WHAT DOES IT MEAN TO BE A “CREDITOR”?

A creditor is one to whom money is owed. One can be a creditor because he or she made a loan, or won a judgment in court or simply was not paid for services or something sold.

 WHAT IS THE DIFFERENCE BETWEEN A “SECURED” CREDITOR AND AN “UNSECURED” CREDITOR?

A “secured” creditor has the right to collateral that can be repossessed. For instance when you buy a car and make monthly payments, your car is the collateral for the car loan and if you do not pay, the car can be repossessed without the lender having to sue you. An “unsecured” creditor has no right to take anything without a judgment or court order. When you owe money on your credit card, the credit card company is an unsecured creditor.

I WANT TO SUE SOMEONE WHO LIVES IN ANOTHER STATE. CAN I SUE HIM IN THE STATE WHERE I LIVE?

The general rule in California is that the plaintiff (person suing) must sue the defendant (person being sued) either where the event causing the lawsuit occurred or where the defendant lives.

NOW THAT I WON IN COURT AND HAVE A JUDGMENT, HOW DO I COLLECT IT?

There are several procedures to collect a judgment. If the defendant has insurance (as with most auto accidents), the insurance company will pay any judgment. If there is no insurance, you can garnish wages of an employed person. This is an order that goes to the employer of the defendant ordering the employer to pay you a certain percentage (about 25%) of the defendant’s income until your judgment is paid. If you know where bank accounts are, an order can be sent to the bank to send you the money in the defendant’s bank account up to the amount you are owed. Under certain circumstances, you can get an order allowing you to sell real property the defendant owns. Liens can be recorded against any real property the defendant owns so that if the property is sold, you will be in line to be paid from the proceeds of the sale of the property.

CAN I TRY TO COLLECT MY JUDGMENT IN ANOTHER STATE?

Yes. You can have your California judgment “entered” in the court where the defendant lives.

I WAS SERVED WITH A COMPLAINT. WHAT DO I DO?

In California, you must file a written response to the complaint within 30 days or you will lose your right to defend yourself. If the complaint is for “Unlawful Detainer” (eviction), then the written response must be filed in five days. If no response is filed on time, the person suing will seek a judgment by default. You will not be allowed to participate at all, even if the other person is wrong and you have defenses that would have resulted in your winning.

I WAS SUED BY A PERSON IN ANOTHER STATE WHO FILED THE LAWSUIT WHERE HE LIVES. DOESN’T HE HAVE TO SUE ME IN THE STATE WHERE I AM?

Maybe. If the act which caused the other person to sue you happened in another state, he or she may be allowed to sue you where he or she is. Another reason you may be sued in a different state is if by contract it has been agreed that any lawsuit will be brought elsewhere. This is very common in business contracts.

MY SIBLINGS AND I INHERITED A PIECE OF REAL PROPERTY. I DO NOT WANT TO OWN PROPERTY WITH THEM. NOW WHAT?

You can file a lawsuit, called a “partition action” to force the property to be sold and from the sale you will get your share of the proceeds.

WHAT IS A MECHANIC’S LIEN?

A mechanic’s lien is a right for one who has improved your property to collect by selling your property if you do not pay. When a contractor or subcontractor works on your property or provides supplies used to improve your property, the contractor usually files documents with the county recorder to give notice that services or supplies are being provided. Once a contractor or subcontractor has been paid, the lien should be “released” by filing a document with the county recorder. Even if the contractor or subcontractor does not file a mechanic’s lien, if the contractor or subcontractor is not paid, generally, the property owner can be sued for breach of contract or failure to pay for supplies.

HOW DOES FORECLOSURE WORK?

Foreclosure is a three step process. First, if you have not paid your mortgage, the lender will have a “Notice of Default and Election to Sell” recorded and mailed to you. From the date of that notice you have 90 days in which to pay the unpaid payments and “bring the loan current” (all past due payments and the current payment due are paid). Second, if you do not make all the past payments (plus attorney’s fees and other loan charges - for recording and preparing and mailing the notice) within the 90 days, then the lender will have a “notice of sale” recorded and mailed to you which shows a date at least 21 days ahead on which the property will be sold a public auction (the foreclosure sale). During this 21 day period, you can pay the entire loan - not just the back payments. Once the property has been sold, you are no longer the owner and must vacate the property.

MY LENDER STARTED FORECLOSURE PROCEEDINGS CLAIMING I OWE PAYMENTS. THE LENDER IS WRONG. ALL MY PAYMENTS ARE MADE. WHAT CAN I DO?

If you can, pay what the lender wants and then sue for the money back for the lender’s error. This is the safest way to keep your property. Another solution is to seek a court order preventing the lender from going forward with the foreclosure until the issue of whether you actually owe any back payments has been determined. This remedy is an “injunction”. You must be able to prove at the very beginning that you will ultimately win the lawsuit you file. You will also be required to post a bond to protect the lender in the event that you lose the lawsuit.

WHAT SHOULD I DO IF SOMEONE WHO OWES ME MONEY FILES BANKRUPTCY?

You file a “proof of claim” with the bankruptcy court. This form tells the judge and trustee what you are owed and why. Depending on whether there are any assets and what kind of debt you are owed, you may ultimately get paid some portion of your debt. Debts are paid by “class” and “priority”. A bankruptcy lawyer can usually tell you where your debt would stand in the payment line.

WHAT IS AN ADVANCED HEALTH CARE DIRECTIVE AND DO I NEED ONE?

An Advanced Health Care Directive is a document that gives health care providers instructions to listen and obey a person whom you have chosen to make health care decisions for you if you are unable to do so for yourself. This is a serious document. If you have a person in your life that you trust to follow your wishes, you should have an Advanced Health Care Directive. If there is no one to tell the doctors what you want done, then the fall back procedure would be to keep you alive as long as possible no matter what the quality of life may be.

WHAT IS A POWER OF ATTORNEY AND DO I NEED ONE?

This is a document that permits someone else to act on our behalf in financial matters and in managing everything you own. A power of attorney can be for only one purpose, for only a certain limited time or forever. This is another very serious document, and should only be given to one whom you completely trust. It would allow another to gain access to your bank accounts, business interests and property. It is also very useful because it allows someone you trust to act for you if you are unable. For instance, if you travel often and would be out of the state or country when loan documents need to be signed, the person you gave a power of attorney could sign the documents for you. If you are seriously ill or become unable to understand (for instance suffer from Alzheimer’s ) then the person you appoint could take care of all of your financial and business needs.

WHAT IS THE DIFFERENCE BETWEEN A WILL AND A LIVING TRUST?

A will is filed with the court and by court supervision the heirs and beneficiaries are given their shares of the estate of the person who died. A Trust is not filed with the court. After a person passes, the Trustee (chosen by the person who passed) takes over and distributes the shares of the estate of the person who died. When estate planning is done through a Trust, a will is also prepared so that if for any reason the Trust does not hold all your belongings when you pass or if the Trust is for any reason invalid, then the will provides that your estate shall be handled in accordance with the terms of your Trust.

I AM A BENEFICIARY OF A TRUST AND THE TRUSTEE HAS NOT GIVEN ME MY SHARE. WHAT CAN I DO?

You can write a letter to the Trustee first to see why you have not been paid. There may be many reasons. If you still believe the Trustee has acted incorrectly, you can file a lawsuit to get an order to make the Trustee distribute your share.

Ms. Grosberg represents clients in all areas of Southern and Northern California, including, among others, the Bay Area, Beverly Hills, Burbank, Culver City, Glendale, Inglewood, Lancaster, the greater Los Angeles area, Orange, Palmdale, Pasadena, Pomona, Riverside, Sacramento, San Bernardino, San Diego, San Francisco, San Jose, San Louis Obispo, Santa Ana, Santa Monica, Simi Valley, the South Bay, Van Nuys and Ventura.

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