When Collecting Business Debt, Consider Freezing The Debtor’s Assets

The writ of attachment application is a under-utilized commercial collection tool.  If the judge grants the application, the creditor can “freeze” most of the debtor’s assets, including bank accounts and real estate.  The mere filing of the application forces the debtor to respond and applies major pressure to the debtor and its business.  Most businesses cannot afford to have bank accounts frozen, so unlike other collection steps which the debtor may ignore, the debtor is unlikely to ignore the creditor’s attachment application.  It can often take months to obtain judgment against the debtor, particularly in Orange County, Los Angeles County, and Riverside County, and debtors often use this fact to their advantage in deflecting collection efforts.  The attachment process takes the otherwise slow legal process and forces the debtor and judge to act quickly.

The California Code of Civil Procedure allows a creditor to freeze the debtor’s assets when the following are satisfied: (1) the plaintiff’s claim is based on a contract (either written or verbal); (2) the plaintiff has established the probable validity of its claim; (3) the plaintiff does not seek the attachment for a purpose other than recovering on the claim at issue; and (4) the amount to be secured by the attachment is greater than zero.  See Code Civ. Proc. § 484.090(a).  In a standard collection case, these elements are easily satisfied.

As an example, our firm recently sued a business in Orange County to collect approximately $110,000.  The debtor business filed an answer to our complaint, thinking that doing so would prevent judgment for several months.  The debtor hoped to use the additional time to transfer its assets to a new company, thereby preventing our client from collecting.  Instead of waiting several months for trial or a summary judgment motion, we quickly file a writ of attachment application.  The debtor knew that our application was likely to be granted.  Rather than paying an attorney several thousand dollars to oppose our application, the debtor contacted us to arrange a payment plan.

The attachment application is under-utilized and should be considered in every business collection matter.