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Tuesday, September 2, 2014

Protecting Retirement Accounts

For those in California with a judgment against them, the creditor might be able to collect from some of your retirement accounts.

One of many judgment articles: I am a Judgment Broker, not a lawyer, and this article is my opinion based on my experience in California, please consult with a lawyer if you need legal advice.

Although some retirement accounts are protected (e.g., 401Ks and profit-sharing plans) because laws tend to protect them; others (such as IRAs) may be vulnerable to judgment creditors.

The judgment creditor's ability to levy a retirement account depends on what type of retirement account it is, the debtor's situation, and the account balance.

One example of a protected retirement account is one protected by Federal ERISA qualified retirement account-related laws.

Another type of protected retirement pension plan account is one that follows the Employee Retirement Income Security Act (ERISA).

Examples of ERISA-qualified pension plans and benefit plans include 401(K) accounts, group health and life insurance plans, pension and profit-sharing plans, HSAs, HRAs, disability, accidental death benefits, and vision and dental plans.

There are two kinds of creditors, mortals and (IRS tax, child or spousal support QDRO) creditors. When it comes to ERISA retirement accounts, IRS and family support judgment creditors have more rights than regular creditors.

California offers less protections for non-ERISA accounts. If your retirement account is not covered and qualified by ERISA, then judgment creditors could potentially seize it.

Non-ERISA accounts that may be vulnerable include IRAs (both Roth and simple), Keogh and SEP plans, 403(b) plans for employees of a public utility or school, plans that do not benefit employees, employer-only plans, and church or government plans.

On the debtors (and their dependent's) side are laws exempting the amount necessary for their support when they retire. That support amount is protected in their IRA and other non-ERISA accounts. The laws are not crystal clear, so different judges may rule differently on the same set of facts.

A court will decide how to divide a debtor's retirement account between them and the judgment creditor, based on the circumstances of the debtor. When considering a case, a California judge will consider many factors including:

1) Does the debtor need any retirement funds now?

2) Will they be able to replenish the retirement funds if they are awarded to the judgment creditor?

3) The debtor's health and age.

4) The debtor's present and future income.

5) The debtor's present and future living expenses.

6) The debtor's ability to continue working and to earn money (including their skills and education level).

7) Any special needs of the debtor or their dependents.

8) The debtor's ability to save more money for retirement.

A debtor example might be a $160,000 IRA. If the debtor is 39 years old, healthy and employed, has no dependents, and earns $68,000 a year; they may not be able to keep it. However, if they are 65 years old, have a heart condition, and are unemployed; they may be able to keep that same account.

Also on the debtor's side, are the roll over protection laws. If the debtor rolls over funds from an ERISA account or a PRP (Private Retirement Plan) into their IRA, those funds will remain 100% exempt. If a debtor is able to prove that the funds in their IRA originally came from an ERISA account or PRP, then the debtor can skip the "necessary for support" test.

California also offers protection for most private retirement plans. If the debtor's pension plan does not qualify under ERISA, but does qualify as a PRP, then it may be fully protected from creditors. Unlike with an IRA, again, the debtor can skip the "necessary for support" test.

To qualify, a PRP must be set up as an employment pension plan, with written rules restricting access to the funds, like an ERISA account.

The debtor cannot deposit a single large lump sum of their own money or roll over their IRA funds into a PRP. If the debtors use PRP funds prematurely and for non-retirement purposes (such as paying personal debts and expenses), then it may lose its exempt status.

One last option for debtors is to file for bankruptcy protection. Bankruptcy laws may allow debtors to protect up to $1 million in their IRAs.


Mark D. Shapiro - Judgment Referral Expert - - where Judgments get Recovered.

Monday, September 1, 2014

Noticed Motions

A noticed motion is a court-compatible document usually served (noticed) on the affected parties, and then entered and stamped by a court clerk. At a hearing, the court later makes its decision to either grant or deny the applicant's motion.

One of many judgment articles: I am a Judgment Broker, not a lawyer, and this article is my opinion, please consult with a lawyer if you need legal advice.

Usually, motions address prior actions or decisions of the court. Usually, a motion must be served on the other party(s) (noticed). However, certain motions (for example emergency motions which are called exparte motions), require no proof of service.

In California, the applicant can submit an application for a motion before, during, or after a court trial. (See CCPs 1003–1010 and CRC 3.1320-3.1342).

It is the applicant's responsibility to make sure their pleadings are proper. If they are not, it is the responsibility of the other party to bring the errors to the attention of the court.

Court clerks will accept most motion applications and schedule a hearing quickly, however a judge will read your application; so make sure you include a Memorandum of Points and Authorities (MPA) with proper titling.

The MPA should include your legal arguments to support your motion that references past cases, laws, and accurate statements of fact, declared under penalty of perjury.

If you have not submitted motions to the court yet, it is a good idea to look at previous motions at that court. If you look at 10 documentation sets from 10 lawsuits, you will probably find a motion example.

Every court has their own rules about captions and the format of documents, make sure you read the laws for your state.

A motion must identify the party bringing the motion, name the defendant party(s), state the basis for the motion and the relief sought, and if a pleading is challenged, state the specific portion challenged.

Additionally, motions must include the name and address of the party(s), the title of the court, the case number, the case name, the date, time, and department of the hearing, and your proof of service.

Motions often require supporting documents. A notice of motion should include the place of the scheduled hearing, the nature of the order being sought, the grounds for the motion, and the documents that support the motion. In California, see CCP 1010.

A motion may or may not be separate from the notice of motion. Motions always must state who is requesting the proposed order, and specify that order.


Mark D. Shapiro - Judgment Referral Expert - - where Judgments get Recovered.

Sunday, August 31, 2014

Becoming A Process Server

Many people including judgment enforcers, have become Registered Process Servers (RPSs) to attempt to earn more money and to find judgments. For many people, becoming a process server is a good idea.

One of many judgment articles: I am a Judgment Broker, not a lawyer, and this article is my opinion, please consult with a lawyer if you need legal advice.

You cannot serve legal papers related to yourself or your business. Some judgment enforcers serve legal papers for each other to save money.

Like most fields, the more training classes you take on a regular basis, the better. You can never learn too much. 

Most counties have minimal or modest requirements to become a RPS. However, process serving is not for everyone, because there are some risks. While most process servers are men, nothing stops a woman from being a process server.

I know a number of woman process servers, from 19 years old to 69 years old. Some female process servers have their spouse or boyfriend wait in the shadows, in the rare cases when there might be trouble.

Some process servers have a concealed gun carrying permit; some carry pepper spray, and others prefer wasp spray, because it is almost as effective, cheaper, lasts longer, and is much more directional.

Registered process servers are interesting and important. A good RPS is valuable to attorneys and many others. As with judgment enforcers, some RPSs are flakes. Most serves are easy and some are difficult.

There are tricks one can use to handle difficult serves. One process server began to dump animal manure on his evasive serve-upon person's lawn, to get them out of their house; when nothing else was able to get them to answer their doorbell.

While most process serving jobs are rather boring (boring means easy, which can be good), occasionally it is very interesting (difficult). Here are two stories of difficult process serving circumstances and their solutions:

Story 1: The debtor's home had a fenced front yard with a big German Shepard on guard. On the gate was a sign that read "Beware of Dog". The RPS handled this by stepping out of his car, locking it and then intentionally triggering the alarm, which made a huge noise commotion with flashing lights.

The RPS let the alarm continue until it caused the debtor to step out of his house and approach him, to inquire "what the hell are you doing?" Then, the RPS gave him his serving papers, and said you have been served. Sometimes, you just have to let them come to you.

Story 2: The RPS was attempting to serve a (judgment debtor) restaurant owner, who had his staff consistently deny he was in the country.

The RPS called to set up an appointment to meet with the debtor to talk about the possibility of the restaurant catering 50 guests at his upcoming party. The debtor was quick to set up an appointment for Saturday at 2 PM.

The RPS showed up early, and the restaurant gave him a free drink. The debtor soon showed up. When presented with the subpoena papers, he said "It's not me!" The debtor then showed his drivers license to the RPS.

The name on the debtor's license was one of the several DBA names previously approved by the court, using a previous affidavit of identity. The RPS said "that is you, and you are served. Thank you for the drink".


Mark D. Shapiro - Judgment Referral Expert - - where Judgments get Recovered.

Saturday, August 30, 2014

Dirt Or Gold Judgments

Judgments and leads on them can be dirt or gold, depending on who the judgment debtor is, and also how well you screen the creditors. If you sell or refer raw leads using only court records, there is very little chance of an average lead paying you much money.

One of many judgment articles: I am a Judgment Broker, not a lawyer, and this article is my opinion, please consult with a lawyer if you need legal advice.

If you communicate with creditors; confirm they want their judgment recovered, and that they know they must share any possible recovery, and that their debtor is known, and not poor or bankrupt. If all these tests are passed, the judgment lead may pay off.

You can sell average judgment leads, the choices are pennies on the dollar per raw lead, or about 5% of what might be eventually recovered in the future.

If the creditor thinks their judgment is guaranteed, or they can sell their average judgment for 50 cents on the dollar cash upfront, or does not want to share any portion of what may be recovered over time; they will almost never get any money for their judgment.

Do not fall into the trap of waiting forever, waiting to find giant judgments against rich debtors with available assets showing. These are almost as rare as four-leaf clovers.

A $3,000 judgment against a solid debtor with a job and a bank account is more valuable than a million dollar judgment against a homeless old man with nothing, or a long dead company with no alter-ego possibilities.

A raw lead is often worth zero. Many unenlightened people send judgment inquiries to hundreds of people/companies the same day, and their judgments to dozens of people at almost the same time. Most people will not respond after you email or voicemail them, in response to their inquiry.

If you communicate with the judgment owners; many will say they are interested and will follow up, however few do. And of the ones that do followup, many send a copy of their judgment; however nothing about their judgment debtor, or the reverse.

Of course, if the debtor has a unique name, perhaps only a copy of the judgment is needed. If the debtor cannot be found, the lead is worthless.

If you wish to contact each lead ten times, that is your business. I believe that people who start out being unresponsive often remain unresponsive over the long term.

To run a successful virtual judgment recovery company, you must screen creditors to make any money. If you are going to outsource judgments, you need to learn how to properly handle raw judgment leads.

Screening does not mean looking creditors up on Google or any data services. Screening means to check the beliefs and attitudes the creditors have about their judgment situations.

In my experience, you cannot fix what is broken, you can only fix what your responses are. It is better to spend your time on the people who are responsive and reasonable, than to try to change people who have a bad attitude, seem clueless, or are unresponsive.

The goal is to stay friendly, and let the creditor know you are (or you know) the best real solution, and they can contact you anytime they are ready.


Mark D. Shapiro - Judgment Referral Expert - - where Judgments get Recovered.

Friday, August 29, 2014

Dissolved Corporations And Shareholders

A dissolved corporation ceases to (properly and/or legally) exist, and the effect this has on its shareholders depends on the way the company was dissolved.

One of many judgment articles: I am a Judgment Broker, not a lawyer, and this article is my opinion, please consult with a lawyer if you need legal advice.

Avoiding negative financial consequences for the shareholders, requires proper and quick dissolution of the corporation, which can be done with either voluntary, involuntary, or suspending procedures.

Voluntary Dissolution can happen when a corporation no longer serves its intended purpose. If a corporation is dissolved voluntarily and its assets are distributed to the shareholders, without paying all remaining corporate debts, the shareholders might become liable for those debts. If this happens, the shareholders should quickly and voluntarily dissolve the corporation, to avoid further expenses. This requires three basic steps:

1) Filing the appropriate documents with the state.

2) Wind up the business operations. An important part of winding up the corporation’s business operations is paying all outstanding debts and claims, including fees and taxes owed to any government agency.

3) Liquidating the remaining corporate assets and distributing them, if any, to the shareholders. Even with a voluntary dissolution of the corporation, it may have an adverse effect on the shareholders, especially if the business operations are not properly concluded.

State laws generally provide for a time period after a corporate dissolution, for creditors to sue the shareholders for failing to pay a corporate debt and/or wrongfully distributing corporate assets. For example, California has a four-year statute of limitation on such claims, and Delaware has a three-year time limit.

Generally, a shareholder's liability for any remaining debts of the corporation is limited to the amount of corporate assets distributed to them. However, tax and payroll obligations might cause a shareholder to owe more, especially if the shareholder was an officer or director in the corporation.

An Involuntary Dissolution is when a corporation gets dissolved by a court order, after one or more of the corporation's shareholders files a lawsuit requesting the dissolution. An example of how this situation can occur is if the relationship among one or more shareholders becomes hostile and prevents operation of the business.

An involuntary dissolution can be financially negative for the shareholders. In addition to paying legal fees and court costs for the lawsuit, the liquidation of the corporation's assets using a court-ordered sheriff's auction will most likely cause any remaining assets to be sold at a steep discount.

If the corporation is dissolved involuntary by the court, or administratively by the state, the shareholders may still pay additional liabilities and expenses.

In some states, a company can be administratively dissolved if it fails to comply with state filing or tax requirements. For example, most states will dissolve a corporation if it fails to file its annual report. Such a dissolution means that the corporation ceases to exist, and sometimes without the shareholders' knowledge.

In administratively dissolved company situations, negative consequences can result, including the shareholders may become personally liable for all liabilities and debts incurred in the continued operation of the corporation's business.

The IRS treats dissolutions as a distribution of assets to the shareholders; even if the assets are not liquid, and despite the fact that they did not intend to dissolve the corporation and make a distribution. This can cause tax issues for the shareholders.

If the company is suspended, someone, perhaps the shareholders, will have to wind up the business. Shareholders may incur more future liabilities if they fail to take the steps necessary to dissolve the corporation, to avoid future annual filing fees and paying fees to the state.

In some states, such as California, do not administratively dissolve corporations for failing to make these filings and payments, the corporation becomes suspended, however still exists.

In California, the suspended corporation stills exists and must continue with its yearly obligations, which will continue to accrue with penalties and interest each year that goes by without articles of dissolution being filed. The shareholders will not be able to file any new corporate articles until all back penalties, fees, and interest expenses gets paid.


Mark D. Shapiro - Judgment Referral Expert - - where Judgments go to get Recovered!

Thursday, August 28, 2014

Inverse Condemnation

Inverse condemnation (sometimes called eminent domain) is a legal term that describes a situation where the government seizes private property and fails to pay compensation to the owner as required by the Fifth and Fourteenth Amendments to the US Constitution.

One of many judgment articles: I am a Judgment Broker, not a lawyer, and this article is my opinion, please consult with a lawyer if you need legal advice.

In some states, inverse condemnation also includes damaging property. In order to be compensated, the property owner often must sue the government. In such cases, the owner is the plaintiff, and that is why the action is considered to be inverse, because the position of the parties is reversed. This is in contrast to the usual case of a direct condemnation, where the government is the plaintiff, that sues a defendant-owner in order to take their property.

Government seizures can be physical (e.g., flooding, land seizure, deprivation of access, retention of possession of land after a lease to the government expires, deprivation of access, removal of ground support, etc.) or a regulatory seizure (when regulations are so onerous that they make the regulated property unusable by the owner for any economical or reasonable purpose).

Sometimes inverse condemnation goes too far and becomes controversial. See Pennsylvania Coal Co. vs Mahon, 260 U.S. 393 (1922), where the owner of a property lost value and marketability, denying them the benefits of property ownership without compensation.

Unfortunately, the US Supreme Court has not elaborated on what "too far" is. However, it has specified three situations where inverse condemnation occurs:

1) Physical seizures or occupation.

2) The reduction of the regulated property's utility or value to such an extent that it is no longer capable of being economically viable.

3) On a precondition to the issuance of a permit, the government demands that the owner gives property to the government, even though there is no rational reason to. See Nollan v. California Coastal Commission, 483 U.S. 825 (1987).

Because of these three situations known as "per se" regulatory seizures, the decision whether or not a seizure has occurred is made by judicial consideration of three factors:

1) The nature of the government regulations.

2) The economic impact of the regulations on the owner's property.

3) The extent to which the regulation interferes with the owner's reasonable, investment-backed expectations.

These three factors are known as the "three-factor Penn Central test", (after Penn Central Transportation Co. vs City of New York, 438 US 104, 124 [1978]). The Penn Central decision has been criticized for it's controversial "taking issue" decision, because its three-factor approach was so vague it made it virtually impossible for attorneys to know before filing a lawsuit, what facts will be considered decisive by the court, and how to apply the three factors.

Railroads and other public utilities, are granted the power of condemnation (also called eminent domain) by state laws, and they can be liable for inverse seizing or the damaging of private property during their activities. This includes seizing personal property (e.g., supplies for the army in wartime); intellectual property (e.g., patents, copyrights, etc.); and contracts.


Mark D. Shapiro - Judgment Referral Expert - - where Judgments go to get Recovered!

Wednesday, August 27, 2014

When The Debtor Objects To A Levy

A "Notice of Levy" procedure can be used for final money judgments, and also for cases where a judgment (or settlement) has not been reached yet.

One of many judgment articles: I am a Judgment Broker, not a lawyer, and this article is my opinion based on my experience in California, please consult with a lawyer if you need legal advice.

If you do not have a judgment yet, or are not going to try to levy the debtor's property soon, a "Notice of Levy" procedure is probably the best way to start. What to do next depends partly on if there is any opposition filed by a relevant party. A notice of levy is generally defensible, even if it is not the most direct way to get paid.

To object to your notice of levy requires a noticed motion, not just a choice by the judgment debtor, see CCP (Code of Civil Procedure) 701.520(c) and (d):

CCP 701.520(c): Within 10 days after service of the notice of intended sale, the judgment debtor may apply to the court on noticed motion for an order that the property be collected rather than sold. A judgment debtor who so applies shall, within the time allowed for the application, serve a copy of the notice of motion on the judgment creditor and file a copy of the notice of motion with the levying officer. Service of the copy of the notice of motion on the judgment creditor shall be made personally or by mail. If the copy of the notice of motion is not filed with the levying officer within the time allowed, the levying officer shall proceed to sell the property. If a copy of the notice of motion is filed with the levying officer within the time allowed, the levying officer shall continue to collect the property until otherwise ordered by the court.

CCP 701.520(d): At the hearing on the motion, the court may in its discretion order that the property be sold or be collected depending on the equities and circumstances of the particular case.

If the court orders that the debtor's property be sold, their order may specify the terms and conditions of the sale. If the court orders that the property be collected; the court may condition its order on an assignment of property belonging to the judgment debtor, to the judgment creditor pursuant to CCPs 708.510-708.560.

CCP 708.410(d) clearly describes when a Notice of Lien in a Pending Action may be filed. Of course, after the judgment becomes final; a levy usually offers the best chance to be paid. CCP 700.190 clarifies the distinction of a final money judgment. These two CCP sections, by their language, seem mutually exclusive.

There is a theory that your judgment debtor may object to your levy, and then the sheriff is somehow required to collect the judgment, rather than sell it at an execution auction sale. However, this is just a theory.

The reason it is a theory is, to collect the judgment the debtor would need to give the sheriff sufficient information to allow the sheriff to collect on the judgment, such as bank information, etc.

The sheriff cannot compel the judgment debtor to pay on demand. Usually, one is only in a position to issue or compel an acknowledgement of satisfaction if they have properly obtained the rights to the judgment pursuant to state laws.

CCP 701.520 shows the way a judgment gets sold. It is unlikely that a debtor will:

1) Take the steps in the first place to object to the sheriff auction, and

2) Prevail at the hearing on their noticed motion.

I have never seen or heard of such a motion being brought. It could happen because it is authorized under the law. This is no reason to write off the recovery process, and never considering a levy on your debtor's money judgment or property.

In opposition to any such debtor motion, the creditor might argue that without a showing by the judgment debtor, and that there is some likelihood of realizing collection through the levying officer, the motion should be denied.

So, there exists a potential problem with a levy with an auction sale. If the judgment debtor simply objects to the sale (not even a court procedure), then the sheriff must collect the judgment, not sell it.

What are the odds that the sheriff, faced with such an objection, is going to make any effort whatsoever to collect the judgment between now and a hundred years from now?

If the judgment debtor elects to have the sheriff collect the judgment, that is the end of any efforts the judgment owner or the assignee might make to enforce it.

The creditor receives any funds that the sheriff collects, however if the sheriff collects nothing, that is what the creditor gets.

It is best to ask the sheriff to sell the judgment or property, if you think your judgment debtor will not fuss. Some judgment debtors hire attorneys to challenge the creditors.

What is done is done. There is nothing in the statutes or case law to suggest that an unopposed "Notice of Lien" is ineffective, regardless of when it is filed. Is it the best way to do business? Probably not, but it is not prohibited. What is not prohibited, is permitted. (At least, until a judge says that it is not permitted.)


Mark D. Shapiro - Judgment Referral Expert - - where Judgments go to get Recovered!