how to collect when you win a lawsuit 4th (1999)

Turning a Sister-State Judgment Into a California Serving Papers on a Judgment Debtor After the Judgment Is Paid... Laying the Groundwork No matter what type of judgment you have small c

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Page ii

An Important Message to Our Readers

This product provides information and general advice about thelaw But laws and procedures change frequently, and they can

be interpreted differently by different people For specific

advice geared to your specific situation, consult an expert Nobook, software or other published material is a substitute for

personalized advice from a knowledgable lawyer licensed to

practice law in your state

Page iii

How To Collect When You Win a Lawsuit

(formerly Collect Your Judgment)

4th California Edition

ByGini Graham Scott & Attorney Robin Leonard

Keeping Up to Date

To keep its books up to date, Nolo issues new printings and new

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(See the "Special Upgrade Offer" in the back of the book.)

This book was last revised in: August 1999

FOURTH EDITIONAugust 1999

ILLUSTRATIONSMari Stein

EDITORStephen EliasCOVER DESIGNToni IharaBOOK DESIGNTerri HearshPRODUCTIONAni DimushevaPROOFREADINGRobert Wells

INDEXJean MannPRINTINGBertelsmann Industry Services

Scott, Gini Graham

How to collect when you win a lawsuit / by Gini Graham Scott,

Robin Leonard Calif 4th ed

p cm

Includes index

ISBN 0-87337-498-3

1 Executions (Law)CaliforniaPopular works 2 Judgments

CaliforniaPopular works 3 Collection lawsCaliforniaPopular

works I Leonard, Robin III Title

KFC1065.Z9S25 1999

347.794'077dc21 34865

CIPCopyright © 1988, 1992, 1993, and 1997 by Gini Graham Scott,

Stephen Elias and Lisa Goldoftas; 1999 by Gini Graham Scott and

Nolo.com All Rights Reserved Printed in the U.S.A

No part of this publication may be reproduced, stored in a retrieval

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800-Page v

Acknowledgments

For the first edition, thanks to:

Attorney Michael Perna (of Marsh and Perna, Oakland,

California) for his valuable suggestions and guidance in

assembling the manuscript

Attorney Sheldon Greene and the law firm of Greene, Kelley,Tobriner and Farren (San Francisco, California) for their

generosity in allowing us to use forms and procedures that weredeveloped for the law firm

Attorney Irwin Eskanos (of Eskanos and Adler, Oakland,

California) and Judge Allen Norris (Richmond, California) fortheir experienced and insightful overviews of the judgment

collection process

Page vii

Table of Contents

1

How to Use This Book

A Nineteen Ways to Collect a Court Judgment 1/3

E Miscellaneous Information About Collections 1/16

2

When to Start Collecting

3

Behavior to Avoid When Collecting

D Communicating With Others About the Debtor 3/4

E Giving and Getting Information About the Debtor 3/4

4

Creating Liens on the Debtor's Property

5

Getting the Debtor to Pay Voluntarily

D Accept Less Than the Judgment as Full Payment 5/7

E Respond to the Debtor's Claims of "No Money" 5/8

Page viii

6

Determining What the Debtor Owns

7

Obtaining a Writ of Execution

A Complete the Writ of Execution Form 7/2

8

Collecting From Deposit Accounts

A Finding Banks and Account Numbers 8/2

B Knowing if the Funds May Be Exempt 8/3

C Levying on Joint Accounts 8/4

D How to Levy on Bank Accounts and Safe-Deposit

9

Collecting From Wages

10

Collecting From Money or Property Owed to Debtor

A Locating Money or Property Owed Debtor 10/2

B How to Levy on Money or Property Held by Third

11

Collecting From a Going Business

A Levying Against Cash Receipts or Business Assets?11/2

B How to Levy Against Cash Receipts 11/3

C How to Levy Against Business Assets 11/5

12

Seizing a Motor Vehicle

Page ix

13

Seizing Tangible Personal Property

A Limitations on Personal Property Levies 13/2

B How to Levy on Personal Property 13/5

14

Seizing Real Estate

A Limitations on Real Estate Levies 14/2

If the Debtor Files for Bankruptcy

C Examine the Bankruptcy Papers You Receive 17/4

E After Filing the Proof of Claim 17/13

18

If the Debtor Dies

19

Help From a Judge: Filing Motions to Force Collections

B Typical Noticed MotionMotion for Assignment

Page x

20

Collecting an Out-of-State Judgment

A Turning a Sister-State Judgment Into a California

Serving Papers on a Judgment Debtor

After the Judgment Is Paid

B Complete Acknowledgment Form 23/2

Page 1/1

Chapter 1

How to Use This Book

A Nineteen Ways to Collect a Court Judgment 1/3

5 Find Out About the Debtor's Job and Assets 1/5

1 Judgment From Small Claims Court 1/8

3 Judgment Stemming From Motor Vehicle

Accident

1/9

4 Judgment or Order for Child or Spousal Support 1/9

8 Debtor Is Federal Employee or on Active

10 Debtor Is Licensed Real Estate Agent 1/13

Page 1/2

11 Debtor Is Private Vocational School 1/13

12 Debtor Is Subject to Conservatorship or

13 Judgment Does Not Reflect Debtor's Correct

E Miscellaneous Information About Collections 1/16

1 Notify Court of Change of Address 1/16

2 Find Out About Fees and Deposits 1/17

3 Use the Correct Forms and Court Documents 1/17

4 Substitute Yourself for Your Attorney 1/17

6 Become Familiar With Legal Citations 1/18

Page 1/3Congratulations! You have a court judgment ordering someone

to pay you money You won your small claims court case or

your case in regular civil courta California state court, anotherstate court or maybe even a federal court You've spent some

time celebratingafter all, you were wronged and deserve to becompensated, and a judge, even perhaps a jury, agreed

But your celebration is not yet a complete one While the courtdecided in your favor, the court did not pay you or demand thatthe defendant pull out a check book and pay up Collecting thejudgment is your job You may have no idea where or how tobegin If you've already made some attempts at collecting, youmay be frustrated and feel like you keep hitting a dead end

It's true that some judgments are uncollectible, but those

judgments are the minority With information and perseverance,most people can collect what they are owedwithout having tohire an attorney and often without much additional expense

If you don't yet have a court judgment This book is for peoplewho already have been to court and been awarded a court

judgment If you have not yet filed your case or your case is stillpending and you don't yet have a judgment, you'll need to waituntil you get your judgment before using this book If you

haven't yet filed a lawsuit, take a look at Everybody's Guide to

Small Claims Court, by Ralph Warner (Nolo) or How to Sue for

Up to $25,000 and Win, by Judge Roderic Duncan (Nolo) Of

course, you can read this book while awaiting your day in courtjust to prepare for your victory!

A Nineteen Ways to Collect a Court Judgment

This book covers 19 different ways to collect a court judgment.The methods are introduced in this chapter and explained in

detail in other chapters After you read this chapter, you'll need

to read only the portions of the book you think can help you

collect your judgment

Bankruptcy or death of debtor If the debtor has either filed forbankruptcy or died, your collections options are greatly limited.Instead of reading the rest of this chapter, go directly to Chapter

17 (bankruptcy of the debtor) or Chapter 18 (death of the

debtor)

B Laying the Groundwork

No matter what type of judgment you have (small claims court

or regular civil court) and what kind of debtor owes you money(individual or business), several steps will help you immediatelyput yourself in the best possible position to collect your

judgment

1 Set Up a Case File

You may have already organized your documents relating to thedebtor when you were preparing your case for court Using

those organizational skillsor using new ones if you didn't

arrange anything before going to courtset up a system for all

documents related to your collection efforts One possible

method is to use an accordion folder for all papers, creating

separate sections for court papers such as the judgment, letters

you write and receipts for costs you incur in trying to collect Ifyour collection efforts are extensive, you can set up files by type

of assetsuch as vehicles, bank accounts, real estate and wages.Keeping complete records is especially important because youare entitled to collect not only your judgment, but also all

collections costs and accrued interest from the date of the

judgment Chapter 16 and the Appendix include instructions

and worksheets for keeping track of payments received and

costs and interest due

Page 1/4Nineteen Ways to Collect a Court Judgment

4 Conduct a debtor's examination; can obtain debtor's

money and property at exam

Chapter6

Basic Collection Techniques (Least costly, generally most

7 Collect from business debtor's cash register (till tap) Chapter

11

8 Collect money from business as it comes in, for a

specified time (keeper)

Chapter11

9 For debtors who file for bankruptcy, file a proof of Chapter

Advanced Collection Techniques (Often expensive, usuallyleast effective)

17 Obtain a court order requiring the debtor to hand

over specific property

Chapter19

18 Obtain a court order requiring the debtor to assign

(transfer) to you certain rights, such as the right to

receive royalties or federal wages due the debtor

Chapter19

19 Force sale of real estate Chapter

14

Page 1/5

2 Establish Liens

A lien is a legal assertion that you have a claim of a specific

value against certain property In another words, a lien changesyour general judgment against the debtor into a specific claimagainst whatever property is subject to the lien Anytime you

win a court judgment, you can use that judgment to create liens.When a debtor sells, refinances or transfers the property, all

liens against the item of property must be paid or otherwise

dealt with before the sale, refinance or transfer is finalized Intheory, you can also collect on your lien by forcing the sale ofthe debtor's house, but this is very costly and time

consumingand not covered in this book

Liens are paid in the order that they were placed against the

property For example, if the debtor still owes money to the

lender, such as a mortgage lender, the lender will be paid ahead

of you and any other creditors who filed liensbecause the

lender's lien was established at the time of the original purchase.You and the other creditors, such as the taxing authority, will bepaid out of the balance of the proceeds, if any, when the

property is sold or refinanced If there aren't any proceeds left topay the creditors, the debtor will have to get the money

elsewhere

Chapter 4 discusses liens in detail and tells you how to create

real estate liens and personal property liens, if the debtor is a

business

3 Know What You Can and Can't Do

Debtors have certain legal rights and protections, such as the

right to appeal their case most of the time, and protections

against collection harassment Read Chapter 2 to understand

when it's wise to start collecting and Chapter 3 for an overview

of actions you must avoid when collecting your judgment

4 Attempt Voluntary Collection

A debtor who has lost in court finally may be willing to pay

you If you get the debtor to make voluntary payments, you

won't need to engage in active collection measures But you

won't know if the debtor will voluntarily pay unless you ask.Chapter 5 gives suggestions for engineering voluntary payment

If the debtor won't make voluntary payments, you'll have to

force collectionsoften by garnishing the debtor's wages (where aportion of the judgment debtor's wages are diverted to you) orseizing, called levying on, certain assets owned by the debtor Ifyou don't already know where the debtor works, or you don'tknow what property the debtor owns, you can use routine

information discovery procedures, such as debtor's

examinations, subpenas and investigation of court files,

discussed in Chapter 6 You need to know where the debtor

works and what kinds of assets the debtor has before you candecide on the best methods of collecting

Page 1/6

6 Obtain Writ of Execution

If you will have to force collections because the debtor doesn'tvoluntarily pay, you will need a sort of legal permission slip

from a court in the county where the debtor has assets This may

be the county where the debtor lives or work, for example if thedebtor owns a vacation house on Lake Tahoe Chapter 7 tellsyou how to obtain court permission, in something called a Writ

of Execution

C Create a Collections Plan

Formulating a collection strategy isn't that difficult

Nevertheless, it's not something about which we can say do x,then y then z Other than the steps described in Section B, thecollections process you will use depends almost entirely on youand the judgment debtor It is impossible to recommend any oneprocedure for collecting a judgment, or even the order in whichthe various procedures might be used

For example, in some cases, the best approach will be to goingafter the debtor's wagesyou'll be paid a set amount each monthuntil the debt is paid off, unless the debtor quits her job But

some debtors are self-employed or earn income that's hard to

garnish, such as by waiting tables In those situations, a wagegarnishment is likely to come up emptyeither because the self-employed person will ignore your attempts or because the

person doesn't earn enough in wages to have them garnished.Similarly, forcing the sale of a debtor's real estate after you have

created a lien is extremely costly, complex and usually requires

a lawyer's help Most people figure they'll be paid when the

debtor sells or refinances, not by forcing a sale But if you have

a very large judgment and the debtor has a lot of equity in hishouse, forcing the sale may be the most cost-effective way ofcollecting

Collecting From Multiple Debtors

If the court awarded you a judgment against two or more

defendants, the defendants are usually considered jointly andseparately liable for the full amount of the judgment, unless thejudgment says otherwise Joint and separate liability means thatyou are entitled to collect the entire judgment from a single

defendant (separate liability), or portions of it from each

defendant (joint liability)

If multiple defendants are liable on your judgment, a good

strategy is to seek to collect from them simultaneously, unlessyou know one will be easy to collect from If you collect morethan ''his share'' from a particular defendant, that's his

problemit is up to him to go after the others for contributions

If you inadvertently collect more than you're entitled to, you

must return the excess immediately

1 Make a Cost-Benefit Analysis

How do you assess how much time, money and energy you'llhave to put out to collect your judgment? The answer, of

course, depends on your situation and personality Furthermore,

collection can be unpredictable: You may think you can easilygarnish the debtor's wagesand then the debtor quits her job Oryou may believe the matter hopeless, but a single letter bringsyou a bonanza.

The following factors will help you determine the costs and

benefits involved in undertaking specific collections techniques:size of your judgment

current value of the debtor's assets

whether the debtor is likely to come into assets in the future

whether the debtor's assets are protected against forced

collections ("exempt," in legalese)

Page 1/7cost of undertaking a particular collection method

competition from other creditors seeking to collect

time and energy you're willing to put into your collection

efforts, and

any special circumstances affecting your likelihood of

collecting

2 Use Rating Charts

To help you choose among the collection procedures, each

chapter describing a collection method opens with a rating chartcontaining the following factors, with checkmarks in the

appropriate columns

Collection Factor

High Moderate LowPotential cost to you

Potential for producing cash

Potential for settlement

Potential time and trouble

Potential for debtor bankruptcy

The charts can quickly tell you if the method will be costly ortime consuming and troublesome for you to undertake, and

whether or not it has a high potential for producing

cashmeaning that you'll be able to grab cash itself or an item thatcan easily be sold The charts also include an assessment of

whether the method is likely to convince the debtor to enter into

a payment schedule (a settlement) The more coercive the

collection method, the more likely the debtor will want to settlethe matter rather than lose property

Finally, the charts tell you if the method is likely to send the

debtor to bankruptcy court There are two kinds of

bankruptcyliquidation (Chapter 7 bankruptcy) and

reorganization (Chapter 13 bankruptcy for individuals or

Chapter 11 bankruptcy for corporations or individuals with

extremely high debt burdens) If a debtor files for bankruptcy,you must cease all collection efforts unless you file a motion

with the court and are granted an order allowing you to

proceedhighly unlikely in your situation Most judgments areeither wiped out in bankruptcy or paid off at a fraction of theirworth Even if you've created a lien against the debtor's

property, there's a good chance the debtor will be able to wipe itout in bankruptcy A few judgments do survive bankruptcy,

however Bankruptcy is covered more in Chapter 17

Obviously, you don't want to pursue aggressive collection

techniques that will push a debtor into bankruptcy Nor is thereany need to do so Judgments last for ten years and can be

renewed for another ten years If the debtor is having seriousfinancial difficulties, you may want to wait for his luck to

change

If the debtor threatens to file for bankruptcy, how can you

assess whether he's a real candidate or just threatening to getyou to back off? There's no foolproof way of telling, but thegreater his total debt burden, the more likely he is to go

bankrupt If you're the only one trying to collect on the debt,he's not likely to file But if he owes a great deal of money toseveral creditors, he's a good candidate

3 Select One or More Procedures

For most creditors holding a court judgment, the best collectionmethods are those that cost the least and yield the highest

results Consider a couple of examples to see how this

information can help you formulate your collection strategy.EXAMPLE 1: Sheila obtained a small claims court judgmentagainst her former friend, Fred, for $1,000 She wrote severalletters

Page 1/8demanding payment, with no results Sheila knew that Fred wasemployed and owned a late model car and his home Sheila

created a lien on Fred's home She decided not to seize his car orforce the sale of his home because the potential cost of both waslikely to be greater than any money Sheila would get Sheila

decided to garnish Fred's wages, figuring he won't likely to quithis job or file for bankruptcy Through the garnishment, Sheila'sjudgment, including collection costs, was paid in six months

EXAMPLE 2: Small Press, a book publisher, obtained a $5,000judgment against Terry Wittgenstein and his small bookstore,Protos Small Press knew that Protos did a brisk business andhad a relatively extensive inventory Terry owned a BMW

automobile, a house and a 25-foot cabin cruiser, which he keptdocked at a local marina Small Press discovered that the BMWand boat were heavily financed, and that the cost of having themseized, stored and sold probably exceeded the amount of moneySmall Press would get Small Press did create a lien on Terry'shouse, but decided not to force a sale because of the cost

involved

Small Press decided that the best way to collect was to impose a

"keeper" on the business, where a law enforcement officer

stands by the cash register and collects money as it comes in

The law enforcement officer charged a fee of $150 When thesheriff phoned Terry at the bookstore and told him he was

sending a deputy down to stand by his cash register, Terry

quickly came to terms with Small Press, signing an agreement to

pay off the judgment in installments over the next six months.Small Press knew that if Terry didn't keep to the terms of theagreement, it could send the keeper and even have the sheriffseize and sell the bookstore inventory and assets to satisfy thejudgment.

D Special Situations

In several collections situations, you have remedies other thanthe 19 listed in Section A, or there are limitations on how youcan collect Keep reading if any of the following are true:

you have a judgment from small claims court

you have a judgment from a federal court

you have a judgment stemming from a motor vehicle accidentyou have a judgment or order for child or spousal support

you have a restitution order

the debtor is married

the debtor is a government agency

the debtor is a federal employee or on active military duty

the debtor is a licensed contractor

the debtor is a licensed real estate agent

the debtor is a private vocational school

the debtor is subject to a conservatorship or guardianship, or

the judgment doesn't reflect the debtor's correct name.

1 Judgment From Small Claims Court

Sometimes a judgment debtor is willing to pay up, but doesn'twant to deal directly with you, the judgment creditor A smallclaims court judgment debtor has the option of paying off a

judgment directly to the court The court can charge the debtor

up to $25 for this service

If your judgment debtor opts for this, once the court receivespayment, it will notify you You have three years to claim thepayment.For this reason, it is important to notify the small

claims court clerk if you change your address (See Section E.1,below.) If you fail to collect within three years, the state gets tokeep the money

If you receive notice from the court that the debtor is paying offthe judgment through the court, it makes sense to cease all othercollection

Page 1/9efforts Otherwise, the debtor will probably get angry and stopmaking the payments.

Once the debt is paid off, read about your few remaining steps

in Chapter 23

2 Judgment From Federal Court

In general, federal judgments are enforced only by federal

courts But still, state law governs procedures for enforcing

judgments except where a specific federal law applies (FederalRule of Civil Procedure 69) So if there's a specific state law

dealing with enforcing judgments, the state law governs Only ifthe state law is silent does the federal law apply This means that

in California, the procedures described in this book apply if youare collecting a judgment awarded by a federal court in

California

Note that although the rules apply, the forms may not Instead,you will have to use forms for enforcing federal court

judgments One book that might help, available at a law library,

is West's Federal Forms, forms 5501 through 5671.

If the federal court that awarded the judgment is not within

California, you must register the judgment with a federal districtcourt within California by filing a certified copy of the judgmentwith the court (28 U.S.C §1963) Once registered, the judgmentmay be collected as if it had been initially awarded by a federalcourt within California

3 Judgment Stemming From Motor Vehicle Accident

If you get a judgment against a California licensed driver andthe debtor doesn't pay, the Department of Motor Vehicles

(DMV) can suspend the debtor's license in either of the

following situations

The accident occurred on a California road, and the judgment

is for $500 or less and remains unpaid at least 90 days from the date it was entered DMV will notify the debtor and give her 20

days to pay or prove that insurance will cover the damage If thedebtor does neither, her license will be suspended for 90 days(Code of Civil Procedure §116.880, Vehicle Code §16370.5)

The judgment is for more than $500 or for personal injury or death, and resulted from an accident caused by an uninsured debtor's operation of a motor vehicle DMV will suspend the

debtor's license until the judgment is paid or converted to a

judgment under which payments are made in installments, for amaximum of six years At the end of the six years if the

judgment is still not paid, you can't simply renew the

suspension, but you can request a new suspension (Vehicle

Code §16371)

If the debtor drives to work, license suspension may lead to ajob loss, leaving you with no source from which to collect Thedebtor might even file for bankruptcy Before seeking to havethe debtor's license suspended, a drastic step, negotiate with thedebtor You may be able to work out a payment plan

If you decide to proceed with the suspension, gather togetherthe following: