What Is a Judgement Creditor?

A judgment creditor is the party who receives a court judgment ordering the opposing party to pay a sum of money. The party who loses a court judgment is known as the judgment debtor. The judgment creditor can collect the judgment from the judgment debtor and, in the event of non-payment, can ask the court to attach the assets or property of the judgment debtor to secure repayment.

Attaching Liens

When a judgment creditor wins his lawsuit, he receives an official judgment from the court. This judgment is a court order demanding payment of the judgment from the judgment debtor. In the event of non-payment, the judgment creditor can return to court and request a lien against the judgment debtor's assets or property. A lien is a legal claim to property you own and can stand in lieu of payment for a judgment.

Debt Collection

Normally, a judgment creditor will not receive the money from a lien until the judgment debtor or court sells the asset subject to the lien. The lien always stays attached to the property and not to the debtor. However, if the judgment debtor sells the property subject to the lien, the lien transfers with the title to the property. It is difficult to impossible to sell items subject to an existing lien. In the event a lien holder has to seize the property to secure a sale, the lien's payment priority does not change based on the party holding the asset subject to the lien.

Lien Release

A lien's payment priority, depends solely on the date of claim. Any existing liens on the property filed prior to the date of the judgment lien will have priority in the event of a sale. On the other hand, the judgment lien takes priority over new claims filed after the judgment lien date. Banks typically will not allow any liens on a property when securing bank financing. The only exception is if the judgment creditor or lien holder releases the lien or agrees to a subordination to a new lien. A subordination agreement is a legal agreement that supersedes the date of a lien's filing.

Duration Of A Lien

Typically, state laws give judgment creditors only a limited time to enforce a lien or judgment before the court judgment itself expires. The specific enforcement period for a lien or judgment depends upon the individual state's statue of limitations. When the creditor's judgment expires, any attached liens expires at the same time. The debtor can then request release of the lien despite the fact the lien was not paid. However, a judgment creditor can choose to continue to collect monies owed pursuant to a judgment even after the court judgment expires. The debt normally remains valid until paid.

References

• California Courts: Self-Help Center
• Bank Rate: Debt, Collection Agencies and Your Rights
• "An Attorney's Guide to the Collection of Bad Debts"; Robert Lewis; 2007