Creditor's Rights

Question 1

Creditor’s Rights is about

Answer 1

how a successful plaintiff turns a victory in a lawsuit into cash

Question 2

Generally, what is the process for turning a victory in a lawsuit into cash?

Answer 2

1. getting a judgment
2. using the judgment to obtain a lien on a particular piece of property
3. foreclosing on the lien to sell the property

Question 3

The lien protects

Answer 3

the rights of the creditor in the debtor’s property against other creditors

Question 4

What are the two broad types of creditors?

Answer 4

1. General Creditors
2. Secured or Lien Creditors

Question 5

What is a general creditor?

Answer 5

A creditor who has a claim only against the total assets of the debtor and must obtain a lien on the debtor’s property before the debtor can be forced to make payment

Question 6

What is a secured or lien creditor?

Answer 6

A creditor who possesses a lien in specific property of the debtor and may acquire their liens by agreement, by force of statute, or by use of legal process.

Question 7

As related to creditor’s rights,

what is attachment?

Answer 7

A prejudgment remedy by which a plaintiff may obtain a lien on the defendant’s property before judgment to satisfy an anticipated money judgment

Question 8

When is a writ of attachment (detinue) issued?

Answer 8

as an ancillary proceeding in connection with a pending suit, or to initiate an independent action

Question 9

Regardless of whether the writ of attachment is issued as an ancillary proceeding or to initiate an independent action, the plaintiff must

Answer 9

post bond.

Question 10

To have a writ of attachment issued, the plaintiff must allege 1 of the following grounds:

Answer 10

1. Defendant is a nonresident of VA or is a foreign corp
2. Defendant has made or is about to make a fraudulent conveyance
3. Defendant has removed or is about to remove his property from the state
4. Defendant has concealed or is about to conceal his property with the intent to hinder or delay creditors
5. Defendant has left or is about to leave VA with intent to change domicile

Question 11

For tangible personal property in possession of the defendant, the lien attaches when

Answer 11

the sheriff makes a proper levy

Question 12

For tangible personal property in a third party’s possession or a debt owed by a third party to the defendant, the lien attaches when

Answer 12

the third party is served a copy of the attachment. The third party must be named as co-defendant.

Question 13

For real property, the lien attaches when

Answer 13

1. a copy of the attachment is served on the person in possession, and
2. the officer’s return describes the property

Question 14

What is the officer’s return?

Answer 14

the document prepared by the sheriff in response to court’s writ of attachment

Question 15

What makes the lawsuit consummate?

Answer 15

Final Judgment

Question 16

What is consummation?

Answer 16

It gives the creditor priority in the property against third parties back to time of attachment.

Question 17

What is a memorandum of lis pendens and what is the effect of filing it in Circuit Court?

Answer 17

A document placed in the real estate recording office indicating that real property is subject to litigation. It is filed to be effective against a BFP.

Question 18

How long does a defendant have to challenge a lien?

Answer 18

10 days

Question 19

On what grounds can a defendant get the judge to quash a lien?

Answer 19

1. the lien is invalid
2. the lien is unsupported
3. the plaintiff is unlikely to prevail in the underlying lawsuit

Question 20

What type of property is exempt from creditor’s claims?

Answer 20

1. Personal Injury Actions
2. Tenancy By the Entirety
3. Homestead Exemption
4. Poor Debtor’s Exemption

Question 21

What type of personal injury debt can be acquired by creditors?

Answer 21

Medical expenses related to the injury

Question 22

What creditors can attach a lien against a tenancy by entirety?

Answer 22

1. The IRS can enforce a tax lien
2. A creditor who is owed a joint debt by spouses

Question 23

What is the homestead exemption to attachment?

Answer 23

1. any property worth up to $5,000 ($10K is 65 yrs old+)
2. an additional $25,000 in real or personal property used as principal residence of claimant or claimant’s dependants
3. an additional $500 per dependent

Question 24

What is the method of claiming the Homestead exemption?

Answer 24

1. Real estate - debtor files a homestead deed for claimed real estate in the county where property is located
2. Personal Property - debtor files a homestead deed in place where debtor resides, describe items claimed and designate their values

Question 25

What exemption takes priority over all creditors?

Answer 25

The Homestead exemption

Question 26

What debts can a Homestead exemption not be claimed?

Answer 26

1. purchase money mortgage or security interest in property
2. spousal or child support obligations
3. intentional tort claims
4. those debts where protection has been waived
5. IRS claims

Question 27

Under the Porr Debtor’s Exemption, every VA resident may claim the following property exempt:

Answer 27

1. clothes up to $1K and household furnishings up to $5K
2. tools of the trade up to $10K (excluding a perfected security interest)
3. motor vehicle up to $6K (excluding a perfected security interest)
4. heirlooms up to $5K
5. sentimental items
6. burial lots up to $5K

Question 28

Exemption from garnishment of earnings or wages is limited to the lesser of

Answer 28

1. 25% of disposable weekly earnings; or
2. the amount by which disposable earnings exceed 40 times the effective federal minimum hourly wage

Question 29

What is required to give third parties notice of a judgment creditor’s interest in property?

Answer 29

A public act such as recording or repossessing personal property

Question 30

What is the duration of a judgment creditor’s rights?

Answer 30

1. 20 years from date of judgment if dated before 1/1/21 or concerns the nonpayment of child support
2. 10 years from the date any judgment was rendered if dated on or after 1/1/21 and doesnt concern nonpayment of child support

Question 31

The debtor only needs to be given what to extend a judgment?

Answer 31

Actual notice. Formal service of the motion is not required.

Question 32

A judgment is automatically docketed by the clerk of court in

Answer 32

the county where the judgment is rendered

Question 33

A judgment from another county is docketed by filing a

Answer 33

copy of the judgment with the county clerk where enforcement is sought

Question 34

A judgment lien on real estate is a floating lien on

Answer 34

all non-exempt real property in the county.

Question 35

A judgment lien on real estate attaches automatically to

Answer 35

after-acquired property

Question 36

A judgment lien on real estate lasts

Answer 36

as long as the judgment

Question 37

A judgment lien on real estate must be re-docketed after

Answer 37

a 20-year extension

Question 38

A lien on the judgment debtor’s real property must be enforced within 10 years of

Answer 38

the debtor’s sale to any purchaser

Question 39

To enforce a judgment lien, the creditor must

Answer 39

bring suit in equity in the city or county where the land is located

Question 40

In Virginia, is there a right to redemption for real property?

Answer 40

No, once the creditor has a lien, the debtor may not prevent its enforcement by paying the debt

Question 41

In what order are proceeds of sales distributed?

Answer 41

1. costs
2. creditor bringing the action
3. junior creditors
4. debtor

Question 42

Priority to proceeds of the sale of real estate among creditors is determined by

Answer 42

the date on which the interest in the real estate was recorded

Question 43

What does a creditor need to satisfy a judgment against tangible personal property?

Answer 43

A writ of fi fa

Question 44

What is the effect of a writ of fi fa?

Answer 44

It commands the officer to whom it is delivered to find property of the debtor, seize it and sell it to satisfy the judgment

Question 45

How many days from the date of judgment does the clerk have to issue a writ of fi fa?

Answer 45

21 days

Question 46

The lien against tangible personal property attaches for priority purposes at what time?

Answer 46

The time of the levy

Question 47

Executions against tangible personal property

How long does the sheriff have to give the return back to the court before it’s void?

Answer 47

Dependent upon the time listed by the court, usually 90 days

Question 48

What are the general requirements of a levy?

Answer 48

1. property must belong to the debtor at the time of the levy
2. sheriff must seize property or observe with power to exercise control or dominion
3. sheriff must serve a copy of the writ on the judgment debtor
4. sheriff must describe property seized in the return