VA Creditor's Rights Flashcards
1
Q
What is Attachment?
A
A lien; a process by which a writ (Writ of Attachment) is issued at the establishment of an action, which in turn commands a sheriff to seize property/effects of D to be held as security for P’s judgment against D (can be against D or holders of D’s property)
2
Q
What is Seizure?
A
Taking possession of property by legal right or process
3
Q
What is Levy?
A
Obtaining physical control over property in pursuance of a writ (“to be levied upon”)
4
Q
Effect of a Levy?
A
Seizure of the property from D is NOT necessary, rather sheriff retains a special interest that enables him to keep the property safe and defend it - if one sells, removes, or encumbers property w/ intent to defeat levy, it is larceny
5
Q
What is Execution?
A
Judicial enforcement of:
1. Money Judgment, OR
2. Court Order
Which directs sheriff to seize and sell D’s property
6
Q
VA’s 2 ways to secure or restrict D’s property prior to a judgment so to satisfy any potential claims?
A
- Attachment before judgment, OR
2. Detinue
7
Q
Due Process concerns?
A
- Writ cannot be ambiguous
- Judge issues writ
- P posts bond in case P loses (to indemnify D)
- D must be given PROMPT post-seizure hearing to litigate validity of P’s CoA
8
Q
Difference between Attachment and Detinue?
A
Attachment - a contingent lien on D’s property, which could be unrelated to CoA
Detinue - an action for return of specific chattels
9
Q
What is necessary for Attachment (before judgment “ABJ)? (FIRST OF TWO REMEDIES)
A
- Must strictly follow statutory guidelines
- P must have legal or equitable claim against D
- P must demonstrate one or more grounds necessary for attachment
10
Q
VA code lays out 6 grounds for Writ of Attachment
A
- D is nonresident of VA w/ property in VA (unconstit.)
- D is moving from VA w/ intent to change domicile
- D is taking property out of VA so there will NOT be sufficient property to satisfy judgment
- D intends to or has converted property into money or securities so to hinder or defraud creditors
- D intends to or has disposed of or assign estate so to hinder or defraud creditors
- D intends to or has absconded from VA
11
Q
Where to file Petition of ABJ?
A
File with judge, magistrate, or clerk in county of situs
12
Q
Jurisdiction of Petition
A
GDC has jurisdiction up to $25,000, but Circuit Court can have jurisdiction of ABJ over $1,000
13
Q
What MUST be included in Petition?
A
- State CoA with sufficient certainty so to give reasonable notice to D of particulars
- Allege at least one (of 6) statutory grounds
- Set forth specific facts for allegation
14
Q
Issuance and Execution of Writ
A
If judge finds reasonable cause during ex parte review, he issues attachment, which allows sheriff to levy property
15
Q
How to serve Writ?
A
Sheriff presents a copy of attachment to the principal D and returns the Writ
16
Q
Levy on Real Estate
A
If there is a levy on real estate, attachment must state sufficient description of the land so to easily identify it
17
Q
Seizure of Property
A
Possession can be had if:
- P requests seizure in Petition
- P has posted bond at least double FMV of property
18
Q
How to fight Attachment?
A
A Hearing to Quash via motion and notice by D
19
Q
Grounds for Hearing to Quash
A
- Attachment invalid on face
- None of grounds for attachment exist, OR
- P not likely to succeed on merits
20
Q
VA Wrongful Attachment
A
Debtor must show:
1. there was a taking
2. lack of good cause
He shall receive compensatory damages for excessive distraint (excess debt + costs), ALSO can receive punitive damages if malice
21
Q
Detinue in General (SECOND OF TWO REMEDIES)
A
Used when one legally aquired property, BUT who retains w/out right (Can be used Pre-Judgment and/or Post-Judgment)
22
Q
Who uses Detinue in VA?
A
- Chattel Mortgagees (to enforce security interest) or
2. Trustee of Deed of Trust (Debtor refuses to deliver goods)
23
Q
What to receive after Detinue granted?
A
Either:
- D pays the amount of judgment, OR
- D surrenders specific property and P sells in conjunction with ARTICLE 9 of UCC (suit if deficiency is allowed)
24
Q
Seizure w/out Notice to D?
Hearing W/in 30 days of issuance
A
- P shows kind, quantity, + value of property
- Reasonable cause property will be sold or altered so to defeat P’s claim
- Reasonable cause P’s claim has substantial basis
25
Bond?
P must additionally file bond for double FMV
| D can have property returned if he does the same
26
What is Lis Pendens (Memo)?
Gives notice to world about suit against real property
27
Purpose of Lis Pendens?
Filed at beginning of suit so to put potential bona fide purchasers on notice so they cannot claim priority
28
Filing of Lis Pendens?
1. File Memo and Pay Fee in situs
| 2. State in Memo - title of CoA, purpose of action, court pending in, amount, description of property, + D's name
29
Judgment by Decree
For one to become "judgment creditor", he must have:
1. Decree for Land or Specific Personal Property, OR
2. Decree requiring Payment of Money, OR
3. Equitable Order
i. e. - alimony
30
Confession of Judgment
A statutory device whereby D may waive notice and hearing requirement by appointing agent to "confess judgment" to clerk in event of nonpayment
- D can set aside this judgment w/in 21 days of notice
31
SoL for Judgment Lien?
Within 20 Years of judgment
- can be extended for 20 more years via timely motion
- some exceptions: for value 10 yr, against PR 2 yr
32
Writ of Possession?
Necessary following a judgment for recovery of specific property (detinue) so a P can enforce his right of possession (real property)
33
How to create a Judgment Lien?
By docketing the GDC judgment in Circuit Court of city or county of situs.. it gives a RIGHT to LEVY
34
What is a Fieri Facias (or Writ of Execution)?
A lien for personal property so to levy the personalty
35
How to file Foreign Judgments (non-VA) in VA?
File a properly authenticated copy with the Circuit Clerk and pay fee
36
What does Judgment Lien attach to?
EVERY interest in land held by D that D has POWER OVER at time of lien and that which is acquired after
- ie if alienated before or in constructive trust, CANNOT touch
37
Priority of Judgment Lien?
First to Record
38
How to enforce a lien--Enforcement Suit?
Bring suit in Circuit Court of situs where court will demand land sold to satisfy judgment lien (enforcement suit is a comes after judgment lien) OR use rents/profits of land to satisfy if W/IN 5 YEARS
39
What is a Homestead Exemption?
A D who is head of a household gets up to $5000 in forgiven debt...if he has not waived in K...thus lien for < or = 5k will be removed
Homestead Deed must be filed in court of situs if real estate
40
Right of Redemption in VA?
NO, once action is filed (to set aside title after judicial sale, court must do w/in 12 months)
41
Defenses?
Legal ONLY (Equitable do NOT apply)
42
Doctrine of Inverse Alienation?
Most recent parcel sold by D to satisfy debt will be used to satisfy, and so on, until satisfied
43
Deed of Trust Priority?
Race-Notice, so later party w/out notice has priority. If same property DoT, FIRST in TIME (race)
44
Purchase Money Deed?
Highest priority, whether others recorded or not
45
Are you liable for clerk's mistakes in VA?
No
46
Time frame for Writ of Fieri Facias?
10 days after GDC judgment OR 21 days after Circuit Court judgment
47
Who issues Writ of Fieri Facias?
The clerk, which directs sheriff to levy on D's personalty
48
How long does sheriff have to Levy?
W/in 90 days of receiving writ - if after 90 days, levy is void and could be quashed by D
49
Creating Lien on Personalty?
1. Levy and Seize = actually seized property (bond req.)
| 2. Levy and Leave = just specifically describes property w/in power to seize
50
Is notice required?
No, b/c judgment was notice
51
What personalty can be levied upon?
1. Money
2. Bank Notes
3. Tangible Goods
4. Chattels
52
Does the Household Exemption apply, here?
Yes (same as above)
53
When does Priority start?
When levied upon (not when sheriff receives writ)
54
How is levy enforced?
Sale of personalty (sheriff sets price)
55
How is personalty sold?
At a Public Auction, after D given notice via public advertisement
56
Can judgment lien-holder buy at sale?
Yes, and usually does; he becomes bona fide purchaser (sheriff cannot buy)
57
Distribution of Proceeds?
1. Admin costs of sale and sheriff fees
2. Payment of Secured Creditor Liens
3. Payment of Judgment
4. Return of excess to D
58
What is Garnishment?
3rd Party indebted to D is asked by Creditor to satisfy D's debt - bank accounts and wages (even if works outside VA)
59
What is a Writ of Garnishment?
Judgment Creditor suggests when Fieri Facias is issued so to afford creditor remedy against 3rd Party
60
Garnishment Procedure?
1. Judgment Creditor obtains lien via Writ of Fieri Facias on D's property held by 3rd Party
2. Creditor files "suggestion" with same clerk
3. Specifies amount of interest, if any
- Priority begins when summons served on 3rd Party
61
What does Clerk do, now?
Issues summons, notice, and claim for exemption to 3rd Party and D
62
What does summons need?
1. SSN of D
2. Total balance due
3. Follows proper legal procedures
4. Directed to only one garnishee
- if any fail, it is void upon 3rd Party objection
63
How many times can summons be issued?
Can only be issued on same 3rd Party ONCE in 18 month period, unless prior summons not fully satisfied or other issues with summons
64
Due Process applied to Garnishments?
Timely notice to D, hearing w/in reasonable time, and summons has info about possible exemptions/contests
65
How long does Garnishment last?
It remains effective until - Order Modifying or Dismissing
66
Exceptions
1. 25% Wage Limitation --60% if for person's support
2. Wages of Public Employees - only constitutional EE
3. Joint Accounts - ie Bank Account
4. Other 3rd Parties - W/out notice or personal inj.
67
What is a Creditor's Bill?
When Garnishment and Fieri Facias are inappropriate, ie equitable interests at play: in trusts, partnership, etc
68
Pre or Post Judgment Remedy?
Post-Judgment Remedy - so Creditor must've obtained valid judgment, where Fieri Facias was returned unsatisfied
69
What does Bill need?
Bill must set forth specific assets Creditor hopes to reach
70
Fraudulent v. Voluntary Conveyance
VA Fraud Conveyance Act = voids gifts, convey, assign, etc intended to hinder/defraud creditor's right in prop.
Voluntary Conveyance = gift, sale, assign, convey, etc. not based upon consideration is deemed valuable in law
71
VFCA
Any Creditor, assignee, successor, may void. Creditor, however, cannot go after Good Faith Purchaser; rather, must attach on original D
72
Proving the Fraud?
By Clear and Convincing Evidence, Creditor must show fraud; Courts will employ a vast number of factors to find fraud or even the inference of such
73
Making a Conveyance to Creditor
D may make a conveyance to any bona fide Creditor he chooses, so long as no benefit for D
74
SoL for Fraud Conveyance
NONE
75
Who may challenge Voluntary Conveyance?
Only already-existing creditors, who must attack it so to make conveyance "voidable"
76
Need to show Fraud?
No, Creditor need not show fraud, hindrance, etc.; But, exemptions apply and 5 Year SoL
77
Procedure for Conveyance (avoiding one)
Creditor can file suit before or after judgment and must bring in necessary parties: D and grantee
File Lis Pendens to put other creditors on notice (still might be subject to other liens)
78
Assignments for Benefit of Creditors
Voluntary transfer of D's assets to another in trust so to immediate liquidate assets and distribute to creditor(s), but must include all of D's assets--otherwise fraud
79
Deed of Assignment
Needs recorded and trustee must mail notice to each creditor named in the deed at least 10 days before sale of assigned property
80
Do all Creditors have to consent?
No, but those that do not can file involuntary petition for liquidation under Chapter 7 of Bankruptcy Code
81
Discharge of D and Sureties
VA allows assignment to contain discharge clause
82
Does VA allow assignment of wages?
Yes, D can assign wages, income, + salary;
1. Trustee needs appointed
2. Trustee must give notice to employers
3. Majority of Creditors must consent
4. Employer(s) must consent
83
What is required for a mechanic's lien?
Performance of services or furnishing of materials valued at $150 or more for work on property
84
How do you perfect a mechanic's lien if you are a:
General contractor
Sub-contractor
General contractor
File memorandum of mechanic's lien with clerk's office in city or county where property is located
Within 90 days of completion or termination of work
Including:
1. Name + Address of owner and Mechanic
2. Amount of lien
3. Description of property
4. Type of materials or service done
Sub-contractor - has priority over general con.
Same as above
Also written notice to owner and general contractor
85
What is the blanket defense to a mechanic's lien?
By not proportioning the lien between different pieces of property, the mechanic will interrupt other creditors
But, Virginia law allows blanket liens if single contract for the work performed
86
What is the one lot defense to a mechanic's lien?
If a mechanic's lien-holder releases one lot subject to the lien, he is estopped from enforcing the lien against the remaining lots
87
Enforcement
Enforcement must occur w/in 60 days of completion of work or 6 months of lien recorded, whichever last; be filed in court of situs; and must contain:
1. Itemized statement of account
2. Description of work done
3. Affidavit verifying such
- If property is < $3000, holder can sell w/in 10 days of amount due
- If property is > $3000, he must petition court for sale (GDC if up to $25,000, but Circuit if higher)
