Creditors Rights

Question 1

Generally, what is the time period within which a suit to enforce a judgment lien must be brought?

Answer 1

Within 20 years of the judgment, or domestication of a foreign judgment. Can be extended another 20 years.

Some exceptions:
1. Debtor conveys the land to a grantee for value - lien must be brought within 10 years of the recordation of the deed from the judgment debtor to the grantee
2. Suit against personal representative of a decedent debtor - within 2 years from the date of PR qualification; motion to extend the period can be brought instead within the 2 year deadline, and extend another 2 years

Question 2

A lien against personal property is created when…

Answer 2

the sheriff seizes the property, or specifically descibes the property which was within his power to seize.

Note: A writ of fieri facias directs a sheriff to levy on the property in question; the lien is not created until the sheriff actually levies on the property.

Question 3

The proceeds of a sale of property pursuant to a judgment lien are distributed in this order:

Answer 3

(1) first to pay administrative costs of sale and sheriff’s fees; (2) then to any secured creditor or prior lien; (3) next to payment of the judgment; and (4) finally any excess proceeds are returned to the judgment debtor.

Question 4

As a general rule, a suit to enforce a judgment lien must be brought within…

Answer 4

20 years of the judgment. The 20 year period may be extended for additional 20 year periods.

Question 5

When an extension is granted on a judgment, the extended lien, once docketed..

Answer 5

will revert to the original judgment date.

Question 6

A confession of judgment is a statutory device by which…

Answer 6

a debtor waives notice and a hearing for a failure to pay the obligation. The debtor appoints an agent (usually an agent of the creditor) to confess judgment in the event of nonpayment.

Question 7

A suit to enforce a judgment lien against the personal representative of a deceased debtor must be brought within…

Answer 7

two years of the date of the personal representative’s qualification.

Question 8

In levying on property, the sheriff may…

Answer 8

break open the outer doors of a building in the daytime after first demanding admittance. Thus, the sheriff may forcibly enter a building to seize property.

Question 9

A financial institution served with a valid notice of lien must…

Answer 9

provide a written response to the judgment creditor within 21 days after being served with the notice, indicating the amount of money being held by the financial institution.

Question 10

While any intangible personal property can be garnished, stock certificates are intangible assets represented by tangible property. The proper action regarding stock certificates…

Answer 10

is seizure, not garnishment.

Question 11

Although the salaries of Virginia’s constitutional officers are exempt, as are salaries of most federal employees, the wages of Virginia…

Answer 11

state, county and city employees may be garnished.

Question 12

A creditor’s bill is a POST-JUDGMENT remedy, so a creditor must have…

Answer 12

first obtained a valid judgment establishing the creditor’s claim. Additionally, the creditor must have issued a writ of fieri facias and the execution on writ must have been returned unsatisfied. All three elements are prerequisite to a creditor’s bill.

Question 13

A summons for garnishment will not be issued unless it contains the social security number of the debtor…

Answer 13

the total balance due, follows the form prescribed by law, and is directed to only one garnishee for the garnishment of only one judgment debtor.

Question 14

A writ of attachment before judgment…

Answer 14

is a contingent lien on the defendant’s property.

Question 15

A party seeking a writ of attachment before judgment (ABJ)….

Answer 15

must have a legal or equitable claim against the defendant. Additionally, there are specific grounds for a writ of attachment: (1) defendant is a nonresident of Virginia who has property in Virginia (PROBS UNCONSITUTIONAL BC OF SHAFER THO); (2) defendant is about to move from Virginia and change his domicile; (3) defendant is taking property out of Virginia leaving insufficient property to satisfy the judgment; (4) defendant is converting or has converted his property into cash to defraud his creditors; (5) defendant has assigned or disposed of his estate, or is about to do so, in order to defraud his creditors; or (6) defendant is about to abscond or conceal himself or is a fugitive. None of these requirements apply here, thus Builder may not seek a writ of attachment before judgment

Question 16

Lis pendens gives notice to the world that a suit is pending against particular real property. Filing a memorandum of lis pendens prevents…

Answer 16

a bona fide purchaser from value who purchases while the action is pending from having a superior right in the subject property; by doing so, the judgment will relate back to the date that the lis pendens was filed rather than back to the date of judgment

Question 17

Unlike a lis pendens, a writ of attachment before judgment may be granted…

Answer 17

against a property that is entirely unrelated to the cause of action (BUT remember, still need one of the 6 prereqs for ABJ)

Question 18

If a plaintiff wrongfully attaches a property without good cause, the debtor possesses an action for…

Answer 18

compensatory damages… AND if the debtor can show the attachment was illegal, malicious, oppressive, or attended by especially aggravating circumstances, he may also obtain exemplary damages.

Question 19

When a judgment for money is rendered, the judgment is a lien on the real estate possessed by the defendant. However, the lien is not automatically created…

Answer 19

the lien is not created until the judgment is docketed in circuit court.

Question 20

A purchase-money deed of trust has preference over…

Answer 20

all other claims or liens on the property, even claims occurring earlier in time (needs to be recorded).

Question 21

Prior to an action by a judgment creditor to enforce a lien, the debtor is free to…

Answer 21

alienate his land, and the judgment creditor has no right to follow the proceeds of the sale into the hands of the vendor.

Question 22

A creditor may bring an action to enforce a lien, requesting that the land be sold to satisfy the judgment lien. But if the rents and profits of all the real estate subject to the lien will pay the judgment within…

Answer 22

five years, the court may not order the property to be sold but will impound the rents and profits for the benefit of the creditor.

Question 23

Virginia provides creditors a means to void conveyances meant to shield assets via the Fraudulent Conveyance Act. This act voids a…

Answer 23

gift, conveyance, assignment or transfer of real estate with intent to delay, hinder or defraud creditors.

> Because Debtor transferred the property to his wife three days after being served, it is quite likely that his purpose was to shield the property from judgment by Lender. Although Debtor’s wife must know of the fraudulent intent in order for the conveyance to be voided, such knowledge will likely be inferred by the close relationship

Question 24

When a fraudulent conveyance is made to defraud creditors, the conveyance will be voidable by the courts. Creditors may not…

Answer 24

pursue property in the hands of a good faith purchaser for value.

If grantee is not a good faith purchaser for value. Thus, Lender may proceed against the property as if it had not been transferred.

Question 25

For a transfer to be fraudulent under the Fraudulent Conveyances Act, the transferee must have actual or…

Answer 25

constructive knowledge that the transfer was made with the intent to keep a debtor from reaching the property.