Judgments never go away. There is a 20 year statute of limitations for enforcement of judgments. Old judgments can come back to bite you. Take, for instance, the experience of a debtor who called me earlier this week who had a judgment entered against him in California in 1995. The debtor currently lives in Florida. She had heard nothing from the judgment creditor since 1995. Without warning, a couple week ago she found that writs of garnishment had been placed on all of her several bank accounts and brokerage accounts. All financial accounts were owned with her husband as tenants by entireties and were exempt.
The debtor told me that many of her outstanding checks bounced. She had to go to court to get the garnishment dissolved on the basis that the accounts were all exempt entireties accounts. She incurred legal fees and great inconvenience. If the creditor had any reason to know that the financial accounts were exempt joint accounts the debtor may have a cause of action against the creditor for wrongful garnishment.
It is unlikely that the original creditor is the party trying to execute on this judgment. Most creditors let judgments lie on the public record after their initial collection efforts. What may have happened in this instance is that the original judgment was sold to a third party investor, probably a collection company. There are companies that pay pennies on the dollar for old judgments in hope of making money by a surprise attack on a complacent debtor. The lesson is that people must maintain effective asset protection plans long after a judgment is entered against them. Asset protection must remain up to date and correctly implemented. Don’t relax just because your asset protection has effectively defended initial creditor attacks because you do not know when the next collection attack will come.