creditors rights Flashcards
1
Q
When obtaining a judgment lien against a debtor’s real estate, this remedy is based on
A
the recording system for real estate.
2
Q
For priority purposes, the general rule is that the first to
A
docket has priority over subsequent docketed liens.
3
Q
The judgment lien actually arises when
A
the judgment is docketed in the real estate recording system and becomes visible, this is a public act.
4
Q
A judgment is automatically docketed
A
by the clerk of court in the county where the judgment is rendered.
5
Q
A judgment lien is a floating lien on
A
all non-exempt real property in the county, and it attaches automatically to after acquired property.
6
Q
To then enforce a judgment lien the creditor must
A
ring a suit in equity in the city or county where the land is located.
7
Q
A commissioner will be appointed to
A
determine ownership and interests in the property and then conducts a sale of the property.
8
Q
The judgment lien creditor must
A
notify junior lien holders.
9
Q
Unless they are joined, those junior interests are
A
not affected by the sale
10
Q
if joined, junior interests
A
are cut off
11
Q
Senior interests to that of the creditor holding the sale
A
aren’t affected by the sale, the purchaser will take subject to senior liens.
12
Q
A deed of trust is
A
a security interest in land, synonymous with a mortgage
13
Q
in a deed of trust,The debtor is the trustor, who
A
gives a deed of trust to a third party trustee who is typically connected with the lender, who is the beneficiary
14
Q
When a default occurs, the lender instructs the trustee to
A
foreclose the deed of trust by sale
15
Q
In Virginia, with a deed of trust: legal title to the property is conveyed to the trustee, and the debtor retains
A
the equitable right to repay the indebtedness secured by the trust and obtain the property upon full repayment
16
Q
A trustee who sells a property after the buyer defaults may
A
first apply the proceeds to discharge the expenses of executing the trust
17
Q
A creditor can also satisfy a judgment with a
A
writ of execution or fi fa, for tangible personal property
18
Q
The writ of fi fa commands the officer to whom it is delivered to
A
locate the property of the debtor, seize it, and sell it to satisfy the judgment.
19
Q
with a writ of fi fa, The lien is created by
A
a levy on the property by the sheriff, and the levy is the public act
20
Q
For tangible personal property the clerk of the court must
A
issue a writ of fi fa within 21 days from the date of judgment unless otherwise instructed by the creditor, and the lien attaches at the time of the levy.
21
Q
In order for the levy to be proper:
A
(i) the property must actually belong to the debtor at the time of the levy,
(ii) the sheriff must seize the property, or observe with the power to exercise control or dominion,
(iii) the sheriff must serve a copy of the writ on the judgment debtor,
(iv) the sheriff must describe the property seized in the return.
The sheriff can then conduct a public sale of the personal property.
22
Q
A judgment lien attaches only to
A
the debtor’s interest in property, and it doesn’t attach to a tenancy by entirety
23
Q
A creditor may attach a tenancy by the entirety only where
A
hey are owed a debt by the spouses as single unit, such as cosigning a loan.
24
Q
a general creditor only has a claim against
A
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
25
a secured creditor
possess a lien in specific property of the debtor.
26
When a court declares that a debtor is liable to a creditor for the payment of a sum of money, the creditor has a
judgment that gives them the right to enforce it through obtaining a lien on the debtor’s property and then converting that lien into money, usually by levying on the property.
27
To satisfy its claim, the creditor can acquire
liens on all debtor’s property except those exempt.
28
A public act such as recording or repossessing personal property is required to
give third parties notice of the judgment creditors interest in the property
29
Once the public act occurs
a creditor's lien arises.
30
The lien settles the rights of the debtor and creditor on property subject to the lien unless
the debtor declares the property at issue to be exempt.
31
Every judgment for money rendered in Virginia by any state or federal court or by confession of judgment, is a lien on
all of the real estate in which the defendant has an interest, whether presently owned or subsequently acquired, from the time the judgment is recorded on the judgment lien docket.
32
The judgment must be recorded on
the judgment lien docket maintained by the clerk for the circuit court within the jurisdiction of which the land is located.
33
since the judgment has been docketed by the clerk of the circuit court within the jurisdiction of which both residences lie, both the former and the current residence of the tortfeasor are subject to the tort victim’s judgment lien, even though the tort victim is entitled to
only one satisfaction.
34
even though the tort victim is entitled to recover only the amount of the money judgment, the judgment lien attaches automatically to
all real property owned or subsequently acquired from the time the judgment is properly recorded.
35
the judgment lien also attaches to real estate acquired
after the lien is recorded.
36
the homestead exemption does not prevent the attachment of a judgment lien, but merely
allocates, upon the enforcement of the lien through a sale, the protected portion of the sale proceeds to the Virginia householder.
37
Garnishment is a court proceeding in which
a creditor (garnishor) asks a court to order a third party (garnishee) who owes an intangible debt to the debtor, or otherwise holds assets belonging to the debtor (such as wages or bank accounts), to turn them over to the creditor instead of the debtor.
38
when a creditor is seeking to satisfy its judgment against the debtor through the debtor’s intangible personal property assets, the creditor should use
garnishment proceedings to obtain the money in the debtor’s local bank account and, at least, a portion of the debtor’s wages
39
Attachment involves a judicial process by which
the court orders a sheriff to levy upon property of a debtor-defendant in order to hold the property for satisfaction of a judgment.
40
In Virginia, distress creates
a pre-trial lien on the tenant’s tangible personal property
41
distress is not useful against
a debtor without tangible property
42
A writ of fieri facias is
a type of writ of execution
43
A writ of fieri facias is addressed to the sheriff and commands him to
sell the goods of the person against whom judgment has been obtained in order to pay the creditors.
44
The writ may be levied on
the current money and bank notes, and on the goods and chattels owned at that time by the judgment debtor
45
A writ of fieri facias is not used to
obtain intangible personal property owned by the judgment debtor
46
Certain transfers by a debtor may be
set aside by the debtor’s creditors.
47
Existing creditors, may challenge either
1) fraudulent transfers or
2) voluntary transfers made for less than fair market value.
48
As a basic rule, a gift, conveyance, assignment or transfer of real or personal property may be set aside if
it is intended to defraud creditors
49
a conveyance to a bona fide purchaser who is unaware of the transferor’s fraudulent intent
may not be set aside
50
a conveyance, assignment, or transfer of real or personal property not made for valuable consideration by an insolvent transferor (or one who is rendered insolvent by the transfer)
may be set aside by existing creditors.
51
Intent to defraud
need not be proven
52
With regard to both types of transfers, the transferee
is a necessary party to the action and must be joined if possible
53
A conveyance by a debtor to the debtor’s spouse is
presumed to be fraudulent.
54
where debtor conveys to spouse, and presumed fraudulent, the transferee spouse
has the burden of establishing by clear and convincing evidence that the transfer was made for valuable consideration or otherwise without an intent to defraud.
55
the test for insolvency is whether
the amount of the transferor’s liabilities at the date of the transfer exceeded the amount of his assets, exclusive of the transferred real estate, on the same date.
56
in determining what constitutes valuable consideration, courts have indicated that it is
less than the “reasonably equivalent value” standard adopted by federal bankruptcy law and have suggested that any consideration would be sufficient.
57
an insolvent debtor may generally make a valid transfer of a portion or the whole of his assets to a bona fide creditor on account of an existing indebtedness, if
that is the sole purpose of the debtor and the transfer is for full value, even though such transfer is intended by the debtor and creditor to give such creditor a preference to the exclusion of others in the distribution of the debtor’s assets.
58
the transaction is used as a cloak for a fraudulent purpose, the transfer
is invalid.
59
When a client gives an attorney a retainer or an advance deposit, the money belongs to
the client and must be placed into the lawyer/Firm’s trust account.
60
for a clients retainer/advance deposit in the firms trust account, the attorney is/and client is?
a trustee of the funds; and the client is the beneficiary
61
thus clients money in lawyers trust account is not lawyers money, its
the clients
62
A writ of fieri facias is used to
execute a judgment lien against tangible personal property.
63
A writ of fieri facias is addressed to the sheriff and commands him to
sell the goods of the person against whom the judgment has been obtained to pay the creditors.
64
A writ of fieri facias may be levied on
money
65
The lien against tangible personal property is created when
the clerk delivers the writ of fieri facias to the sheriff.
66
To levy on intangible property, the Sheriff must request the clerk to issue
a garnishment, which is used to enforce the lien against intangible property.
67
Money in a bank account is an intangible because
it is a debtor-creditor relationship
68
A proper levy occurs when
1) the sheriff has the power to exercise dominion and control over the debtor’s property and
2) undertakes such power.
3) property must be properly described on the return
69
The description “all of Debtor’s property in Firm’s possession” was sufficient to
alert the Firm to the property referenced.
70
a judgment obtained in one jurisdiction is not automatically enforceable by a judgment creditor against real property located
in another jurisdiction
71
the filing of an abstract of the judgment secured in one Virginia circuit court with the clerk of the Virginia circuit court in the circuit in which the debtor owns real property generally is sufficient to
attach a judgment lien on that real property.
72
Creditor’s filing with the Clerk’s Office of the Richmond Circuit Court of an abstract of the judgment Creditor had obtained against Debtor in Henrico County Circuit Court is sufficient for the attachment of
a judgment lien on Debtor’s residence located in Richmond.
73
Property owned as tenants by the entirety by a married couple cannot be attached by a creditor to satisfy a claim against
only one spouse.
74
generally a joint bank account belongs, during the lifetimes of all parties, to the parties in proportion to
the net contributions by each to the sums on deposit
75
a joint account between persons married to each other belongs to them
equally, unless there is clear and convincing evidence of a different intent.
76
unlike the martial residence, a creditor who has a claim against only debtor spouse may satisfy that claim from that spouse’s portion of
the joint bank account
77
unless Debtor can establish that he and his wife had a different intent with regard to ownership of the funds in the joint bank account, such that Wanda was the owner of more than half of these funds, Creditor is entitled
to one-half of the funds in the joint bank account.
78
a future creditor may set aside a transfer by a debtor that is
fraudulent or constructively fraudulent, even if the transfer does not involve goods that the creditor has furnished to the debtor
79
Among the items of personal property that a Virginia resident debtor can protect from a creditor, including a judgment creditor, is
the debtor’s wedding and engagement rings- no dollar limits placed on these rings
80
while a Virginia resident is entitled to an exemption for a motor vehicle, this exemption is limited to
$6,000
81
if a car is used in the debtor's occupation or trade, it may qualify for
the $10,000 exemption for personal property necessary for use in the debtor’s occupation or trade
82
while a Virginia resident is entitled to an exemption for any wearing apparel, this exemption is limited to
$1,000.
83
while a Virginia resident is entitled to an exemption for any household furnishings, this exemption is limited to
$5,000
84
In order to enforce a statutory mechanic’s lien held by a mechanic for the cost of repairs to personal property made at the request of the property owner, the mechanic may
sell the property at auction without court involvement in order to recover the cost of the repairs if the value of the property is less than $10,000, so long as the shop follows the statutory requirements
85
Where the value of the property to be sold exceeds $25,000, the mechanic must
petition the circuit court for the county or city in which the property is located.
86
where the mechanic is going to sell property at auction valued at more than $25,000, and fails to file a petition where the property is located to do so...
the auction sale may be stopped
87
the statutory requirement for involving the court in the sale of property to enforce a mechanic’s lien is keyed to
the value of the property subject to the lien, not to the value of the lien itself
88
shop may hold a public sale where the value of the personal property is below the statutory minimum for involving the court, the shop must
petition the circuit court for the county or city in which the property is located for the sale of property valued in excess of $25,000
89
A buyer of goods in the ordinary course of business generally takes free of
any security interests, including perfected ones, held by a creditor in the seller’s inventory
90
In order to qualify as "goods in the ordinary course of business rule" the buyer must
purchase goods from a merchant who is in the business of selling goods of that kind, in good faith, and without knowledge that the sale violates the creditor’s security interest in the goods.
91
the buyer-in-the-ordinary-course-of-business rule applies to
perfected security interests
92
The more general “buyer-in-the-ordinary-course-of-business” rule applies, regardless of
the use to which the buyer puts the goods so long as the goods were inventory in the hands of the seller.
93
to be effective against a bona fide purchaser (BFP), holder of an attachment lien must file
a memorandum of attachment or a lis pendens with the clerk’s office of the court where the property is located
94
although the lender’s action against the borrower pre-dated the buyer’s purchase of the land, the lender does not have priority over a bona fide purchaser of the land because
the lender failed to record its attachment lien with the clerk of the circuit court where the land was located.
95
Generally, cash proceeds from the sale of the collateral go first to
the payment of the collection and enforcement expenses and then to the secured party to satisfy the outstanding amount of the obligation
96
If there is a surplus, the debtor is entitled to it, and if there is a deficiency
the debtor remains liable for the deficiency.
97
A judgment obtained in Virginia circuit court is valid for
a term of 20 years from the date the judgment was rendered.
98
The term of an unpaid judgment may be extended by
motion of the judgment creditor for good shown. If granted, the judgment is extended an additional 20 years.
99
A materialman is
a person who supplies material for the construction of a building
100
To perfect a mechanic’s lien, a general contractor, subcontractor, laborer, or materialman must
file a memorandum of lien no later than 90 days from the last day of the month in which the contractor last performed labor or furnished material, and in no event later than 90 days from the time the structure is completed, or the work is otherwise terminated.
101
To perfect a mechanic’s lien the memorandum of lien must be filed in
the clerk’s office in the county or city in which the building or structure is located and mailed to the owner of the property, and if the claimant is not the general contractor, to the general contractor as well
102
for mechanics lien, when filing a memorandum of lien, the claimant must
1) verify the memorandum by oath (i.e., affidavit)
2) The claimant also must file a certification of mailing of a copy of the memorandum of lien to the owner and, if required, to the general contractor
103
a materialman, as well as a general contractor, subcontractor, and laborer, has a lien that attaches to a building or structure for which
the materialman provides materials.
104
It is not necessary for the materialman to enter into
a contractual relationship with the owner of the building or structure.
105
a perfected mechanic’s lien has priority over
an existing lien (e.g. mortgage) on the building or structure to the extent that the existing lien is on the building or structure and not the land on which the building or structure rests.
106
Generally, a judicial lien creditor has priority over the judgment debtor’s assets as against the holder of a security interest in those assets that is
when the judicial lien is filed
107
when the holder of a purchase money security interest (PMSI) perfects that interest either before or within 20 days after the debtor receives possession of the collateral, the holder of the PMSI
takes priority over a judgment creditor whose rights in the collateral arose between the time the security interest attached and the time of the filing.
108
a party who has been awarded a judgment is a general unsecured creditor unless and until
that party files a judicial lien to enforce the judgment.
109
Once the successful party files the judicial lien, the party generally has superior rights as against the holder of
a subsequently perfected security interest; except for a holder of a PMSI who timely perfected
110
Under Virginia law, a preferential transfer made by a debtor to a creditor for an antecedent debt owed to that creditor generally
may not be set aside
111
a gift, conveyance, assignment, or transfer of real or personal property that is intended to defraud creditors
may be set aside
112
A creditor bears the burden of establishing the transferor's intent to
defraud by clear and convincing evidence
113
under Virginia law, a debtor may favor one creditor over another, regardless of
whether the transfer will eliminate the debt owed to a creditor
114
An insolvent debtor may still
favor one creditor over another.
114
A statutory or common-law lien creditor is a creditor who
obtains a possessory lien on the property of another by operation of a statute or common-law rule.
115
A statutory or common-law lien has priority over a security interest, including a perfected security interest, in goods, provided:
(i) the effectiveness of the lien depends on the lien holder’s possession of the goods; and
(ii) the lien secures payment or performance of an obligation for services or materials furnished with respect to goods by the lien holder in the ordinary course of that person’s business.
116
When the lien is statutory and the statute creating the lien expressly provides a different priority rule, such as subordination of the possessory lien to security interests
that rule governs.
117
In Virginia, a mechanic is entitled to a mechanic’s possessory lien of up to $1000 that is
superior to prior security interests, including perfected security interests.
118
The remainder of the mechanic’s lien is
inferior to all prior security interests and liens.
119
