Flashcards in Creditor's Rights Deck (46):
If a creditor does not have a judgment what will the commonwealth do?
No remedies without a judgment
exception is attachment in a pending suit
What is a prejudgment remedy for a creditor?
creditor - files a petition of attachment alleging debtor doing something wrong and posts a bond
court - ex parte determination and if established, then a writ of attachment
sheriff - provides copy of attachment to person in possession and returns documents to court
If a court issues a writ of attachment what does the creditor get?
1) contingent or inchoate lien that dates from time of levy by sheriff
2) judgment is necessary to make lien enforceable
D borrows $5000 from C on 1-10. T sues D for tort on 2-3 alleging money damages of $10,000. T obtains an attachment lien on D's property on 3-3. C obtains judgment against D on 4-4 and get a judgment lien on D's property. On 5-5, T gets a judgment against D. Who gets paid first from D's property?
T - attachment lien became first in line with attachment line because judgment lien was enforceable.
If a creditor has a judgment, but it is from an out-of-state court?
need to domesticate judgment by:
1) register the judgment with VA court that will enforce; and
2) notify the debtor in writing regarding registration
C has a judgment against H. W and H own property in tenancy by the entirety. Can C look to the Commonwealth for help in collecting this judgment against H from the property?
No - can only enforce if debt is from H and W.
- IRS is not limited
Creditor has a judgment against debtor. Creditor garnishes debtor's bank account in Bank. Does homestead provision help debtor?
Yes. Homestead - includes personal property.
Homestead can be assert (by filing a deed) any time prior to the creditor actually garnishing or selling.
The homestead protection does not allow a debtor to protect against:
a purchase money mortgage (PMM), purchase money security interest (PMSI), intentional tort claims, alimony or child support, or if waived.
Can a debtor waiver the homestead exemption?
Yes, waiver is allowed in VA.
To assert the homestead, a deed must be filed.
Creditor with judgment against real property of debtor must do what to get the Commonwealth to help collect it?
Judgment creditor must docket (record) judgment in the court where land is located.
- If judgment lien was obtained in same locality as real property then automatic docketing.
How long does a judgment lien last on real property?
How does a creditor with judgment lien on real property turn the lien into money?
1) creditor brings a creditor's bill in equity where land is located.
2) commissioner determine whether 5 years of income (rents/profits) would be sufficient to satisfy judgment lien.
3) if not, then land may be sold to cover judgment lien.
D owns land subject to a recorded mortgage by H. F obtains a judgment of $90,000 against D and dockets judgment when land is located. S obtains a $20,000 judgment against D and dockets similarly. F brings a credit suit in equity which results in sell of $100,000. Who gets what?
F - $90,000
S - $10,000
Buyer takes subject to M's mortgage?
Creditor has a judgment from debtor's tangible personal property. What is needed to get the Commonwealth to enforce judgment?
1) Court prepares a writ of execution (fi fa) to direct sheriff to levy (identify personal property of debtor and symbolically controls lien)
2) return to court
- sell of seized property at public sale
Is a levy required after a writ of execution for judgment against debtor's intangible personal property?
No. - important to give written notice
enforced by garnishment
What does a judgment creditor do garnishment?
1) obtain writ of execution
2) obtain garnishment summons from clerk of court
3) service of summon on garnishee and judgment debtor
What can the garnishee do in response to judgment creditor's writ of execution?
1) assert defense
2) exercise right of setoff
3) acknowledge liability
What are the limits on garnishment of wages?
25% or 30x minimum wage, whichever is lesser
What is difference between fraudulent conveyance and voluntary conveyance?
fraudulent - requires showing of bad intent to hinder or delay creditors
voluntary - requires showing less than valuable consideration by person who is insolvent or is unable to pay off debts
- preference of creditor not fraudulent/voluntary
On 1-1, D transfers land to T. On 4-4, C extends credit to D. What does C have to do to recover land from T?
Show that transfer was fraudulent
If no judgment then file a creditor's bill of rights and notice of lis pendens and obtain a judgment
If judgment - file a motion to set aside transfer
What is a mechanic's lien?
Statutory lien for work/improvement/repair on buildings/personal property
- must be filed within 90 days of completion of work
Can a subcontractor obtains its own mechanic's lien?
Must file a memorandum of mechanic's lien
Must notify the owner and general contractor
Subcontractor's mechanic's lien is limited to amount owner owes to general contractor
What is needed to perfect a mechanic's lien?
File a memorandum of a mechanic's lien in the clerk's office within 90 days after completed of work or when work was stopped
Memo needs: name of parties, verified amount, and description of property
What is a blanket lien?
Single contract for the work performed and is not distributed to different lots or units
- applies to mechanic liens when multiple properties in one job
- release of lot of a blanket lien is a release of entire lien
What is the effect of releasing the lien on one property when creditor has a claim for multiple properties?
estops the creditor from enforcing the entire blanket lien
What is the dollar amount for a mechanic's lien?
$150 or more for construction, removal, repair, or improvement
What is required to properly domesticate a judgment in the Commonwealth?
File an authenticated copy of the foreign judgment filed in any circuit court and pay the prescribe fee
File an affidavit setting forth the last known post address of the judgment debtor and creditor
How can a default foreign judgment that is domesticated in VA be challenged?
Challenge that service of process was insufficient, i.e. foreign state did not follow its long arm statute.
Issues must be raised in the courts of Virginia.
What is the purpose of a debtor's interrogatory proceeding?
determine nature, location, and present condition of all debtor's assets
How is a debtor interrogatory proceeding initiated?
Creditor must secure a) live writ of execution; b) obtain a date for the proceedings from the trial and c) have clerk issue an interrogatory summons against the debtor
What assets must a debtor disclose at the debtor interrogatory proceeding?
Disclose all information about all assets
- can apply homestead exception after ($5,000 of property + $500 for each dependent)
What is the homestead deed?
Allows debtors to exempt property up to $5000 plus $500 for each dependent
What is covered by the poor debtor's exemptions?
wedding rings, heirlooms, clothes, household goods, cars
How much of a person's wages may be garnished?
25% of weekly income of disposable income or amount by which exceeds 30 times the federally minimum wage, whichever is less
What must a creditor demonstrate to void a transfer of property of debtor under a theory of voluntary conveyance without consideration?
Creditor must demonstrate that it was a creditor prior to the conveyance.
Fraud is not involved.
Is a constructive trust only imposed when there is a showing of fraud?
No. Can be based on fraud or when equity deems that the property should not be retained.
Fraud must be shown by clear and convincing evidence.
If a creditor alleges that the debtor fraudulent conveyance property with the intent to defraud, what is a defense of party who received the conveyed property?
That they took title as a bona fide purchaser.
When seeking to impose a constructive trust on property that has a deed of trust, must the owner and holder of the deed trust be joined as defendants?
Yes. Parties with an interest in the property are entitled to notice and have an opportunity to challenge.
When the creditor is seeking to obtain property transferred by a debtor under a theory of voluntary conveyance, what must the creditor must show regarding the debtor?
Debtor was insolvent when voluntary transfer was made or was made insolvent by the transfer.
A purchaser of land is notified after closing that a third party has a judgment lien against the previous owner on work to improve the land. Does the purchaser have to the pay the lien?
Yes, takes subject to lien.
Lien needs to be docketed in the jurisdiction where the land is located.
When an after acquired provision is exercised by the perfected attached creditor, what is the status of the creditor?
good faith purchaser
Can a creditor domestic a judgment against a defendant on property that is temporarily in VA?
Yes - need to follow the Uniform Enforcement of Foreign Judgments Acts
After a judgment is domesticated in VA, how long does the plaintiff need to wait to obtain a writ of fieri facias from the clerk of the court?
Once a sheriff seizes property described in the writ of fieri facias, how are the proceeds distributed?
- pay expenses of sale
- satisfy the creditor's judgment
- remaining goes to debtor
Is a debtor in default on a foreign judgment estopped from raising a lack of personal jurisdiction when the judgment is domesticated in VA?
No. Can raise lack of personal jurisdiction (minimum contacts and fairness)
- Must attack judgment within 21 days or domesticated judgment becomes final