Overview
When a business owner or contractor’s clients fail to pay for services, labor or materials, non-court action may not be sufficient to collect the money due. The Law Office of Howard L. Hibbard assists contractors, subcontractors and other business owners with debt collection actions. These services range from forceful collection letters and telephone calls to legal actions and the collection procedures following judgment. Our office works for and with clients throughout Northern California. Please contact us for a free consultation.
General Information on Debt Collection
A collection action is generally a breach of contact lawsuit for non-performance. The non-performance is the failure to pay. In addition to the amount due under the contract, additional damages such as interest, attorney’s fees and costs may be obtained depending on the terms of the contract. In the event that the unpaid fees are for services, labor or materials outside of a contract, the lawsuit is for quantum meruit, or the reasonable value of the services, labor or materials provided.
Contractors and sub-contractors, in order to recover monies from the owner of real property for unpaid bills, must first file a Preliminary Notice and a Mechanic’s Lien, unless some exception exists. Exceptions are rare. Please read Mechanic’s Liens for more information or contact us to discuss you case.
Post-Judgment Collection Procedures
After a judgment is obtained in a collection action, the judgment debtor is required to pay the judgment to the judgment creditor. In some cases, the judgment debtor refuses to pay and additional procedures are required to collect the judgment. Theses procedures include, but are not limited to: filing a Notice of Judgment Lien or Abstract of Judgment, Examination of a Judgment Debtor (OEX), Writ of Execution, and Bank Levy.
Liens to Encumber Judgment Debtor’s Property
Two types of legal documents exist in California that encumber the judgment Debtor’s property. The first is a Notice of Judgment Lien, filed with the Secretary of State. This Notice attaches to all of the judgment debtor’s personal property statewide. The second is an Abstract of Judgment, filed with the County Recorder. The Abstract attaches to the judgment debtor’s real property in the County in which it is recorded.
A Notice of Judgment Lien is filed with the California Secretary of State pursuant to Cal. Code Civ. Pro. §697.510 through §697.670. Once filed, this Lien attaches to the judgment debtor’s personal property statewide including negotiable instruments, accounts receivable, equipment, inventory, etc. to secure payment of the judgment. If any of the property is sold, the lien remains intact and collectable on the property.
An Abstract of Judgment is filed with the County Recorder pursuant to Cal. Code Civ. Pro. §697.310 through §697.420. The Abstract encumbers the judgment debtor’s interest in real property in that county. If and when the property is refinanced or sold, the judgment creditor is entitled to recover his/her judgment plus interest. This recovery is not automatic and additional steps are required.
An Order of Examination of a Judgment Debtor (OEX) is another legal procedure used post-judgment to determine the assets and liabilities of the judgment debtor and thus his/her ability to pay the judgment. Pursuant to Cal. Code Civ. Pro. §708.110(a), the judgment debtor and his/her non-debtor spouse are compelled to appear in court, “to furnish information to aid in enforcement of the money judgment.” Once the Order of Examination is properly served on the judgment debtor, an arrest warrant may be issued if the judgment debtor fails to appear. The judgment debtor must appear at Court on the date set by the Court and provide financial asset and liabilities, property, and other information.
A Writ of Execution is a legal document, issued following judgment that instructs the levying officer, in some cases the county sheriff to seize and auction specific property of the judgment debtor in order to pay the judgment. When property is seized and sold at auction, the proceeds go first to pay the expenses of the levying officer and then to the judgment creditor. If the judgment creditor is not fully repaid, additional property may be seized until the debt is fully repaid.
A Notice of Levy is also available to ensure repayment of a judgment if the judgment creditor has the judgment debtor’s bank account information. The Notice of Levy is served by a process server or the county sheriff to the bank branch where the judgment debtor’s accounts are held. The levy attaches only to the monies that are in the account at the time that the levy is served. The bank then has ten (10) days to remit payment of the funds to the Sheriff’s office or to file a Memorandum of Garnishee explaining why the fund cannot be released. In addition, the judgment debtor him/herself may file Claim of Exemption in an attempt to block or terminate the bank levy.
A Wage Garnishment occurs when the writ of execution for wage garnishment is served on a judgment debtor’s employer. The garnishment is restricted to one-third (1/3) of the judgment debtor’s wages for any given pay period. The judgment debtor him/herself may file Claim of Exemption in an attempt to block or terminate the wage garnishment.
Services We Provide
Our attorneys are experienced in collection procedures and negotiations. Our office: (1) forcefully prosecutes collection actions for our clients including hearing and trial representation, (2) prepares and files all necessary forms and paperwork both pre- and post-judgment, (3) negotiates and advocates strongly on our clients’ behalf, (4) any other business-related legal services as may be necessary. Please contact us with specific questions and for more detailed information in this is a very complicated area of law.