Assignment Orders

August 9, 2023

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

What if your judgment debtor does not have a regular wage job, and gets paid by customers, relatives, renters or tenants, or most anyone else?

An assignment order might be the right (although paperwork intensive) way to try to satisfy your judgment. This article covers assignment orders in California. It is very important to know your state laws, and if and how assignment orders are allowed.

Assignment orders are (noticed motion) court orders that require a new court hearing, and must be properly served on the other parties. Assignment orders may be able to capture most kinds of (current and future) non-wage income streams.

Assignment orders cannot be served on (non-related) non-debtor companies, however a turnover order can probably be used to get shares of a debtor’s stock ownership in a non-debtor company.

Because assignment orders are lawful alternatives to conventional levies, you do not (in California) need to get a writ of execution. Unlike regular levies, the money often gets turned over directly to you.

In some places, the court may require the Sheriff to be the levying officer. If that is the case, you will need to have a registered process server open a Sheriff levy file, and then have the assignment order served on the parties, and then file the proofs of service with the Sheriff. While personal service is needed to make your court order stick, you might want to fax the assignment order first, to catch any possible dispersements before they go out the door. Without personal service, one cannot get a contempt order if the third-party does not comply.

Assignment orders can capture most distributions, commissions, and almost any kind of K-1 income. If approved by a court, an assignment order instructs someone that owes money to your judgment debtor, to pay you instead of the judgment debtor.

In general, assignment orders are for corporations and charging orders are for LLPs or LLCs. Assignment orders are most useful when a debtor receives (non-exempt and non-retirement-based) income. Assignment orders may work, even when the debtor claims they are poor, because income is income. (Most truly poor judgment debtors do not have income streams.)

Sometimes judges will approve assignment orders to reach out-of-state asset streams, and sometimes a company in another state paying 1099 income to a contractor, may agree to comply with such an order, however if they do not comply, you have to sue them in their state. On California, the 1099 independent contractor third-party levy is responded to by returning a Memorandum of Garnishee (AT-167), which is also signed under penalty of perjury.

Assignment orders can be worded two ways. The first is where the employer is ordered by the court to send you the correct percentage, although some judges do not permit this, citing no authority over the employer. The other way is where the judgment debtor is accountable to pay you. The judgment debtor may not comply, however it is a court order, and if the judgment debtor is under the jurisdiction of the court, not complying may backfire on them.

Assignment orders can last as long as it takes to satisfy the judgment. Like most court orders and judgments, nothing is guaranteed. The judgment debtor could file for bankruptcy protection. Other things may happen to thwart any enforcement action or strategy.

In theory, assignment orders for non-exempt income, can ask for all of the income, not just 25% of the income, as most wage levies (garnishments) can reach.

If the judgment is small, or the debtor is rich, ask for 50-100%. If the judge does not think your proposed order is reasonable, compromise and aim for 25%. (Because CCP 708.510-f seems to be very similar to CCP 706.050.)

If the debtor is not rich, it may be smarter to ask for a percentage, instead of all of their income stream. In judgment enforcement, being too aggressive could increase the chance that the judgment debtor will file for bankruptcy protection.

Usually, judges do not rubber-stamp approvals on assignment orders for creditors. When the creditor clearly shows a synopsis of why an assignment order is appropriate, then a judge may approve their proposed order.

In court, y ou could document why you have no other reasonable way to enforce the judgment. You could also document any prior court-endorsed expenses and attempts that did not satisfy the judgment.

Assignment orders can also be used to reach income originating from other judgments, when your debtor is the creditor. An assignment order can order the debtor of your debtor to pay you instead of them (or the sheriff). Again, consider asking for a percentage.

The first step for any assignment order is learning who is paying your judgment debtor. A debtor exam, could subpoena enough judgment debtor documentation and information, to learn who to serve assignment orders to. Some debtors will pay, when their clients call them, and ask what is going on? In California, a judgment debtor exam creates a one-year “silent lien” on all their personal property, which might make you a secured creditor if they later file for bankruptcy protection. If your judgment debtors might be public employees this website: may confirm it and provide you with information about their salaries and benefits.

Assignment orders can be general, and not list specific names. They can say “25% of all monies due to the judgment debtor from clients he performs accounting services for”. Then, you can serve the assignment order on whoever pays the debtor, including any of their new clients you later discover, after the assignment order is issued.

Another general example would be “The tenant residing at 22 First Street will pay you”. That way, if the tenant moves and someone new moves in, you can have the same assignment order served on the new tenant. If the judge will not allow a generic order, you can find out who is renting, one legal way or another.

Although some lawyers will point out that rent only becomes due in the event of a default, and cannot be assigned: Another point of view is: An assignment of rents clause includes rents as additional security to the real estate described in a Deed of Trust. The deed of trust transfers to the lender (beneficiary of the Deed Of Trust) the right to collect rental income following a default by the borrower/debtor (trustor).

The assignment of rents clause establishes a present security interest (lien) on existing and future rents, issues, and profits from the debtor’s property. Once the Deed Of Trust is recorded, the lien is perfected, giving constructive notice to all of the lender’s security interests, and has priority over all subsequent interests in the rents (e.g., from an assignment order granted to a judgment creditor).

However, a lender generally can only exercise their security interest in any rents after the borrower has defaulted under the Deed Of Trust. This circumstance may interfere with your assignment order, however to exercise their rights to rents by, a lender must enforce their right to the rents by either:

1) delivering written demand on the owner for future rents (and to all other recorded interests in the rents),

2) delivering written demand to the tenants for the future rents (and to all other recorded interests in the rents),

3) having a receiver appointed judicially, or

4) obtaining possession of the rents non-judicially.

So, when you get an assignment order for the rents, be sure it has the exact legal description of the property in it so that you can record it, thus perfecting your interest ahead of any subsequent creditors. Collect your rents until the judgment is paid off. As long as a lender has not enforced his rights under the clause you should be good. If the lender does enforce, they should notice you by sending you the required notice (they have constructive notice of your interest because you recorded it).

If you are noticed by a lender that they are exercising their right to the rents, you must stop collecting and inform the tenants to discontinue sending you any subsequent rents. However, this does not always happen, most lenders simply choose to enforce their interest against the property by foreclosing against the borrower. There is usually a one form of action rule, however a lender’s enforcement of it’s collection rights is usually not considered to be an action, in California, see Civil Code 2938.

Sometimes, after being served an assignment order, the third-parties still pay the judgment debtor instead of you. Even if they mistakenly pay the judgment debtor, they still owe you that payment.

It is good practice to get certified copies of the assignment order, to quickly serve on parties and/or their lawyers, so they cannot claim they did not believe it to be genuine.

As with any courts hearings – with assignment orders; obeying court rules, state laws, and a substantial paperwork load is required.

Often, assignment order paperwork is usually in 5-6 parts. For example, an Assignment Order (which cannot be served ex-parte), (an optional) Temporary Restraining Order. In California, this is covered by CCP 708.520. A Temporary Restraining Order (TRO) is only to restrain the judgment debtor from assigning his rights to the payment stream pending a motion, it does not restrain the payor from paying anyone. The package is the TRO to lock up the funds, a Memorandum of Points and Authorities, a Motion, a Notice of Motion (or Entry of Order), and Proofs Of Service, that are filed with the court. When the stakes are big, consider asking the court to appoint a receiver to make distributions.

A restraining order is a temporary restraining order, which can be obtained with an ex-parte appearance (no notice) in the law and motion department, without notice to the opposing party. Have your process server ready to serve the opposing party immediately after the judge issues the order because it will not be effective until you have served them.

The Notice of Motion (Entry of Order) and the Motion (Order) are sometimes combined into one document. You need to make several copies of all documents, schedule a hearing date at the court, and have the judgment debtor served everything.

In California, CCP 708.510 specifies the debtor can be served by mail. Bring the proof of service to the court, and appear at the court hearing. (If the income is wages, use form FL 435.)

If your order is granted, serve a copy of the order on the judgment debtor by mail, and the parties that will be paying you by mail first. If they do not respond, contact them politely, and if necessary, have them re-served personally.

Please consult with a lawyer when you do your first assignment order.

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