Methods for collecting unpaid judgments in California

Methods for collecting unpaid judgments in California are is the topic of this blog post which discusses some of the more common methods for collecting on an unpaid judgment in the State of California.  Unpaid judgments are very common as there are estimates stating that approximately 80% of judgments are never collected.

I have been collecting unpaid judgments in California since 1992 when I worked in industrial property management and over the years I have collected on many judgments both large and small both as an employee and as a judgment recovery professional.

Anyone who has ever obtained a judgment soon discovers that while the Court may enter the judgment they will not collect it for you.  Realistically few if any judgment debtors ever voluntarily pay a judgment which means that the judgment creditor is responsible for collecting the judgment although the Court will issue certain documents that are very useful in collecting on a judgment such as writs of execution, abstracts of judgment, order to appear for examination for a judgment debtor, etc.

There are two major collection methods that can be used in collecting an unpaid judgment which are discussed briefly below.  Anyone attempting to collect on an unpaid judgment should carefully consider which of the two methods they wish to use.

The first method is what I call the active method. The active method involves actively taking steps to collect the judgment such as levying on bank accounts, scheduling judgment debtor examinations, serving wage garnishments, requesting assignment orders, etc.  The active method is my personal favorite method for collecting on judgments as it increases the odds of collection

although it does have one major disadvantage which is that it takes time and money to pursue the active method of judgment collections. Another disadvantage is that it may persuade the judgment debtor to take certain actions to avoid having to pay the judgment such as filing for bankruptcy, moving out of state, etc.

The second method is what I call the passive method. The passive method only works in cases  where you know that the judgment debtor owns or has an ownership interest in real property located in a certain county.  In that case you could record an abstract of judgment in the county where the real property is located and that will place a recorded lien on any present or future ownership interest by the judgment debtor in any real property located in that county that will last in most cases until the judgment expires or the judgment is paid off.   Another situation would be if the judgment debtor owns a business in which case you can file a notice of judgment lien with the California Secretary of State. The major advantage of the passive method is that in most cases it takes less time and money to utilize the passive method. However the major disadvantage to the passive method is that you may have to wait a long time before the judgment is paid off.

This blog post is merely an overview of the basic strategy for California judgment collections.  While some individuals do well collecting their own unpaid judgment many do not have the time, money or inclination to attempt collection on their own.  Those individuals may want to consider assigning the judgment to a judgment recovery professional.

The author of this blog post, Stan Burman, has collected unpaid California judgments since 1992 and has also worked in California and Federal litigation since 1995 as a freelance paralegal.  

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DISCLAIMER:

Please note that the author of this blog post, Stan Burman is NOT an attorney and as such is unable to provide any specific legal advice. The author is NOT engaged in providing any legal, financial, or other professional services, and any information contained in this blog post is NOT intended to constitute legal advice.

The materials and information contained in this blog post have been prepared by Stan Burman for informational purposes only and are not legal advice. Transmission of the information contained in this blog post is not intended to create, and receipt does not constitute, any business relationship between the author and any readers. Readers should not act upon this information without seeking professional counsel.

Motion for assignment order in California

The filing of a a motion for assignment order om California is the topic of this blog post.

An assignment order can be very useful to someone attempting to collect a judgment in California.

Many times someone attempting to collect a California judgment will be unable to collect as they cannot locate any assets such as a bank account or car that may be seized to satisfy the judgment. Or the judgment debtor may be self-employed making a wage garnishment impossible. These types of situations are where an assignment order can allow someone to collect on a judgment that would otherwise be uncollectible. Many persons working in the judgment recovery field will testify to the effectiveness of an assignment order.

Code of Civil Procedure § 708.510 authorizes a Court to issue an order directing the Judgment Debtor to assign to a Judgment Creditor, all or part of a right to payment due, or to become due, including

1. Wages due from the federal government that are not subject to withholding under an earnings withholding order;

2. Other payments such as rents, commissions, royalties, payments due from a patent or copyright, insurance policy loan value, accounts receivable, general intangibles, judgments and instruments.

Although the Court may take into consideration all relevant factors, the sole constraints placed on the Court are that the right to payment be assigned only to the extent necessary to satisfy the creditor’s money judgment and that, where part of the payments are exempt, the amount of the payments assigned should not exceed the difference between the gross amount of the payments and the exempt amount.

Note that a California Court of Appeal has ruled that just because a right to payment has been ordered assigned under Code of Civil Procedure § 708.510, that does not preclude a challenge to whether the claims were assignable ab initio; the Legislature specifically noted that § 708.510 does not make any property assignable that is not already assignable. See Kracht v. Perrin, Gartland & Doyle (1990) 219 Cal App 3d 1019, 1022. In this case the Court ruled that a right to receive payment from a malpractice suit could not be assigned.

In an unusual case involving the Estate of Ferdinand Marcos, the Court ordered his Estate to assign the funds held in Swiss bank accounts in favor of the plaintiffs who had sued the Estate for damages resulting from torture, summary execution, and disappearances during his regime. The judgment which was entered in the United States District Court in Hawaii, had been transferred to a district court in California for enforcement purposes.

Estate of former Philippines president ordered to execute assignment of funds in Swiss banks in favor of the class and individual plaintiffs. Case law interpreting California statute on assignment of right to payment in enforcement of a judgment has consistently upheld a court's power to require debtors to assign their interests in debts or other property. The statute and its case law permitted an order of assignment of the estate's interests in the foreign bank accounts for the benefit of the judgment creditors, class action plaintiffs. See In re Estate of Marcos Human Rights Litig. (1995, DC Hawaii) 910 F Supp 1470, 1473.

This case clearly shows that an assignment order can be used to reach almost any asset of a Judgment Debtor.

Code of Civil Procedure § 708.520 authorizes the Court to restrain the Judgment Debtor from assigning or otherwise disposing of the right to payment sought to be assigned upon a showing of need. This is important as otherwise the Judgment Debtor may assign the right to payment to someone else or otherwise attempt to evade collection efforts.

Attorneys or parties in California who wish to view a portion of a sample motion for assignment order for California that is sold by the author please see below.

http://www.scribd.com/doc/51511627/Sample-Motion-for-Assignment-Order-for-California

The author of this article, Stan Burman, is a freelance paralegal with over 15 years of experience in California Civil Litigation. Visit his website at http://www.legaldocspro.net/

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