We recently collected $128k on a $90k judgment that the debtor had failed to pay for years.
The judgment was a $90k default judgment from West Virginia. The debtor lived in Los Angeles County, but his home was titled in his family trust, not in the name on the judgment. An abstract of judgment recorded only under his own name could have missed the house.
We got around that with an affidavit of identity under California Code of Civil Procedure section 680.135.
The original creditor won a $90k default judgment in a West Virginia circuit court.
The creditor assigned the judgment, and the assignment was filed in the West Virginia case. The debtor lived in Los Angeles County, in a very, very nice property worth about $6 million, so we domesticated the judgment there as a sister-state judgment. With filing fees and accrued interest, the California judgment was entered at $95k.
The debtor was served with the notice of entry of the sister-state judgment. He paid nothing, and the balance kept growing at 10% a year.
The debtor’s home was titled to him and his wife “each as co-trustees” of their family trust. The judgment was only against the debtor, as an individual. A title search under the judgment debtor’s name wouldn’t connect the debtor and his property.
Over the years he had moved properties into the trust, back out to himself and his wife as joint tenants, and back into the trust again. Each deed claimed an exemption from transfer tax because the grantor and grantee were the same person. He also sold one trust property to a third party and bought his current home in the trust’s name days later.
Those deeds were the key evidence. In each one, the debtor stated on the public record that he and the trust were the same owner. In other words, the debtor retained the “beneficial interest” in the property, and was continuing to reside there.
A revocable living trust is an estate planning tool, mostly used to avoid probate. The person who creates it, the settlor, signs a trust document and deeds property into the trust’s name. In almost every case, the settlor is also the trustee and the beneficiary during his or her lifetime. The settlor can “revoke” the trust, take property back out, change it, or cancel the whole thing at any time. That’s why it’s called a “revocable” living trust.
A lot of people don’t realize that a revocable living trust is NOT an entity. That’s a very common misconception that we recently needed to explain to an experienced attorney who thought a trust was actually its own entity.
A trust is not a separate legal entity like a corporation or an LLC. It is an arrangement for holding property, and the trustee holds title. A revocable trust usually doesn’t even file its own tax return. Its income goes on the settlor’s return under the settlor’s Social Security number.
Most importantly, a revocable trust is not separate from the settlor in any way that matters to a creditor. The settlor keeps complete control and can pull every asset back out on a whim. California law treats the property as the settlor’s own. Under Probate Code section 18200, property in a revocable trust is subject to the claims of the settlor’s creditors, and the courts have called this kind of trust simply a probate avoidance device (Galdjie v. Darwish (2003) 113 Cal.App.4th 1331, 1349). For a judgment creditor, the debtor and the debtor’s revocable trust are the same person.
California lets a judgment creditor add names the debtor goes by to a writ of execution or an abstract of judgment. Code of Civil Procedure section 680.135 defines the affidavit of identity. It is a sworn statement giving the case, the name in the judgment, the additional name, and the facts showing it’s the same debtor. Under sections 674(c)(1) and 699.510(c)(2), the court approves it without a hearing or notice if the facts are sufficient.
Our affidavit argued three things:
We attached copies of every deed in the chain of title for the property. The court granted the order, so “judgment debtor” now included the trustee’s name exactly as he held title to the real estate, and could be used on any writ or abstract.
We had the clerk issue an abstract of judgment with both names and recorded it with the Los Angeles County Recorder. Under CCP section 697.340, that created a judgment lien on the debtor’s interest in the home. He could no longer sell or refinance without paying the judgment.
We also levied his bank account and collected about $14k. The debtor never contacted us, never hired a lawyer, and never challenged the levy.
Recently, the debtor opened escrow on the house, and the escrow officer asked for a payoff. Beautiful!! We sent a demand to the title company, for about $114k.
Escrow promptly paid in full! The case was done and dusted, that easily. Judgment satisfied.
| Recovery | Amount |
|---|---|
| Bank levy | $14k |
| Escrow payoff | $114k |
| Total collected | $128k |
We recovered about 142% of the original $90k judgment, mostly because California post-judgment interest accrues at 10% a year.
At the end of the day, this was a successful judgment recovery for the full amount because we knew the law, we knew exactly what to do, and we executed brilliantly. We left the debtor absolutely zero chances to squirm out of paying the full amount. Most creditors would not have known to do an affidavit of identity in this situation, or would’ve simply filed and recorded an abstract of judgment in the debtor’s name which did not match the way title was held on the real property deed. If this was not done correctly, the title company may have missed the real property lien on the debtor’s property entirely, leaving the judgment unpaid.
This is the difference between a true professional, who knows all the ins and outs of judgment enforcement, and someone who does this part-time or who is brand-new. We eat, breathe, and sleep judgment recovery, and we love doing it. This is what we do all day long. Judgment collection is tedious and very difficult especially if you have a judgment debtor that hides their assets or has a sophisticated strategy to avoid payment. If you have an uncollected judgment, contact Final Verdict Solutions at (484) 312-3300 to discuss a free, no-obligation cash offer.
Final Verdict Solutions buys civil money judgments over $25,000. Get a no-obligation cash offer. If you accept, you get paid and collecting the judgment becomes our job, not yours.
2001 Market Street, Suite 2500
Philadelphia, PA 19103
