I Have a Judgment....What's Next?

I have a Judgment . . . What’s Next?
By Scott D. Reep, Esq.


Last week, Steve wrote about the expense of litigation. It is expensive in terms of time, emotions and money. Each week, we consult with people who have gone through the litigation process and now have a piece of paper saying that the other side now owes them money. People are often surprised to learn that the court does not actively force the defendant to pay the judgment. Some people find out for the first time that we don’t have debtors’ prison in the United States and that the court will not be putting the defendant in jail until the judgment is paid. To the contrary, in the United States, we have bankruptcy court where we forgive people’s debts and give them the opportunity to enjoy a new debt-free start.

Here is some basic information about California judgments: (1) judgments are good for 10 years and are renewable, if renewed before the 10-year period ends; (2) the unpaid portion of the judgment collects interest at the rate of 10% simple interest per year; (3) if the judgment is renewed, the accrued interest is compounded; (4) if the judgment is against a person, it will likely show up on their credit report and lower their credit score; (5) it is possible to collect an out-of-state judgment in California by converting that judgment to be a California judgment.

There are a number of unusual words that are used in the judgment collection process. The party that won is called the “judgment creditor” and the losing party is referred to as the “judgment debtor.” The term “levy” means to seize or take.

Although the court does not actively force the debtor to pay the judgment, the court has a number of procedures to help the creditor collect. Because each debtor is in a different position relating to the assets that they have, it is up to the creditor to determine the best procedure for collection.

The first step to collect a judgment is to determine what assets the debtor has. Sometimes you are lucky enough to know where the debtor works, where they bank and where the house that they own is located. Sometimes, you may have a judgment against a person that survives on government assistance, lives in an apartment and keeps what little money they have under their mattress. Good luck collecting a judgment if that is your situation. Some people simply don’t have any assets. If you find yourself in that situation, it may be best to renew the judgment and hope that the debtor wins the lottery or that their rich Uncle Thurston leaves them money. If you know little about the debtor’s assets there is a procedure, called a “debtor’s examination” where you can force the debtor back into court and ask the debtor to produce information about their financial condition.

Once you have an idea of what assets the debtor has, we usually follow these steps: (1) contact the debtor and work out a voluntary payment plan. It is better to receive the judgment in payments over time than to have a piece of paper stating that you are entitled to the whole amount; (2) put liens on the debtor’s real property and personal property; (3) have the court issue a writ of execution [sounds ominous, but is merely a court order authorizing the sheriff to seize the debtor’s personal property]; (4) decide whether to go forward with a bank levy, a wage garnishment or perhaps a third-party levy.

You may see the debtor driving around town in a new car . . . perhaps even a car that you would like to own yourself. We do not usually recommend levying on a vehicle . . . it is an expensive process, typically costing the creditor $1,500 to $1,800 out-of-pocket with little hope of actually recovering anything. The sheriff’s fees are expensive because the car has to impounded, stored, advertised for sale and then sold at public auction. Vehicles often have little equity, so after the court and sheriff’s fees are paid, the lien holder (lender) is paid and the debtor is paid their $1,900 exemption, there is probably nothing left to pay the judgment. However, even though you may not recover any money from the sale, you may get satisfaction in seeing the debtor walking or on their bike.

For more information about collecting judgments, visit the State Court’s website at www.courtinfo.ca.gov .



The information herein is intended to be general in nature and does not constitute legal advice. Send column suggestions to info@SolanoLawGroup.com, fax to Gizzi & Reep, LLP at 707-748-0921 or mail to 940 Adams Street, Ste. A, Benicia.