed assets.
(8) Whether the value of the consideration received by the debtor was reasonably equivalent to the value of the asset transferred or the amount of the obligation incurred.
(9) Whether the debtor was insolvent or became insolvent shortly after the transfer was made or the obligation was incurred.
(10) Whether the transfer occurred shortly before or shortly after a substantial debt was incurred.
(11) Whether the debtor transferred the essential assets of the business to a lienor that transferred the assets to an insider of the debtor.
A fraudulent transfer under the UVTA is a transfer by the debtor of property to a third person undertaken with the intent to prevent a creditor from reaching that interest to satisfy its claim. Under the U[V]TA, a transfer can be invalid either because of actual fraud or constructive fraud. [Potter v. Alliance United Ins. Co. (2019) 37 Cal.App.5th 894, 903–904]
The claim can be brought against the debtor, e.g., the transferor or the transferee unless the transferee who took the asset in good faith and for a reasonably equivalent value.
What is important is that a creditor can invoke the protections of this law before its claim against the debtor has matured to a judgment. This has the effect of preserving the asset to satisfy the claim if it matures to judgment.
Also, a transfer that is made by a debtor is voidable as to its creditor whether the claim arose before or after the transfer was made or the obligation was incurred.
If the creditor proves the debtor engaged in conduct to hinder, delay, or defraud it by a preponderance of the evidence then the transfer can be avoided. These claims must generally be brought within 4 years of the transfer although other, shorter time periods apply in certain instances. It is also possible that the time periods do not begin to run until the claim has matured to judgment where the transfer was made after an action on the debtor was commenced.
Sister State Judgments
“A State may not disregard the judgment of a sister State because it disagrees with the reasoning underlying the judgment or deems it to be wrong on the merits.” (V.L. v. E.L. (2016) 136 S.Ct. 1017, 1020).
In California, a “Sister state judgment” means that part of any judgment, decree, or order of a court of a state of the United States, other than California, which requires the payment of money, but does not include a support order. “Support” generally means an obligation owing on behalf of a child, spouse, or family. Thus, if one has a judgment against judgment debtor who has property subject to levy in California, one can apply for entry of that judgment in California to reach those assets in satisfaction of the judgment once entered.
A judgment creditor or assignee can apply to have the sister state judgment entered as a judgment in California.
Foreign-Country Judgments under the Uniform Foreign-County Money Judgments Recognition Act
A judgment of a foreign court can be entered in California subject to various exceptions which include judgments for taxes, fines, penalties, support, divorce, maintenance, or domestic relations. Under principles of comity, however, a judgment for support, divorce, maintenance, or domestic relations may be recognized.
Tribal Court Money Judgments under the Tribal Court Civil Money Judgments Act
A judgment creditor can apply to enter the judgment of a court or tribunal of any federally recognized Indian nation, tribe, pueblo, hand, or Alaska Native village, duly established under tribal or federal law, including Courts of Indian Offenses under Part 11 of Title 25 of the Code of Federal Regulations (CFR) in California.
Registration of federal judgments
Federal judgments can be registered in other districts once they become final.
This firm has experience in these proceedings, and can assist judgment debtors or judgment creditors in matters involving the enforcement of California judgments, and the entry of sister state judgments, foreign-country judgments, and tribal court money judgments.