Once in a while, the best chance to recover a judgment is when your judgment debtor has an ongoing lawsuit against someone else. If your judgment debtor is suing someone else, it may be possible to lien their lawsuit. If their lawsuit is successful, your lien will attach to their judgment, providing you a chance to eventually get paid. Note that if your judgment debtor’s defendant is broke, even liening their lawsuit may not help you get paid.
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.
A judgment creditor can lien their judgment debtor’s ongoing lawsuit, before the final entry of judgment. The creditor files a notice of lien (in California, Judicial Council Form EJ-185, also known as Form AT-180, see CCPs 491.410, 708.410, and 708.510, and California code 953) with the clerk of the court. Notice of the judgment lien must be served (often by mail and/or by the court) on all the parties who filed an answer to the original complaint in your judgment debtor’s lawsuit.
Each court has their own rules. Usually, along with the notice of lien, a certified copy of your judgment is required. If you are not the original prevailing party (the original judgment creditor), also include a certified copy of your acknowledgment of assignment.
With lawsuit liens, until your judgment debtor’s judgment is final, your lien does not really “attach”. Occasionally, settlement talks begin after you file your lawsuit lien. Usually, settlements do not work out, and the creditor will need to start enforcement procedures, for a chance to be paid.
After your judgment debtor’s lawsuit is successful and final, their judgment will be ready to be attached. Attachment starts by buying a writ of execution from the court, because that is the first step in almost any asset-based judgment recovery procedure. Next, file your judgment lien notice at the court. You will then have two chances to get paid something. One chance is really just a chance, and that is if your lien might become a bargaining chip. For a judgment lien to be a bargaining chip, all these factors must be true:
1) Your judgment debtor’s defendant has enough available assets to pay or settle your debtor’s lawsuit or judgment.
2) Your debtor is the only creditor on the judgment or lawsuit against their debtor. If there is more than one creditor, one or more of them may not agree that you have a bargaining chip, because many people mistakenly think judgments are cash.
3) All parties agree to your proposal and negotiations, so that you get paid, and that both judgments/lawsuits get satisfied, at least to the extents possible. Of course, the most you can get paid is what is required to satisfy your judgment.
Usually, a judgment lien is just a lien, and judgment recovery requires a levy by the Sheriff, just like any other Sheriff levy. Every Sheriff’s office is different, and what it costs to levy, and the deposits required to levy a judgment debtor’s property vary. The Sheriff can levy your debtor’s final judgment, publish notice of the sale, and then sell the judgment debtor’s rights to their judgment at an auction. You can then credit bid on the judgment right to buy it, only to the amount necessary to make your bid the highest bid.