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Debtors and Creditors
University of Iowa School of Law
Bauer, Patrick B.

COLLECTION REMEDIES
I.                   Getting A Judgment
a.        Sue in the County with jurisdiction
b.      Default Judgment – Consumer Credit Code (Iowa)
                                                              i.      Defines default – only in default if at least 10 days past due
                                                            ii.      Have to give consumer notice and 20 days to cure the default
                                                          iii.      Force the creditor to put forth evidence that the debt is owed
c.       Winning the Judgment –
                                                              i.      Clerk records the judgment in the record book (Plaintiff, Defendant, date, and how much owed) – you must turn the promissory note in because otherwise there might be a double right to collect
                                                            ii.      Plaintiff has to attest to who the debtor is, this insures the right person is collected from
                                                          iii.      Judgment usually includes:
1.      a note which has a term that attorneys fees and court costs for collection will be paid by the debtor; and
2.      Statutory interest
d.      Domesticating Judgments (You can’t fork what you can’t find) – it does you no good to get a judgment in a county where the debtor has no property
                                                              i.      If get a foreign judgment One way to domesticate is to sue the person again in the county where property is
                                                            ii.      Or use IA 626(A) – file the judgment with the clerk of court in the county where the property is located
e.       The statute of limitations on a judgment is 20 years (except deficiency judgment in Mortgages, which is only 2 years).
II.                Post Judgment Remedies p14
a.       Lien –
                                                              i.      A property interest on the debtor’s right in property that must be satisfied before the property is available for the satisfaction of the claims of general (unsecured) creditors.
1.      Not the right to possession
2.      Priority on the right to Title over those without a lien
                                                            ii.      Liens can arise through:
1.      Agreement (Consensual) – Article 9 and Mortgage
2.      Taking an Action under Law – Execution Lien
3.      Automatic by Law – Judgment, Mechanic/Statutory, and Tax liens
                                                          iii.      Attaches to the property and remains with the property
                                                          iv.      Three Aspects to Every Lien:
1.      What does the lien attach to?
a.       Judgment Lien only attaches to Real Property, not personal property.
2.      Geographically attach?
a.       Must domesticate judgments
3.      How long does the lien last?
a.       Judgment Lien lasts 10 years. You can keep getting new judgments, but the priority will keep moving.
b.      Judgment Liens p14 (Automatic)
                                                              i.      Attaches to Real Estate owned at the time of judgment or acquired after judgment.
1.      Real Estate = “lands, tenements, hereditaments, and all rights thereto and interests therein, equitable as well as legal.”
                                                            ii.      Automatically Attaches to all Real Estate in the jurisdiction when:
1.      The judgment is entered; or
2.      If the judgment is entered in a jurisdiction where the real estate is not located, then when the judgment is filed with the state district court clerk where the real estate lies
                                                          iii.      Exists for 10 years from the date of judgment
                                                          iv.      Enforcement – Levy and Sale
1.      Levy – Sheriff makes an entry in the encumbrance book maintained by the clerk of the county in which the property is located; Sheriff must limit the levy to the amount of property necessary to cover the amount of the debt
                                                            v.      Priority – Generally the Date of Priority is set as of date of attachment
1.      Exception: Levy and Sale – If the levy occurs within the 10 yr period, but the Sale occurs after the 10 yr period, priority is set as of the date of levy (McCormick v. Lincoln p19).
2.      Exception: Purchase-Money Mortgage always has priority as a matter of law.
3.      Exception: After-Acquired Property –
a.       Iowa: when more than one lien exists at the time the Property is acquired, all the liens equally attach to the property and have the same date of priority (Kisterson v. Tate p23)
                                                                                                                                      i.      The debts would be paid out equally to each party sharing priority
b.      Other States: set priority as of date of judgment
                                                          vi.      Renewing Judgment (Whitters v. Neal p21):
1.      You can sue on the judgment between year 9 and 10 of the judgment lien; You can sue earlier than year 9 if the court approves of the reason for doing so. IC 614.3
a.       This resets the priority period as of the date of new judgment
b.      This gives a new 10 yr lien and 20 yr limitation
2.      You can sue for a new judgment after the original judgment lien expires (same effect as above)
3.      You can execute under the original judgment after the lien expires
a.       Get a writ of execution and levy
b.      Priority is set as of the date of levy
4.      Example: Denegre v. Haun p24 (before IC 614.3)
a.       In 1847 Denegre gets Judgment against Haun
b.      In 1848 Denegre gets a 2nd Judg against Haun
c.       In 1849 the Hauns make a contract to sell the property to the school commission
d.      In 1853 the contract was assigned to Townsend Cox
e.       In 1854 Denegre sued on his 1847 & 1848 judgments, obtaining a new judgment.
f.       In 1858 Denegre enforces the 1854 judgment and Denegre purchases it at sheriff’s sale.
g.      The action here is a quiet title action – the purchaser at sheriff’s sale claims to own it free and clear of any claim via the contract to sell/assignment.
                                                                                                                                      i.      When the Hauns entered into 1849 contract, the liens followed the property.
                                                                                                                                    ii.      In 1858, the liens would have expired.
                                                                                                                                  iii.      The 1854 new judgment gave a new date for judgment lien period ending in 1864.
                                                                                                                                  iv.      The new judgment did not attach to the property because the property was no longer the Haun’s. So the assignment of land contract was subject to the 1847 and 1848 liens, but those expired when Denegre sued and got new judgment
                                                                                                                                    v.      Alternatively, even if he didn’t get new judgment, the 1847 and 1848 liens had expired.
c.       Execution and Execution Liens p28 (Legal Action) – NO LEVY, NO LIEN
                                                              i.      Execution Lien – lien on any property (real or personal or intangible) that exists from the date of levy (IC 626.33 and Kisterson v. Tate) until either the sale of the property or the 20 year limitation on judgment runs.
1.      Real Property – an execution lien can exist in two ways:
a.       The property is not located in the county where the judgment was obtained/filed; or
b.      The 10 year judgment lien period expired—i.e. through years 11-20.
                                                            ii.      IC 626.1 – “Judgments or orders requiring the payment of money, or delivery of possession of property, are to be enforced by execution.”
                                                          iii.      IC 626.2 – These are liens that can be executed within 20yrs. The writ can be sent from the court to the sheriff of another county. You send the writ of preacipe to the clerk of the county where you want the sheriff to levy to tell the clerk to fill out a writ of general execution to tell the sheriff to go levy.
                                                          iv.      IC 626.3 – only one writ of execution may exist at the same time.
                                                            v.      IC 626.7 – You can immediately demand the writ of execution be issued by the cle

              i.      IC 626.26 Garnishment: Property of the defendant in the possession of another, or debts due the defendant, may be reached by garnishment.
                                                            ii.      Garnishment is a separate action against a third party in possession of something that belongs to the debtor (property or income)
1.      P must get a writ of execution for garnishment (the rules of writ of execution apply – 120 days etc.)
2.      Answer:
a.       Sheriff may take the answers when serving the Garnishee IC 642.5
b.      If the Garnishee refuses to answer the sheriff, then the Garnishee shall be notified to appear and answer IC 642.6
3.      Failure to Answer or Appear IC 642.9
a.       Presumption that the Garnishee is indebted to the defendant for the full amount of the plaintiff’s demand
b.      Garnishee must be given an opportunity to explain why he failed to appear/answer
c.       Rule 1.304 If the Garnishee fails to answer and appear and explain why, then the Garnishee becomes liable for the full amount of the debt.
4.      Controverting an Answer
a.       Plaintiff may controvert any of the garnishee’s answers and join an issue which will then be tried. IC 642.11
b.      CR 9 p44 – On Jan. 3, 2009 Plaintiff got a judgment against debtor. Mapes answered a writ of garnishment saying that she had valuable antique quilts in her possession that belong to Debtor. She further stated that she had a lease on the quilts for one year and the lease was dated Dec. 1, 2008. Her partner tells the plaintiff that he knows nothing about the lease.
                                                                                                                                      i.      Plaintiff must controvert the fact that there is a lease
                                                                                                                                    ii.      If there is a lease, Mapes has a prior right of possession and P can’t garnish the quilts yet.
                                                                                                                                  iii.      If there is no lease, then Mapes has possession of property of the Defendant and she must turn them over to the sheriff.
5.      Judgment
a.       10 days notice to Garnishee before a judgment can be entered against the Garnishee. IC 642.14
b.      Judgment may be entered against the Garnishee making the Garnishee liable to the plaintiff for the debtor’s debt. IC 642.13
                                                          iii.      Discharging the Garnishment Duty
1.      Paying or Delivering – Garnishee can pay the amount owing to the sheriff or place the property of the defendant up to the amount owing with the sheriff. IC 642.10
2.      Defendant may plead facts showing that the debt or property is exempt, or that it is not liable for the debtor, and this issue shall be tried. If any part is found to be exempt or not liable, then the Garnishee will be discharged for that part. IC 642.15
a.       P goes after 5 lamps, but Garnishee pleads that 2 of them do not belong to the debtor.
b.      P goes after Debtor’s exempt property that is in the hands of the Garnishee. (Debtor’s car worth less than 7,000)
                                                          iv.      Expiration of the Writ
1.      If the debt of the Garnishee to the defendant is not due, execution shall be suspended until its maturity IC 642.16
CR 10 p38 – Relevant Facts: Widget Shop orders from Acme and pays 30 days after delivery. $10,000 worth of widgets are delivered to Widget Shop on Sept 5.