A judgment lien is a court order, by the Clerk of the Court that entitles the creditor to create a lien against the judgment debtor’s real or personal property.
Judgment Lien
As a general matter, a creditor should record the appropriate judgment liens as soon as possible after judgment is entered. Judgment liens generally do not immediately disrupt the debtor’s business and thus are less likely to precipitate a bankruptcy filing than other enforcement devices. Moreover, the sooner the judgment lien is recorded, the less likely it will be set aside as a preference should the debtor ultimately file bankruptcy.
In California, a judgment lien can also be forever. A judgment lien is a court ordered lien that is placed against property when the owner fails to pay a debt. The judgment lien on the property must be paid before the property can be sold. While forgiveness of unpaid debts is a normal function of any downward business cycle, creditors need to determine whether there is value in reducing the debt to a judgment. That decision must be weighted in terms of what the economic future will bring for the debtor. Just because someone has nothing now, does not mean they never will own anything of value.
A judgment when entered in California earns 10% per annum, lasts for 10 years, and is renewable prior to expiration, in perpetuity every 10 years. This results in the doubling of the amount owed on the debt every 10 years. With a little patience, one can eventually recover the sums owed in the future. So reducing the sums owed to a judgment and either recording a lien, or monitoring the debtor’s assets for future real estate purchases is productive. Of course, apart from judgment liens, there are other more active means to pursue collection of a judgment, but for the money and right debtor, a judgment lien is the most economical means to obtain eventual payment.
Personal Property
A judgment lien against personal property (“JLPP”) is similar to a UCC-1. It creates a UCC-1 like lien against accounts receivable, inventory and equipment. Because of its relatively low cost, it is recommended that a JLPP be recorded with the secretary of state in almost all
