California Debt Collection Laws

Statute of limitations for open accounts, written contracts, domestic and foreign judgments:

Pursuant to Code of Civil Procedure §706.050, California exemptions for wage garnishments generally track exemptions available under Federal law (25% of income) As of January 1, 2013, the exemptions are 25% of a wage earner’s net income. In addition, there are other exemptions including SSI, retirement and disability plans.

Commercial collections

Commercial collections can be subject to the California version of the UCC. In Commercial and  business unsecured collections, Prejudgment Writs of Attachment are available.  Code of Civil procedure §483.010, et seq.

A writ of attachment is a very effective tool for creditors. With increasing backlogs in Court calendars across the State of California, a prejudgment writ of attachment allows a creditor to obtain liens upon the debtor’s assets early in the litigation.

  • The matter must be based upon a contract.
  • The amount must be readily ascertainable.
  • The plaintiff must establish the probable validity of the claim (more likely than not), and if the defendant is an individual, the claim must arise out of their primary business, trade or profession.
  • A statutory $10,000 bond is required. Code of Civil Procedure §489.220(a)
  • The advantages to obtaining a writ of attachment are clear: A writ of attachment allows a lien to be placed upon the debtor’s property, and allows the Sheriff or a private process server to levy upon bank accounts, account receivables and all other assets against which a judgment lien could be levied.
  • In addition, a subsequent judgment will “relate back” to the date of the attachment lien, even if other creditors obtain judgment liens after the attachment and before the creditor obtains judgment. A prejudgment writ of attachment is not available for consumer cases.

Consumer collections

Consumer collections in California are subject to both the Federal FDCPA and California Rosenthal Fair Debt Collection Practices Act

Secure versus Unsecured matters

Secured collections: Pretrial claim and delivery is available to recover specific tangible personal property. Code of Civil Procedure §512.010, et seq. It requires a bond equal to twice the value of the collateral.

Filing Fees

  • Initial Court costs vary according to principal balance and county:
  • Superior Court Limited Jurisdiction up to $10,000: $225 – $240
  • Superior Court Limited Jurisdiction $10,000-$24,999.99: $370-$395
  • Superior Court Unlimited Jurisdiction $25,000 and up: $435 – $450

Service of Process and other costs

  • Sheriff’s fees: Service of process: Approximately $35 for County Sheriffs. Some County
  • Sheriffs no longer serve civil process and use of private process servers is required; use of Sheriffs for service is generally not recommended due to severe backlogs, even in the counties where the Sheriff still serves civil process.
  • Process server fees: Approximately $75 – $125 (can be higher in remote portions of the state).

Garnishment fees:

Writ of Execution $25, plus to Sheriff fees: Bank levy $35, Wage Garnishment $30; process server fees additional if served by private process server.

Debtor exams

Varies by county: Approximately $30-60, plus cost of personal service upon the debtor.

Post-Judgment Enforcement and Execution

Judgments are good for ten (10) years, and can be renewed any time after five (5) years. [Code of Civil Procedure §683.110] It is recommended, especially in larger cases, that the renewal of judgment be undertaken shortly after five (5) years, in order to maximize accruing interest. A renewal of judgment must be served in the same manner as an initial complaint. If a judgment includes an award of attorney’s fees, post-judgment attorney’s fees incurred in enforcing the judgment may be added to the amount owing on the judgment. [Code of Civil Procedure, §685.040]

Interest accrues at 10% per annum [Code of Civil Procedure, §685.010], and creditors can recover allowable fees and costs incurred within the prior two years.

Post-judgment liens: An Abstract of Judgment is issued by the Clerk of the Court [Code of Civil Procedure §674] ($25), and recorded with County Recorders ($23 – $48). An Abstract places a lien upon any real property in the particular county where recorded in the name of the judgment debtor. Therefore, an Abstract should be recorded in larger cases in each county in which the creditor believes the judgment debtor may have an ownership interest in real property. Abstracts are good for ten years, and may be renewed.

A Personal Property Judgment Lien (PPJL) is recorded with the Secretary of State ($10). It is good for only five years, and may be renewed by filing a continuation statement in the last six months before the lien expires [Code of Civil Procedure §697.510].

Judgment Creditors can have Writs of Execution issued by the Clerk of the Court: ($25)

Bank levies: After the Clerk of the Court issues a Writ of Execution ($25), it may be served upon financial institutions. The Writ of Execution may be served upon the financial institution by a Sheriff or private process server. Some County Sheriffs no longer serve civil process and use of private process servers is required. Even if a process server is used, the Sheriff fee ($35) must be paid. Therefore, the judgment creditor has to pay for issuance of the Writ of Execution ($25), approximately $35 to the Sheriff, and possibly pay for a private process server to effect service of a bank levy.

Pursuant to Assembly Bill 2364, as of January 1, 2013, each bank in California is designating a single location for all bank levies, pursuant to Code of Civil Procedure §684.115. This previously was voluntary, and few banks provided a central location. This allows creditors with a single Writ of Execution to levy upon all of a debtor’s bank accounts in their name located anywhere in the State of California.

Garnishments: Wage garnishments allowed (25% of income, subject to exemptions)

After issuance of a Writ of Execution by the Court ($25), it may be served upon the debtor’s employer by Sheriff or private process server. Some County Sheriffs no longer serve civil process and use of private process servers is required. Even if a process server is used, the Sheriff’s fee ($30) must be paid. Therefore, the judgment creditor has to pay for issuance of the Writ of Execution ($25), approximately $30 to the Sheriff, and possibly pay for a private process server to effect service of a bank levy.

The employer is required to provide a written return of Garnishee within fifteen (15) days after service. If the employer fails to pay funds over to the County Sheriff, they are liable to the creditor for all amounts that should have been withheld, which can be enforced in a separate action.

Other Post-judgment Remedies:

 

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