Potentail judgment debtor seeks to avoid judgment lien.
Full Question:
Answer:
You appear to believe, and properly so, that you have no legal defense to any action against you as co-signer on a relative's car loan. You ask if you should transfer assets before any judgment is taken against you so as to avoid any judgment lien upon your assets. You don't appear to be aware of the statutory exemptions of assets that Florida and other states have enacted. So, I'll talk about the Florida's statutory exemptions, but first I want to inform you generally about judgments and judgment liens.
Judgments Law & Legal Definition.
A judgment is the final decision by a court in a lawsuit, criminal prosecution or appeal from a lower court's judgment. This is distinguished from an "interlocutory judgment," which is only valid until a final judgment is made. It is a court’s final decision regarding the rights and obligations of the parties to a case. A judgment is also referred to as a decree.
There are certain legal requirements for the validity of a judicial judgment. It must be made by a competent judge or court at a time and place appointed by law and in the form it requires. For example, if the judge does not have jurisdiction of the matter, or does not hold a required hearing or present the required opportunity for a party to be heard, then any judgment rendered may be overturned. The judgment must confine itself to the question raised before the court and cannot extend beyond it. If the judgment is appealed, the appellate court generally reviews the law applied by the lower court, and will not disturb the factual findings.
The person who obtains a civil judgment for money is called a judgment creditor and the person who owes money on the judgment is called the judgment debtor. If the judgment debtor fails to pay the judgment, the judgment creditor may file a judgment lien and have the judgment debtor's assets sold to pay off the judgment. Local laws on procedures used to collect unpaid vary, so laws in your area should be consulted for specific requirements.
Judgment Debtor Law & Legal Definition.
A judgment debtor is a losing defendant in a lawsuit who owes the amount awarded in the judgment to the winner. The term is typically applied to a person who fails to pay the amount of the judgment they owe. An unsatisfied judgment is often noted in a credit report on a judgment debtor issued by various credit reporting agencies.
The property of the judgment debtor is subject to lien, execution and levy by the judgment creditor. There are procedures, which vary by jurisdiction, for locating the assets of a judgment debtor and then attaching their assets or garnishing their income. Such procedures usually involve serving the judgment debtor with a written set of questions (interrogatories) or a verbal questioning under oath (deposition).
Judgment Liens Law & Legal Definition.
A judgment lien is created when a court grants a creditor an interest in the debtor's property, based upon a court judgment. A plaintiff who obtains a monetary judgment is termed a "judgment creditor." The defendant becomes a "judgment debtor."
Judgment liens may be created through a wide variety of circumstances. For example, if a person negligently injures someone in an accident, the injured person is likely to sue for damages. If the insurance doesn't cover the judgment, a judgment lien may be placed against the negligent person's property to secure payment of the claim to the injured party.
If the debt is not paid, the judgment creditor can then seek to enforce the judgment by garnishing wages, seizing a bank account, or placing a lien against the debtor's property. After the judgment creditor places a lien upon the attached property, the next step in the collection process is to conduct a sale of the attached property to satisfy the judgment debt. If a lien were placed on a home, the judgment creditor would then seek to foreclose on the property, in the same way a mortgage holder such as a bank would foreclose if it were not paid.
Laws regarding judgment liens vary by jurisdiction, so local laws should be consulted for specific requirements. The following is an example of an Oregon state law dealing with judgment liens:
"ORS 18.360 Expiration of judgment and lien; renewal; judgment in criminal action; judgments for property division. (1) Except as provided in this section and ORS 25.700, whenever a period of 10 years elapses after the entry of a judgment in a circuit court, the judgment and any docketed or recorded lien thereof shall expire. However, before the expiration of 10 years the circuit court for the county in which the judgment originally was entered, on motion, may renew the judgment and cause a notation in the register and the judgment docket indicating the renewal of the judgment to be made. The renewed judgment and any lien thereof expire 10 years after entry of the renewed judgment. If the judgment is renewed, the judgment creditor or the agent of the judgment creditor may cause to be recorded in the County Clerk Lien Record of any other county in this state a certified copy of the renewed judgment or a lien record abstract. Execution may issue upon the renewed judgment until the judgment expires or is fully satisfied."
Judgement Proof Law & Legal Definition.
Judgement proof refers to a debtor who has little or no assets for a creditor to seek payment of a judgement from. In some cases, a person threatened with or subject to potential litigation may make themself judgment proof by diverting his/her assets into holdings that can't be reached by local courts, such as investing their money offshore through offshore trusts and IBC's (International Business Corporations).
What are homestead exemption laws?
Homestead laws were generally designed to protect the home from creditors, provides the right of occupancy given to a surviving spouse, minor children, and unmarried children of a deceased owner and also afford reduced property tax treatment. When people use the term "homestead exemption" they may be referring to the tax exemption or reduction, or the exemption from debts or execution for the payment of debts.
This page only discusses the exemption from debts aspect. Don't be confused. The exemption does not mean that you cannot lose your home to creditors or that a lien cannot be placed on the home. If you borrow money on your home like most people do, the mortgage holder can foreclose and the exemption has no effect. If a unsecured creditor sues you and obtains a judgment, the creditor can enroll the judgment as a lien on your property. However, to the extent that you have a homestead exemption, the creditor cannot execute on the homestead and take the home.
Specific homestead laws vary from State to State. In Texas, for example, a homestead is not protected from debts owed to the federal government. The homestead exemption may be used without filing a recorded claim in some States, while in others, a designation of homestead may be required. On the other hand, in virtually every State, in order to receive a homestead tax exemption the property must be designated as such.
In community property States, generally, either separate or community property may constitute a homestead. Likewise, in some States, a homestead owner's spouse must join in any transfer or encumbrance of a homestead. In almost all States, a surviving spouse is entitled to the sole occupancy of a homestead for life, even though the property may be owned by someone else, such as were the property is titled in the husband's name, he dies and leaves the property to his children. Be sure to check the laws of your State.
Homestead exemption forms are usually available from the tax assessor in your county. If not, the tax assessor can provide you with the proper location.
The State of Florida allows an exemption equal to value of property as assessed for tax purposes (No monetary limitations) - area limitations of ½ acre urban land or 160 acres rural land Florida Constitution, Article 10 § 4.
The State of Florida allows an exemption equal to the value of real property as assessed for tax purposes (with no monetary limitations on value, but with area limitations of ½ acre urban land or 160 acres rural land. See Florida Constitution, Article 10 § 4. Be aware that the law works slowly and deliberately, and be aware especially of the federal and state fair-debt-collection-practices act. Both the timelines built into the judicial system itself and the timelines in the fair-debt-collection practices act could delay entry of a judgment until after one who has not yet filed for a homestead exemption has time to do so. As a general rule, a judgment takes effect and creates a judgment lien only when it is entered as a matter of record in either the records of the clerk of the court or, in some states, in the records of the county recording officer.
Having a homestead exemption in effect before any judgement is entered against one, is far preferrable to transfering assets. Transferring assets can create both more and more difficult problems than paying off a judgment lien against non-exempt assets.
You could and should contact a legal-aid office or attorney in your area. This is a very straight-forward matter for a lawyer who has experience in debtor-creditor litigation.