Orange County Charging Order Lawyer

Charging Orders as a Collection Tool

corporate-collectionsOften times a debtor’s most valuable asset is his ownership of a corporation, limited liability company, or partnership.  Charging orders allow creditors to gain possession of, and eventually sell, the debtor’s interest in these entities.  Charging orders are an under-utilized judgment collection tool.  These orders can be quite effective at bringing the debtor to the table.

Need Help Obtaining a Charging Order in California?

The charging order process is considerably more complex than other debt collection tools.  Please contact us at (949) 203-3870 if you would like to discuss using the charging order process to collect your judgment.  Our office is in Orange County, California and we collect debts and judgments throughout California, with an emphasis in Orange County, Los Angeles County, San Diego County, Riverside County and San Bernardino County.  We are happy to provide you with a complimentary judgment collection analysis.

 

How to Collect Business Debt via Charging Orders

  1. Assets of a partnership or limited liability company are not liable for a judgment rendered against a partner or member personally (i.e., partnership or LLC assets are not subject to execution unless the judgment is against the partnership or LLC itself).  To reach a debtor’s partnership or LLC interest, the judgment creditor ordinarily must obtain a court order charging those interests with the amount of the judgment.  See CCP §§ 699.720(a)(2) and 708.310.
  2. To obtain the charging order, the judgment creditor must file a motion with the court.  The motion should be filed in the court that entered the judgment or in any other court of competent jurisdiction.  See Corporations Code §§ 15522, 15673, 15907.03(a), 16504(a), 17302(a); see also CCP §§ 708.310-708.320.
  3. A motion for a charging order should usually be combined with a motion to appoint a receiver to collect the judgment debtor’s share of partnership or LLC profits and any other moneys due, or to become due, the debtor from the partnership or LLC.  See CCP §§ 564 (b)(3),(4), 708.620.
  4. Proper service of the motion creates a lien on the debtor’s partnership or LLC interest.
  5. The partnership or LLC should be personally served and proof of service filed with the court.
  6. At the hearing on the motion, the court may issue an order charging the partner’s interest in a limited partnership in the unsatisfied amount of the judgment.  See Corporations Code §§ 15522 and 15673.
  7. After the creditor has obtained the charging order, the court may order foreclosure on the judgment debtor’s partnership or LLC interest at any time.  See Corporations Code §§ 15907.03(b), 16504(b), and 17302(b).  In other words, the court may order that the debtor’s interests be sold.  At the foreclosure sale, the highest bidder will acquire the debtor’s interest in the partnership or LLC.  Usually the judgment creditor is the highest bidder.  If a third party is the highest bidder, the judgment creditor will receive the bid amount, up to the full amount of the judgment.

 

Contact The Wallin Firm Today for a Judgment Review

Charging orders can be very effective, but are also quite complex.  Please contact us to discuss the specifics of your judgment or business collection matter and our ability to use the charging order process to collect.

The Wallin Firm does everything necessary to maximize the likelihood of collecting our clients’ judgments.  We understand that collecting is extremely important to our clients, and we take our responsibility very seriously.  Feel free to contact us today at (949) 203-3870 for a complimentary review of your judgment and collection options.

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