楊清泉律師 - JUDICIAL LIENS AND BANKRUPT DEBTOR’S RESIDENCE PART 1

A judicial lien is an involuntary lien that arises out of a judgment in a lawsuit. First, there is a lawsuit where the debtor is normally the defendant. Second, the lawsuit ends with the debtor losing. Third, a judgment is entered saying that the defendant lost and owes plaintiff a sum of money. If nothing else happens after entry of judgment, there is no judicial lien. Plaintiff or creditor must take a fourth step where he applies for an involuntary lien on all the properties in the name of defendant. Fifth, the involuntary lien must be recorded in the county’s recorder’s office. The recording of the involuntary lien is the act that creates a judicial lien that attaches to all properties in the county in the name of judgment debtor.

To illustrate, debtor owes American Express $50,000. Debtor defaults and fails to pay it back. Is there a judicial lien at this stage? No. There is only a breach of contract situation because of the failure to repay a loan. American Express files a lawsuit against debtor for breach of contract to collect the $50,000. Is there a judicial lien at this stage? No. There is only a lawsuit that has been filed for breach of contract. Can American Express garnish debtor’s wages at this point? No. Can it put a judicial lien on debtor’s residence at this point? No. After six months, the case is set for trial. At trial, American Express wins and thereafter gets a judgment against debtor for $50,000 plus interest, penalties, costs and legal fees of $20,000, making a total judgment against debtor of $70,000. Can American Express put a lien on debtor’s bank accounts for $70,000 at this point? No. There is a judgment that has not yet been entered is what creditor has. After 30 days, the judgment is entered. Can American Express garnish debtor’s wages at this point? NO. There is a judgment that has been entered but there is no writ of execution. After 30 days, American Express obtains a writ of execution and thereafter obtains a writ of garnishment against debtor’s wages. Can American Express start garnishing debtor’s wages? Yes. The sheriff will use the writ of wage garnishment to get 25% of debtor’s wages. So, if debtor has a gross monthly salary of $5,000, the sheriff will get 25% of that or $1,250 every month.