Creditors Rights

Question 1

Detinue

Answer 1

For an action in detinue, plaintiff’s pleading (verified by affidavit) must show that she has: (i) an interest in the property, general or specific; (ii) a right to immediate possession with possession currently being wrongfully withheld from the plaintiff; (iii) plaintiff must describe the kind, quality, and value of the property; (iv) describe the basis of her claim to entitlement to the property; and (v) allege one or more of the grounds prescribed in the pretrial seizure statute—a) the principal defendant either is a foreign corporation or is about to remove himself or the property from the Commonwealth, is converting, assigning, or disposing of the property, or is absconding; b) the property will be sold, removed, secreted, destroyed, or materially damaged if left in defendant’s possession.

A plaintiff seeking pretrial seizure must also post a bond in an amount of at least twice the fair market value of the property claimed. After reviewing the petition, the judge can enter an ex parte order for the sheriff to seize the property and hold it pending the outcome of a trial on the merits.

Question 2

Lis Pendens

Answer 2

A lis pendens notice informs innocent parties interested in the status of the title to a certain piece of property that disputes about ownership exist. It puts innocent parties on notice of the dispute and thus the innocent parties will be bound by whatever outcome the court decrees if they nevertheless go ahead and purchase the property before the title question is resolved.

Question 3

Mechanic’s Lien

Answer 3

All persons performing labor or furnishing materials valued at $150 or more for the construction, removal, repair, or improvement of any building or permanent structure have a lien for the value of their services.

Question 4

Perfection of a Mechanic’s Lien

Answer 4

To perfect a mechanic’s lien in Virginia, a general contractor must file a memorandum of a mechanic’s lien in the clerk’s office within 90 days of the completion of the work or from the time work is terminated. The memorandum must have the names of the owners, verified amount of the claim, and description of the property.

Question 5

Apportionment in a Mechanic’s Lien

Answer 5

When a mechanic’s lien is filed, the amount of materials used and charges for each property should be apportioned to each lot. By not proportioning the money owed, other creditors’ claims may be impinged upon a blanket lien. On the other hand, the law allows for a blanket lien when there is a single contract for the entire work performed.

Question 6

The Release of One Lot Defense

Answer 6

The release of one lot defense states that a creditor who releases the lien on one lot is estopped from enforcing the lien against the remaining lots.

Question 7

Domesticating a judgment

Answer 7

To properly domesticate a judgment in Virginia under the Uniform Enforcement of Foreign Judgments Act, an authenticated copy of the foreign judgment must be filed in the office of the clerk of any circuit court of any city or county of the Commonwealth upon payment of the prescribed fee. The creditor must also make and file with the clerk of the court, an affidavit setting forth the name and last known post office address of the judgment debtor and the judgment creditor. The clerk must mail notice of the foreign judgment to the debtor at the address given by the creditor. As a matter of good practice, notice should also be mailed by creditor and proof of that mailing is filed with the clerk. Then, if the clerk does not mail notice and such proof has been filed by creditor, the lack of the mailing by the clerk will not affect the enforcement proceedings.

After this process, the judgment is treated as if it were obtained in Virginia.

Question 8

Challenging a default judgment

Answer 8

To challenge a default judgment, the debtor must show that service of process was insufficient.

Question 9

Fieri Facias and Levying

Answer 9

A fieri facias commands the officer to whom it is delivered to find property of the debtor, seize it, and sell it to satisfy the judgment.

A creditor must wait 21 days after a judgment is properly filed to request a writ of fi fa from the clerk of the court.

The writ will be delivered to the sheriff of the county and will direct the sheriff to levy on all of the debtor’s personal property located in the county. To properly levy on the property, the sheriff will need to actually seize the property or have it in sight with the power to seize it, and also properly list the property in the return of the writ.

The sheriff will then advertise the sale of the property and sell it before the return date on the writ. The proceeds of sale will be used to pay for the expenses of sale and to satisfy the judgment. Any remaining proceeds are given to debtor.

Question 10

Debtor Interrogatory Proceeding

Answer 10

The purpose of a debtor interrogatory proceeding is to determine the nature, location, and present condition of all of the debtor’s assets. To initiate interrogatory proceedings, the creditor must secure a live writ of execution, obtain the date for the proceeding from the trial judge or commissioner and have the clerk issue an interrogatory summons against the debtor.

Failure to answer the interrogatories is cause for issuance of a capias by the judge, and the debtor could be taken into custody until she answers.

Question 11

Exemptions: Homestead

Answer 11

In Virginia, all residents have the right to file a homestead deed. Under this exemption, the claimant may claim as exempt up to $5,000 worth of property (or $10,000 if the claimant is aged 65 or older) and an additional $500 for each dependent of the household.

Question 12

Capias

Answer 12

A type of writ usually requiring a party to be taken into custody until he makes proper answers or conveyance and delivery.

Question 13

Exemptions: Poor Debtors

Answer 13

Apparel up to $1,000; household furnishings up to $5,000; trade tools up to $10,000; motor vehicle up to $2,000; heirlooms up to $5,000; burial plots up to $5,000; and sentimental items (e.g., family Bible, pets)

Question 14

Garnishment

Answer 14

Only 25% of weekly disposable wages or the amount by which weekly disposable earnings exceed 40 times the federal hourly minimum wage, whichever is less, is subject to surrender.

Question 15

Existing Creditors

Answer 15

An existing creditor is one who has a liquidated claim at the time the conveyance in question occurs. An existing creditor can attack a conveyance made with fraudulent intent or a voluntary conveyance as a fraudulent conveyance, void such conveyance, and restore title to the property in the debtor.

Question 16

Liquidated Claim

Answer 16

A liquidated claim is a claim that has a determined amount either agreed upon by the parties involved or determined by arithmetic or law.

Question 17

Subsequent Creditor

Answer 17

A subsequent creditor has a claim that, at the time of the conveyance in question, has an undetermined amount until agreed upon by the parties or determined by a court.

A subsequent creditor may attack a conveyance only if it was made with fraudulent intent and may not attack a voluntary conveyance.

Question 18

Fraudulent conveyances

Answer 18

Potential fraudulent conveyances fall into two classifications: conveyances made with intent to hinder, delay, or defraud a creditor; and voluntary conveyances.

Question 19

Voluntary conveyances

Answer 19

A voluntary conveyance is made by the debtor, which is not for valid consideration, or, which is made by the debtor while insolvent, or which renders the debtor insolvent upon making it, or is upon consideration of marriage.

Question 20

Conveyance between spouses

Answer 20

There is a presumption that a conveyance between an indebted husband and his wife is fraudulent and would be subject to attack by either existing or subsequent creditors. There is a provision that if the wife can show that there was a basis for the conveyance being a bona fide gift or was made for legitimate consideration without knowledge of the husband’s intent to defraud, the conveyance will be considered a voluntary conveyance and may be attacked only by existing creditors.

Question 21

Tenancy by the entirety and creditors

Answer 21

Property that is held by husband and wife as tenants by the entireties is subject to enforcement only of joint liens against both husband and wife.

Under Virginia law, a transfer of tenancy by the entireties property between spouses is not a fraudulent conveyance.

Question 22

Preferring creditors

Answer 22

There is nothing wrong with preferring one creditor over another and the conveyance cannot be set aside to the extent an antecedent debt is satisfied.

Question 23

Bona Fide Purchasers

Answer 23

It is the transferee’s burden to show she is a BFP in a voluntary conveyance.

Question 24

Repair Lien

Answer 24

A lien arises under the Virginia Code where a mechanic repairs an item of personal property on request and is not paid for the services provided. Where repairs were made at the owner’s request, the mechanic is entitled to the just and reasonable charges of her services.

Possessory liens arising by operation of law have priority over any security interest in the collateral so long as: (i) the goods or services were provided in the ordinary course of business; and (ii) the collateral remains in the lienholder’s possession.

Question 25

Challenging a foreign judgment

Answer 25

Once a foreign judgment has been properly filed in Virginia, using the uniform act, the debtor must attack any invalid service or jurisdiction defects in the foreign jurisdiction within 21 days of such filing.

Debtor can also request a stay of enforcement of the judgment in Virginia. To do so, debtor will need to show that an appeal from the foreign judgment is pending or will be taken, or that a stay of execution has been granted. The circuit court can then stay the execution of the judgment until such time as the appeal is concluded, the appeal period expires, or the existing stay expires or is vacated, provided debtor has furnished the appropriate security for satisfaction of the judgment or appeal, as required by either state, as applicable.