General Litigation

A Judgment is an Oral Statement by a Judge which Becomes a Court Order when Reduced to Writing by the Clerk of the Court

It declares that a moral obligation created between two parties arising form of a sale of goods or services may be legally enforced by the prevailing party against the losing party, and the effect of which is that it may be so enforced by the many different post judgment remedies.

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. Chasing unpaid monies is an exercise in patience, a little bit of cost, and vigilance on the part of your counsel. At this blip in the business cycle, people are not fighting nor resisting suits to reduce unpaid debts to a judgment. In some cases, after suit is filed, the debtor agrees to stipulate or agree to the judgment, usually under the belief that they will likely never have any meaningful assets to collect.

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.

Renewal of a Judgment

It is possible that a judgment will still be unpaid after five years. A creditor can renew the judgment by serving on the debtor and filing with the clerk a form called an application for renewal of judgment. A creditor must wait at least five years (but never more than 10) before renewing otherwise the judgment will automatically expire at the end of 10 years, after it was awarded. As soon as the judgment is renewed, interest accrues on the entire judgment, including accumulated interest and costs, at the rate of 10 percent per year.

Satisfaction of Judgment

Upon full payment of the judgment, the creditor must file a satisfaction of judgment with the county recorder’s office(s) releasing any liens recorded. This satisfaction of judgment must be filed after full payment is received and after written demand by the judgment debtor. Any creditor who fails to file an acknowledgment of satisfaction of judgment” with the court is liable to the debtor for all damages sustained by reason of such failure, such as losses resulting from the other person’s inability to obtain credit (if the judgment against the debtor was recorded on his or her credit record). Once a creditor signs an acknowledgment of satisfaction of judgment form, he/she gives up your right to collect anything more on the judgment.

There is an exception, where a real estate escrow or title insurance company may request a signed acknowledgment form in advance, with the clear agreement and understanding that the escrow or title insurance company will pay the entire unpaid judgment (including all accrued interest and court costs) from the proceeds of a sale of the debtor’s property.