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UCC Lein and Judgment

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Anonymous
Not applicable

UCC Lein and Judgment

If one has a UCC Lein and Judgment on their credit does this serve as protection from creditors so they can not go after the debt until the first judgement lein is resolved?

 

In other words, if you owe three creditors but the first creditor has a judgment in place, it seems like the other two are going to be hard pressed to get their money because the first judgment needs to be satisfied before any others are satisfied.

 

I heard this as a strategy and not sure if it is effective?

Message 1 of 5
4 REPLIES 4
RobertEG
Legendary Contributor

Re: UCC Lein and Judgment

I am not sure what the "strategy" is, but yes, in general, it is true that a creditor is not ensured payment simpy because they have a judgment.

 

Other creditors can still seek and obtain a judgment and place a judgment lien, but may have to wait in line based on an earlier judgment/lien, or until certan other events have occured, such as obtaining a writ of garnishment and then actually being able to attach the assets or wages.

 

However, I would not consider having more people in line to attach assets/wages as a "strategy" for protection........

Message 2 of 5
Anonymous
Not applicable

Re: UCC Lein and Judgment

Thanks for the reply. Say a person had 3 creditors and the first one had a judgment in place aginst the debtor. I assume that the 2nd and 3rd creditors would need to wait until that first judgment is either vacated or satisfied before they can attempt to get their money. I was asking if this principle was true. It's not a question of whether one would want to have this judgment in place, rather a siutation where they are trying to protect their overall assets. What do you think of this as an asset protection strategy and for leverage in negotiating with the 2nd and 3rd creditors?

Message 3 of 5
StartingOver10
Moderator Emerita

Re: UCC Lein and Judgment

I think it is best to speak to an attorney that specializes in asset protection

Message 4 of 5
Anonymous
Not applicable

Re: UCC Lein and Judgment

Check with an attorney but actually it's not always true. First not all judgments attach to the same assets, some attach to personal property only, some attach to any property including homesteads, such as tax liens. So it depends.

 

Even if they all attach any of them can execute their writ regardless of who is ahead of them, subject to the interest of the senior creditors. If you owe the senior creditor more than all your assets are worth then in general the junior creditors won't bother. However lets' say you owe $5,000 to the first creditor, $5,000 to the second creditor and $20,000 to the third creditor. If you, for example, owned a new Maserati that was completely paid for the third creditor would grab it like a shot, sell it, pay off the two senior creditors and then themselves sending the surplus back to you less costs. I'm ignoring exemptions, if they exist the first dollars might go to the taxpayer and then the rest to the creditors and then anything left back to the debtor. 

 

A junior creditor has the same rights to enforce the lien/judgment however the senior creditors normally have to be paid first before they pocket anything on their debt. 

 

It gets a lot more complicated in real life. I was in charge of seizing, selling and redeeming personal and real property for many years at a State Revenue Dept..

Then there's  Marshaling of assets where the court can order which proceeds go to which creditor to maximize recovery for all of them. Simple concept, tough to actually deal with. The idea is if the first creditor is attached to, lets say real property as well as the car while the second is only attached to the car. In some cases the second creditor can use the court to force the first creditor to go after the real property instead of the car even though the car would be easier to take in order to allow the second to execute against the car. 

 

Ultimate answer- don't follow any strategies that don't come from a real attorney that specializes in debt recovery or foreclosures. 

Message 5 of 5
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