Assignees And Causes Of Action

August 9, 2023


I am not a lawyer, I am a Judgment Broker. This article is my opinion, and not legal advice, based on my experience in California. Laws vary in each state. If you ever need any legal advice or a strategy to use, please contact a lawyer.

In bad economies, judgment debtors are more likely to take advantage of the potential “proof of service loopholes” created by default judgments. Some judgment debtors will claim they were not properly served, even if they actually were, and try to vacate a default judgment against them. When you are considering becoming an assignee of record, pay attention to the proof of service.

When a default judgment is vacated (set aside), that is bad news for the Original Judgment Creditor (OJC). After a judgment is vacated, the OJC has the option of suing the defendant again and possibly getting a new judgment.

When a judgment is assigned, the cause of action for the judgment does not transfer. The assignee of record has no standing if there is an attempt to vacate or appeal the judgment. Also, an assignee of record has no recourse if a court clerk or the county recorder makes a mistake, that prevents their judgment lien from attaching to a judgment debtor’s property.

When a default judgment is vacated, it is usually a disaster for an assignee of record, because the cause of action is lost, which means the judgment is now worthless, and the assignee loses everything they may have spent trying to recover the judgment.

Just because a judgment was won by default, does not mean it will never get enforced. However, default judgments are weaker than contested judgments. In some states, for example New York, default judgments require a new case number, and winning a new court hearing to be domesticated to their state.

There are ways to clean up questionable proofs of service on default judgments. One way is to have the judgment debtor personally served something (an abstract of judgment or a notice of the Default judgment) related to the judgment (using a registered process server or a Sheriff), then wait six months; and then the judgment debtor will not be able to successfully claim they did not know about the judgment. If you do this, any issues about the original proof of service for the lawsuit not being served on the judgment debtor correctly, become moot. This will not help in every case, judgments can be vacated for several other reasons.

Some judgment enforcers have purchase contracts which require the OJC to reimburse them something if the judgment gets vacated, appealed, or if the judgment debtor successfully gets bankruptcy protection. Some OJCs do not like such policies, and look for other judgment enforcers with contracts that do not require reimbursements under those circumstances.

I can see both sides of the issue. When a judgment gets vacated because of an inadequate proof of service, the judgment enforcer takes a bath because the OJC did not make sure to get the judgment debtor personally served by a registered process server or a Sheriff.

When the notice of the lawsuit was not properly and personally served, or was served by publication, it might end up being a worthless judgment. Before spending significant money recovering a default judgment having non-perfect proof of service, clean up the proof of service.

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