Judgment Enforcement Associates
We Aggressively, Creatively, and Effectively
Enforce All California Judgments!
- California Labor Commissioner Judgments -
- Superior Court & Small Claims Court Judgments -
- Department of Real Estate Judgments - Criminal Restitution Orders -
- Judgments against Car Dealerships - Judgments against Building Contractors -
- Family Law Judgments - All Federal Court Judgments and Sister State Judgments -
News
News
WHY IS IT SO DIFFICULT FOR YOU
TO ENFORCE A JUDGMENT IN CALIFORNIA?
Is your judgment accruing 5% or 10% interest after January 1, 2023?
For judgments entered on or after January 1, 2023, or where an application for renewal of judgment is filed on or after January 1, 2023, interest accrues at the rate of 5 percent
per annum on the principal amount of a money judgment remaining unsatisfied in the following cases:
•
The principal amount of a money judgment of under two hundred thousand dollars ($200,000) remains unsatisfied against a debtor for a claim related to medical expenses.
•
The principal amount of a money judgment of under fifty thousand dollars ($50,000) remains unsatisfied against a debtor for a claim related to personal debt.
•
An agreement governing the use of a credit card as defined in subdivision (a) of Section 1747.02 of the Civil Code.
•
A conditional sale contract as defined in subdivision (a) of Section 2981 of the Civil Code.
•
A deferred deposit transaction as defined in subdivision (a) of Section 23001 of the Financial Code.
The above does NOT include debts incurred due to or obtained by tortious or fraudulent conduct or judgments for unpaid wages, damages, or penalties owed to an employee.
Is the judgment limited to a 5-year life?
CCP § 683.120.
(a) The judgment creditor may renew a judgment by filing an application for renewal of the judgment with the court in which the judgment was entered.
(b) Except as otherwise provided in this article, the filing of the application renews the judgment in the amount determined under Section 683.150 and extends the period of enforceability of the judgment as renewed for a period of 10 years from the date the application is filed.
(c) Notwithstanding subdivisions (a) and (b), for a judgment identified in subdivision (c) of Section 683.110,
a judgment creditor may renew the judgment only once.
The filing of the application under this subdivision renews the judgment in the amount determined under Section 683.150 and extends the
period of enforceability of the judgment as renewed for a period of five years from the date the application is filed. No application may be filed if the judgment was renewed on or before December 31, 2022.
(d) In the case of a money judgment payable in installments, for the purposes of enforcement and of any later renewal, the amount of the judgment as renewed shall be treated as a lump-sum money judgment entered on the date the application is filed.
California
Governor Gavin Newsome signed SB 616 into law.
This new law, which went into effect on September 1, 2020, includes changes to California law regarding garnishments. SB 616 amends the California Code of Civil Procedure (CCCP) § 699.520, revising requirements for a writ of execution. The content of a notice of levy is also changed, as SB 616 amends CCCP § 699.540. SB 616 amends, repeals, and adds CCCP §§ 703.520 and 703.550, adjusting the procedures for claiming exemptions after levy. Also, SB 616 expands property exemptions by amending CCCP § 704.070 and adding CCCP §§ 704.220, 704.225, and 704.230. These changes ultimately limit how much judgment creditors can garnish from an individual’s bank account when attempting to collect on judgments.
Specifically, California currently provides a judgment debtor with 10 days after the notice of levy is served to claim their exemptions and gives a creditor 10 days to oppose the claims. Additionally, the State already specifies the maximum amount of a judgment debtor’s disposable earnings that are subject to a garnishment, exempting 75% of paid earnings of an employee
if, prior to payment to the employee, the earnings were not subject to a withholding order or assignment order for support. In other words, a creditor can garnish up to an amount that is the lesser of either 25% of a debtor’s weekly earnings or 50% of the amount by which the debtor’s earnings exceed 40 times the minimum hourly wage, and there is no minimum balance that a debtor’s deposit account must remain after being garnished. Under SB 616, beginning September 1, 2020, debtors will have 15 days to file a notice of claim of exemption
if the debtor was personally served with the notice of levy and 20 days if the debtor was served with the notice of levy by mail. Creditors now have 15 days to oppose the exemptions claimed by debtors.
Further, SB 616 automatically designates any funds in a debtor’s deposit account that are “equal to or less than the minimum basic standard of adequate care for a family of four”
in California as exempt from garnishment, without the need for a debtor to file a claim of exemption (and a debtor is still entitled to all other exemptions provided for by state or federal law). CCCP § 704.220(a). However, this exemption does not apply to money garnished to satisfy certain obligations such as wages owed, child support, or spousal support. It also does not apply to the collection of a liability by the State, or any of its departments or agencies. Currently, the Department of Social Services considers the amount needed to establish the basic standard of care to be $1,724.00. The exempted amount will be updated yearly, meaning it may be higher after the effective date of September 1, 2020. Additionally, any monies received from FEMA are automatically exempt without the need for a debtor to file a claim. In other words, the first $1,724.00 in the Debtor's account can NOT be touched with a Bank Levy.
If a debtor has more than one account with the same bank, either the creditor or the debtor may move the court to determine how and to which account the exemption shall be applied. If a debtor has multiple accounts across multiple financial institutions, the creditor must request a hearing before a judge to determine how the exemption should be applied.
SB 616 will limit the extent to which judgment creditors can obtain funds that would have otherwise been collectible under current California law. SB 616 does not, however, limit the ability of a debt collector to execute a judgment against the non-exempt personal assets of a judgment debtor.
These upcoming limitations may reduce the amounts judgment creditors are able to collect through a garnishment in California. The Judicial Council will be amending or adopting the necessary forms to implement this new section 704.220 of the CCCP, as the law requires a levy against a judgment debtor’s deposit account to include a description of the right to, and the limitations of, this new automatic exemption. It will be important to follow the development of these forms to ensure that the appropriate version is used as of the effective date in less than a year. In addition to decreasing the effectiveness in California of a garnishment to recover funds to collect on a judgment, this law may also lead to increased litigation costs because of more court appearances due to the interplay between this new exemption and already existing ones, as well as situations involving more than one account at a single bank. They will also force financial institutions in California to be increasingly vigilant in ensuring they are complying with California law regarding minimum thresholds that should remain in accounts. It is the financial institution that must make the determination of what non-exempt funds are available to turn over to the judgment creditor, which can be a complex endeavor when dealing with multiple accounts.
NEW CALIFORNIA HOMESTEAD EXEMPTION LAW
The new legislation, Assembly Bill 1885, was formally approved by California Governor Gavin Newsom and filed with the secretary of state on September 18, 2020 and is effective January 1, 2021.
It increases the exemption to protect a greater amount of equity in your home should you file for Chapter 7 or Chapter 13 bankruptcy. In California, where a state bankruptcy exemption system is used, exemption amounts are updated every three years by the California Judicial Council. The new law provides for more significant changes in the California homestead exemption.
WHAT IS A HOMESTEAD EXEMPTION?
A homestead exemption protects home equity from a homeowner’s creditors, up to a certain dollar amount. Collectors cannot acquire any funds within this amount to settle past-due debt. This applies if you file for bankruptcy or you experience financial difficulties after a divorce or your spouse passes away. You can also get a California homestead exemption on property taxes, in which you’re taxed on the value of your home minus the exemption amount.
HOW DOES THE HOMESTEAD EXEMPTION WORK?
By law, a certain amount of your assets is protected. The homestead exemption protects the home of a debtor and its equity from being seized by creditors. Otherwise, a creditor can file a lawsuit, obtain a judgement against you, and take actions to collect on judgements, such as garnishing paychecks/bank accounts or forcing the sale of property.
The homestead exemption kicks in when a particular creditor attempts to sell your home to pay a judgment against you. If you file for bankruptcy (personal or business), it also protects all or a portion of your home equity from creditors in general. Again, it only offers protection up to a certain dollar amount. If the legally available exemption is a greater amount than that of your home equity, your home is fully protected from creditors. A lender then cannot force the sale of your property.
INCREASE IN THE CALIFORNIA HOMESTEAD EXEMPTION
The California homestead exemption in 2020 was $75,000 for a single homeowner, with a maximum of $175,000 for homeowners who met specific family, income, and age requirements. The new law eliminates many qualifying conditions and provides a homestead exemption to anyone with a principal residence. As of January 1, 2021, the California homestead exemption amount will be at least $300,000 if the median sale price for homes in your county were less than that during the prior year. However, it can be as high as $600,000 if the median sale price in your county was more than that amount.
HOW DOES THIS INCREASE APPLY TO MY COUNTY?
The exemption amount can fall between $300,000 and $600,000; the actual amount will equal the prior year’s median home sale price amount if it is within this range. Some real world examples include the median price in Los Angeles County, which as of September 2020, stood at $677,000 (this would qualify a homeowner for a homestead exemption of $600,000). In Riverside County, the median price was $487,000, so the homestead exemption would be $487,000.
Pertinent amounts to use won’t be available until the end of the prior calendar year. Accepted sources for this information haven’t yet been determined, but a reliable source of statistics is the California Association of Realtors.
AUTOMATIC HOMESTEAD VS. DECLARED HOMESTEAD
In California, you don’t necessarily have to file a homestead declaration. An automatic homestead protects your home against a forced sale if the proceeds wouldn’t be enough to pay the homestead before the creditor. If there’s a judgement lien on your property, the creditor gets paid from a home sale before you get the homestead.
Homestead amounts are the same for automatic and declared homesteads. The difference is that a declared homestead only protects exempt equity when a home is sold voluntarily. Proceeds are protected for six months during which you can reinvest the homestead in a new home (if that amount covers the sale price and other costs).
Filing a declaration is a good idea if you have equity in your home and experience financial trouble. Your homestead won’t be lost after a property sale and the proceeds will be protected for a full six months.
The California homestead exemption also has two different systems. System 1 applies to any property where you reside and to proceeds from forced sales of property received six months before filing for bankruptcy. System 2 applies to property a debtor uses as a residence (the resident can be independent of the debtor as well) and allows for unused portions of the exemption plus a wildcard amount to be used.
HOW DOES THIS COMPARE TO FEDERAL LAW?
The homestead is part of state law. It does not set limits on what the IRS or other federal agencies can collect. The IRS has its own set of exemptions for delinquent taxpayers, although these don’t do much in protecting a home. Nonetheless, it is rare for the IRS to force the sale of a home; more likely, a lien on real property will be a barrier to selling or refinancing it. You don’t have a choice in which law applies to your situation; according to the U.S. Constitution’s Supremacy Clause, federal law takes precedence over state law.
YOU OBTAINED A JUDGMENT... NOW YOU WONDER WHY IT
DOES NOT APPEAR ON A DEBTOR’S CREDIT REPORT?
In the past, three types of public records could appear on your credit report: bankruptcies, judgments, and tax liens. In recent years, however, there have been major changes that have reduced the number of public records added to credit reports to one.
While it’s still common today to find bankruptcies on credit reports, you typically won’t find a judgment or tax lien.
The reason judgments and tax liens have gone missing from credit reports is because of new policies adopted by the three major credit reporting agencies (CRAs) – Equifax, TransUnion, and Experian – stemming from a 2015 settlement between the CRAs and 31 state attorneys general.
The three major credit bureaus rolled out their National Consumer Assistance Plan (NCAP). On July 1, 2017, the credit reports that most creditors rely upon have changed drastically. The NCAP changes were fully implemented by March 2018.
CRA's have removed ninety-six percent of all civil judgment data and tax lien data from credit reports that did not meet the new standards. The only public record data it currently has is bankruptcy.
Remember, a Judgment is only worth the paper it is written on…
Unless it is collected!
