Legal Question in Business Law in California

Re: How Judgment Impacts Bank Accounts

Let me add a bit of information to that provided by Mr. Hoffman.

After the judgment creditor has tracked down company assets using the procedures described by Mr. Hoffman, it has numerous means at its disposal to enforce the judgment. Most attorneys representing a judgment creditor will try and get as many liens in place on judgment debtor assets as possible. These include a Judgment Lien on Personal Property (commercial debts only), another lien that's created with service of the order to appear for judgment debtor examination, and a lien created by recordation of a Writ of Execution.

The Writ of Execution is, in essence, a court order authorizing the sheriff to enforce the judgment through various statutory schemes. With a bank account, normally the judgment creditor will have the sheriff "levy" the account under the authority of the Writ of Execution. The sheriff (or a registered process server) will serve a Notice of Levy on your bank, ordering them to turn over the contents of the account as of that day. The bank will send the judgment debtor a notice advising the account has been levied and that absent some agreement with the judgment creditor, they will turn over the levied amount to the sheriff within a statutorily prescribed number of days. Please note that the levy reaches only amounts in the bank on the day of the levy, and each levy is a one time act. The bank is not required to turn over funds that later go into the account, unless another levy is made.

You should also be aware that the judgment creditor can garnish a company's receivables, place and foreclose liens against real property and personal property such as inventory, physical assets, intangibles and so forth. Foreclosing such liens is often a time consuming and expensive proposition, so most creditors will attack bank accounts first.

I hope this gives you a clearer picture of the process. However, please be aware that this is by no means an exhaustive treatment of the process.

Please don't hesitate to let me know if you need further information.

Now the inevitable caveat:

The foregoing information is provided as an accommodation only, and does not constitute specific legal advice or a biding legal opinion based on a comprehensive review of all relevant facts, nor can provision of such information be construed as creating an attorney-client relationship.

Re: How Judgment Impacts Bank Accounts

In California, once a money judgment is obtained (whether against an individual or business), that judgment is immediately enforceable. The only way to postpone enforcement is for the defendant to file an appeal, and post a bond pending the appeal. If the appeal is ultimately decided against the defendant, the bond will be used to pay the judgment.

There really is no way of telling how quickly the judgment creditor will begin levying on bank accounts, or taking other steps to enforce the judgment. They can do it immediately (if they have enough information concerning the assets of the business), or they could wait years. (In California, judgments are good for 10 years, and can be renewed for an additional 10 years.)

If you are in California, your judgment creditor has a variety of methods to obtain information about your assets, including hiring a private investigator, "skip tracer," and requesting that the court order a representative of the business to appear in court and answer questions concerning the location and amount of assets owned by the business (a "judgment debtor examination).