Legal Question in Real Estate Law in North Carolina

Re: Judgment Protection in the Case of Foreclosure

The amount of money involved should prompt you to seek the advice of an attorney. The conduct that you described would credit fraud. That could result in criminal prosecution and loss of the property of your parents.

Re: Judgment Protection in the Case of Foreclosure

Vince, make sure you get an answer from a North Carolina attorney if that's where the properties are; California law is quite different. However, I can hint at a few things where the law of CA and that of NC are likely to be in agreement:

First, a friendly suit to create a judgment lien that might be senior to someone else's judgment probably isn't going to work. The main reason is that a mortgage (or deed of trust) is almost certainly already going to be on the property record as a lien, and would have priority in time (and therefore in right to pay-off) over the friendly judgment. Also, the friendly judgment would be a fraud on the court, and probably also on the creditors, with all the facts smeared across the court's records.

Next, those "folks looking to sue" will be focusing on the collateral, not you. They know all about you from your credit reports and your loan applications, and most of the lenders know about each other and may have been discussing you and comparing credit applications. The creditors will sue if the collateral is exhausted and NC's anti-deficiency laws allow. Honestly, if you appear to be broke and headed for Ch. 7, many lenders will be deterred from pursuing you, but some will sue, if only to show that they're PO'ed.

Transferring assets to a friend via a phony judgment is just as fraudulent as hiding assets by selling property to your nephew and brother in law at 5c on the dollar, or creating an offshore trust in Inner Mongolia. It has the added problem for you and the proposed friendly judgment creditor that the evidence will already be on file at the court, awaiting a creditor suit for fraud.

Re: Judgment Protection in the Case of Foreclosure

Judgments are valid for ten years but can be renewed indefinitely.

There can be an indefinite number of judgments against a person, although it is true that subsequent creditors may lose interest if they see prior judgment creditors who might have priority.

Be cautious, as what you suggest with a friend suing you on a made up debt would be Fraud and a crime.

Re: Judgment Protection in the Case of Foreclosure

Yeah, nice try. Your 'buddy' is quite wrong about the law and rules and process. Every judgment can, and would be, enforced by garnishment, levy on assets, etc. There is no 'precedence' of judgments. Now that you have publicly disclosed your desire and intent to mislead or defraud lenders, you should be quite careful about following the real rules to avoid civil suit or criminal prosecution for fraud.