Golden Gate Collections

Can I get in trouble for trying to collect my debt?

The easiest answer this question is, “of course you can get in trouble if you’re a knucklehead.”  There are a few ways you can screw up debt collection in a way that actually creates more trouble for you:

Lying – Anyone can get in trouble for misrepresenting things to a court, or for lying to law enforcement officers. Lying to the debtor is trouble, too. For example, it is illegal (a misdemeanor punishable by imprisonment for up to six months and/or a fine of up to $2500) to try to mislead someone who owes you money by sending them a document that looks like it comes from the court or another government agency when that document doesn’t. California Civil Code section 1788.16.

Violence – As tempting as it may be, don’t channel your inner Marsellus Wallace and hire someone with a pair of pliers and a blowtorch to get medieval on the debtor. That stuff works a lot better in the movies. Even threatening such behavior can get you in trouble.

Defamation – Calling out the debtor publicly can have consequences, depending on what you say. Laws against defamation apply to debt collection like they apply to everything else.

Special Cases

Even if you avoid breaking kneecaps and forging court documents, you might still run aground of the law.  State and federal law have rules and procedures that govern debt collection in certain situations.

Fair Debt Collections Act (FDCA) – People collecting debts which qualify as “consumer debt” may be subject to both California and federal fair debt collection practices act.  “Consumer debts” are debt taken on by natural persons (a natural person is a living, breathing one is opposed to a Corporation) and involving money or property or services used primarily for personal, family or household purposes. Violating the FDCAs may subject you to paying the other side attorney’s fees and substantial penalties.

Landlord/Tenant – The FDCAs and California’s tenant protection laws, protect tenants from certain collection methods by landlords.  If you are trying to collect owed rent, you should be very careful and should talk to a lawyer. Violating the laws which protect residential tenants can also subject you to having to pay the other side attorney’s fees and penalties.

Bankruptcy – If the person you are collecting from have declared bankruptcy, you are probably going to have to move your collection activity to bankruptcy court. Typically, the filing of bankruptcy, will create “automatic stay” from the federal bankruptcy court which prohibits collection activity from state court, or anywhere but the bankruptcy court. Violation of the automatic stay can get you in trouble.

Do you want to enforce your judgment by placing a lien on real property?

Getting a lien on someone’s home or other real property is usually a good first step in collecting your judgment.  However, it’s never easy, and in some cases it’s not even an option.  Here’ s some of what you need to know:

Questions to Ask Yourself:

1. Do you have a judgment against the person?  You need a judgment against the owner of the property to place a lien on it.  Just because you have a judgment against his Corporation or her LLC, does not mean you have a judgment against them.
2. Is the property protected?  Sometimes, professional deadbeats will put their house in the trust to make it harder for the people they owe money to collect. It doesn’t necessarily mean that it will be impossible to put a lien on the house but it does make it harder.
3. Where is the property?  In order to place a lien on real property (land), you need record an abstract of judgment in the office of the county recorder in the county where the property is located.
4. Is your judgment from a different state?  If the judgment was issued by an out-of-state federal court you will need to register it in California by filing a certified copy of the judgment in a California federal district court. See 28 USC § 1963.  If it was issued by a different state court, you will need to domesticate it in California.  See Sister State Money Judgment Act, California Code of Civil Procedure § 1710 et seq.  After that, you can record the abstract of judgment.

How to Get the Lien:

Create an Abstract of Judgment – The abstract of judgment is a summary of the judgment, including the parties, the amount owed, and any applicable interest.

• Use the EJ-001 – Be sure to use the proper California Judicial Council form for an abstract of judgment (EJ-001) and also to use the proper cover letter when filing in a county other than the one where the abstract was issued. A phone call to the County recorder’s office can save you a lot of time.
• List the SSN – If you happen to know the judgment debtor’s Social Security number, be sure to listed in the abstract of judgment form in the appropriate place. The lien of abstract is voidable if you don’t list the Social Security number if you know the number or if it is “immediately accessible” to you.
• List multiple names / aliases – if the judgment debtor is known by more than one name, you may need to file an affidavit of identity to add those additional names. This is not, however, a procedure that allows you to add additional judgment debtors.

Record the abstract of judgment – You need to record the abstract of judgment with the county recorder’s office in whichever county the property you seek is located.

Provide notice – Finally, you must give notice to the judgment creditor of the judgment lien. This is either done by the county recorder or by you. If you’re the one doing it, you can do it by having a process server personally deliver a copy or by mailing it registered or certified mail or through a procedure known as substitute service. You need to follow the statute to the letter and you need to file proof of service with the county recorder where you filed the abstract. Don’t assume the recorder will do this for you. Ask!