Some Time Limits On Enforcing Judgments In California.

Once you win a judgment in California, the good news is that the judgment is valid and enforceable for ten years. In addition you may apply to the court to renew the judgment for additional ten year enforcement periods. It is important to do this before the judgment expires because once the judgment lapses you may not renew it.

Another benefit of renewing a judgment in California is that the interest, in effect, gets compounded. This is because judgments earn simple interest at the rate of 10% per year. Once the judgment is renewed, the accrued interest is added to the judgment, and interest during the renewal period runs at the same, simple 10% rate but on the new, higher amount of the judgment.

While the law seems to provide a long period of time for enforcing a judgment, there are some practical limitations. Accordingly it is an excellent idea to take immediate action to enforce your judgment to see if you can identify potential sources of payment and pursue them. Then, if you choose to wait, you are at least making an informed choice.

Some time limits which may cause you to lose out on possible sources of recovery include:

A. Assets in other states or countries
The time to enforce a judgment in a sister state is not unlimited. If the judgment debtor lives in or moves to another state you may face time limits for enforcing your judgment in that other state. A valid judgment from any of the fifty states may be "domesticated" or transferred and enforced in another state. However, states have time limits on how long a creditor may wait before taking that action. The rules are also wildly different in the international context.

B. Insurance
If the judgment debtor has an insurance policy that covers the judgment but the insurer is not paying, the judgment creditor may be able to sue the insurer to enforce the insurance policy. This claim, however, must also be brought in a timely fashion, and the time is less than the ten year period the judgment is enforceable.

C. Fraudulent Transfers
If a judgment debtor transfers away property to try to hide their assets a court may set aside those transfers on the grounds that they are fraudulent or a sham. Here again, however, that kind of a claim must be brought within a year of the earliest of either the creditor should have discovered the transfer if they were reasonably diligent, the date the creditor actually learned of the transfer, or the date of the actual delivery and change of possession of the property. The last time period is interesting because one of the traditional marks of a fraudulent transfer is that it takes place on paper but the actual circumstances do not change. An example might be the sale of a home to a friend or family member for a nominal amount and the debtor still lives in the house. Since there was no delivery or change in possession the time period would be measured from when the creditor should have learned of it by being diligent, perhaps by examining title records, or when the creditor actually learned of it.

Here are only three situations in which a judgment creditor could unknowingly lose the right to enforce a judgment when they thought they were protected for ten years. The ten year period is the outer limit, subject to renewal. That said, however, the judgment creditor must first be diligent and take steps to thoroughly investigate possible sources of recovery and pursue them. Once that is done, and the judgment remains unsatisfied, the creditor can then formulate a plan for further enforcement activity in the future on a schedule that makes sense for their particular case. The worst course of action is to do nothing.

If you need help enforcing a judgment, call now for a consultation regarding your situation.