Occasionally, the best chance to recover a judgment is when your judgment debtor owns a judgment against someone else. If your debtor has a final judgment, you can probably have it levied, which gives you a chance of recovering some money. Of course, if your debtor’s judgment debtor is poor, there is probably not much reason to levy their judgment.
This article is my opinion, and not legal advice. I am a judgment broker, and am not a lawyer. If you ever need any legal advice or a strategy to use, please contact a lawyer.
If your judgment debtor owns a judgment in their favor; you might choose to levy on that judgment through the court clerk, rather than serving something on the judgment debtor; and see if anyone files a third-party claim. It is only at that point that you will fully know the basis, and the supporting legal authority for the third-party’s separate property interest(s), if any.
In California, one can use the AT180.PDF form, and file it at the court to lien the judgment. In most states, one can file a notice of lien at the court. Make sure to check the local laws regarding notice to the parties and/or attorneys. In some states/counties, is possible to levy the debtor’s judgment and have it auctioned, buy it by credit bidding at the auction, or let someone else buy it for the amount of your judgment.
After your debtor’s judgment gets attached by a Sheriff levy, there could be a settlement offer, that may get you paid. Usually, debtors do not pay after their settlement offers; so you will then have to pay a Sheriff to sell your debtor’s judgment at an auction, which might get you paid something. You will need a writ of garnishment/execution on that judgment. You might want to later attend the auction, and use your judgment to credit bid, to be the high bidder and pay, so you will own your judgment debtor’s judgment. Usually, there is not very much demand for judgments at auctions.
A Sheriff sale of any of your judgment debtor’s (available) property, including rights to their judgment; can only get you, at the very most, enough money to satisfy your judgment in full. There is a possible exception after you buy something at a Sheriff auction sale. You might buy an item for $1,000 and later sell it, hopefully for a higher price.
Usually, it is difficult to make money reselling judgments. If your judgment debtor is only one of several prevailing parties in their judgment, you will only get a pro-rata share of any recovery or sale. (Judgments do not sell for much cash upfront in this economy.)
If there is more than one plaintiff/creditor on your judgment debtor’s judgment, consider consulting with the other creditors, before levying your judgment debtor’s judgment. If you do not, there could be claims of third-party ownership from the other creditors. Even if no other creditors step forward to claim their share of ownership, you will still get at most, your judgment debtor’s pro-rata share of whatever is recovered, up to whatever is necessary to satisfy your judgment.
After you have already filed the judgment lien (if appropriate in your State) with the court, you can pay the Sheriff to levy your debtor’s final judgment. You begin by getting a writ of execution. Then you have a registered process server or the Sheriff directly, open a Sheriff’s levying officer file. Then you file your notice of judgment levy with the court, and the proper parties must be served.
On the levy forms and your Sheriff letter of instruction, include the judgment case number, party names, and court location. The court clerk will note in their case file and/or their computer, that your lien is now attached to your debtor’s judgment. Then, you can pay the Sheriff to sell your debtor’s judgment at an auction and perhaps credit bid, or bid on the judgment at the auction. You might be able to buy it for a dollar or so, then credit that dollar toward the judgment debt, and recover the judgment you now own.
In some states, the process to levy on a judgment is the same as a bank levy, you get from the court, a writ/writ of garnishment, the same way you would attach a bank account or property owned by the judgment debtor held by some third-party (such as a warehouse or storage facility). Some judges do not fully understand the laws related to this, and may not approve a levy of a judgment.
In judgment recovery, anything can happen. I have read about a few cases where judgment debtors have filed a claim of exemption, after their judgments were levied. If that ever happens, claims of exemption procedures would need to be followed. Rarely, however more than once, courts have ordered that the judgment be collected instead of being sold. If only judgment collection was as simple as those courts believed. In California, see Code Of Civil Procedure sections 701.520, 700.190, and 701.070. Note that you usually have to notice the judgment debtor to make sure their judgment is sold instead of collected.
What if you filed a proper notice of judgment lien with the court, and then your judgment debtor makes a “secret settlement” with their debtor, and then dismisses their judgment? In theory, you could then request the court to vacate the dismissal of your debtor’s judgment, and then ask the court for leave to file a complaint in intervention. In California, see Codes Of Civil Procedure sections 708.440 and 708.470.