Collect Debt via Liens Against Debtors’ Lawsuits

Once a creditor has obtained a judgment against a debtor, it then has the right to attach a lien against any outstanding lawsuits that the debtor is a party to.  More specifically, any judgment creditor who possesses a money judgment against a judgment debtor who is a party to a pending action may obtain a lien in the pending action to satisfy its money judgment. CCP §708.410(a).   This can be an effective means for creditors to enforce judgments and collect debt, particularly business debt in California.

To create the lien, the judgment creditor must file in the pending action a notice of lien and an abstract or a certified copy of the money judgment. CCP §708.410(b).  A lien in a pending action effects the judgment debtor’s potential recovery by attaching to both the judgment debtor’s causes of action for money or property that are the subject of the action, as well as the judgment debtor’s rights to money or property under any judgment obtained later in the action.  CCP §708.410(a).

Obtaining a lien not only attaches to any potential recovery by the debtor, but it increases the creditor’s negotiating leverage by affecting the debtor’s ability to control its own case.  Once the judgment creditor gets a lien in a pending action, the judgment debtor can no longer enforce by writ of execution or otherwise, any recovery unless the judgment creditor’s money judgment is first satisfied or the judgment creditor’s lien is released.  CCP §708.440(a).  Moreover, the judgment debtor must first procure the judgment creditor’s written consent prior to entering into any compromise, dismissal, settlement, or satisfaction of the pending action or special proceeding or the judgment obtained without the judgment creditor’s written consent. CCP §708.440(b).

Though the process to obtain the lien can be relatively straight forward, the judgment debtor is entitled to contest the lien and may file a motion accordingly.  Having an attorney that understands the judgment lien advocacy and collection process is key to success.  The Wallin Firm is experienced in this area and has assisted many businesses in Orange County and throughout California with their various collection matters.