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Imagine this scenario: you’ve been sued by someone who claims you either owe them money for a debt or you’ve wronged them somehow, and you should be liable for the damage you’ve caused. After going through the motions (no pun intended), you lose your case, and the court enters a judgment against you for $100,000.00.  What is the effect of that judgment? What does the creditor actually have to do to collect on it, and what property can they seize to satisfy the judgment?

A Judgment Lien Attaches to All Real and Personal Property, But ……

Under Georgia law, a judgment lien attaches to “all the property of the defendant in judgment, both real and personal, from the date of such judgments.” O.C.G.A. § 9-12-80. A Georgia judgment lien “is often described as ‘floating’ because the lien covers property acquired by the debtor subsequent to the rendition and execution of the judgment against him.” Crossroads Bank of Georgia v. Corim, Inc., 262 Ga. 364, 365 n.2, 418 S.E.2d 601, 602 n.2 (1992). But, with certain types of assets, the creditor actually has to take an additional step to actually “perfect” that judgment lien or ensure that it attaches to the property they are attempting to seize.

Tangible Personal Property

Once the court enters a judgment against you, that judgment attaches to all your tangible personal property such as your household furniture, hobby equipment, collectibles, vehicles, etc. A creditor can’t just show up to your house and start taking your stuff. First, the creditor must obtain a Writ of Fieri Facias (often referred to as a Fi.Fa.). This document is issued by the clerk of the court that entered the judgment. This document allows the sheriff to seize your personal property to satisfy the judgment.  It may be counter-intuitive, but if the sheriff and the creditor do show up at your house with a Fi.Fa., the Georgia code provides that you can point out what property to take to satisfy the judgment and also point out property that belongs to others that the sheriff cannot take. In reality, sheriff’s seizures are rare. Most creditors would prefer to garnish a bank account or file the Fi.Fa. in the county where you live so that it attaches to a house you own.

Real Property

While the Georgia Code does state that the entry of a judgment binds all real property of the defendant, there is an extra step that must be taken to bind real property. The defendant MUST file a Writ of Fi.Fa. in the county where the real property (land or a house) is located to bind that property to the judgment lien. O.C.G.A. § 9-12- 86(b).

A Chose in What?

Judgment liens do not attach to what’s a called a “chose in action.” You , like many non-bankruptcy lawyers, may ask, what in the world is a chose in action? A “chose in action” is defined as “personalty to which the owner has a right of possession in the future or a right of immediate possession which is being wrongfully withheld.” O.C.G.A. § 44-12-20. Examples of a chose in action are  proceeds from performance of a contract or money sitting in your bank account. For most people and businesses, the money in the bank account is the most likely to be seized through an action called a garnishment. Because money deposited with a bank is technically money owed to you by that bank, the judgment lien does not attach to it. The creditor must go one step further and actually file a garnishment against that bank. When a creditor files a garnishment against a bank, they are effectively telling the court that the bank owes you the money, but because you owe the creditor money, the bank should pay the creditor instead. It’s the same principle as the garnishment of wages. When a creditor files a garnishment against your employer, they are requiring your employer to pay up to 25% of your after-tax wages to the creditor instead of you.

Another example is if a company you own has a contract to provide services and you are awaiting payment. For instance, if you are a contractor that has performed renovations for a customer and that customer now owes you money, the creditor would have to file a garnishment against that customer to seize the money owed to you.

These are important distinctions in bankruptcy because it determines how much a judgment creditors lien is valued at during the course of a Chapter 11 or a Subchapter V bankruptcy. Under the Bankruptcy Code, a judgment creditor’s lien can be crammed down to the value of the property it encumbers. For example, if a $100,000.00 judgment lien only attaches to $10,000.00 worth of personal property, you can, through a plan of reorganization, pay that creditor back the present value of $10,000.00 over time rather than the entire $100,000.00. There are many complicating factors as to the total amount a debtor is required to pay creditors in a Chapter 11 or SubChapter V, but for the sake of simplicity, the secured claim of the judgment creditor is reduced to the value of the collateral the judgment lien attaches to.

In the context of a Chapter 7, if you have $5,000.00 of tangible personal property and $15,000.00 sitting in a bank account, the judgment lien will only attach to your household goods and collectibles and not the money in your bank account.

Recap of Judgment Creditor Property Rights

Asset Type
Judgment Automatically Attaches?
What Does a Creditor Have to Do?
Real Property
No
File a Writ of Fi.Fa. in the county where the real property is located.
Vehicle
Yes
Nothing, but if the vehicle title has a lienholder on it, the judgment creditor will have to pay off the lienholder.
Personal Property (tangible items like furniture, electronics, etc.)
Yes
Nothing for the judgment lien to attach.
Future contract payments, wages, bank accounts, accounts receivable, partnership interest
No
Garnish whomever owes you the money. Judgment creditor can request a “charging order” against a debtor’s LLC membership interest so that if any distributions are owed to debtor, the LLC must pay the creditor instead.
Retirement Funds
Never (remember to save for retirement because those funds cannot be garnished by creditors other than the IRS)
Creditors, other than the IRS, cannot garnish or attach retirement funds.