(SAN DIEGO) – October 24, 2012 - The 54-year old Artist
Formerly and now once again known as Prince has just turned the tables on and sued a California collection agency. The Oscar-winning musician and songwriter is seeking damages of over $116,000 for money he claims the agency took from him unlawfully.
Can a creditor simply take money from your bank account? Under some circumstances, they can. This is known as a “levy.” While a creditor can levy funds from your bank account if you owe them money, the creditor needs to obtain a money judgment against you first and find out where you bank.
In Prince’s case, he apparently lost a court battle over a music production contract and the judgment was sent out for collection. Prince alleges, however, that the court that issued the judgment later vacated (nullified) it, which means the debt was erased. This means that the judgment was no longer collectable and that the collection agency allegedly stole $116,000 from the musician.
This collection agency was doing what’s known in legal terms as “executing” on the judgment. Winning a lawsuit is just a piece of paper. The next and far harder step is getting paid. Once a plaintiff holds a judgment they’re known as a “judgment creditor” and judgment creditors have certain rights and ways in which to collect their judgments.
Since Prince’s net worth is estimated to be between 100 and 250 million dollars, he could cough up $116,000 if he had to. For someone with a lower net worth, ending up on the wrong side of a judgment can be devastating financially, especially if it’s not dealt with quickly. Creditors can and will act fast to collect.
Creditors can do many things to execute on their judgments such as garnishing wages, seizing assets such as real estate and vehicles, and levying back accounts as happened to Prince. What’s worse, if the debtor lives in a community property state such as California, in many cases the community property of both spouses can be seized by the creditor, even if the other spouse wasn’t even involved in the case!
A judgment is serious business and should not be ignored. Judgments and pending foreclosures are a leading reason why debtors often consider asking the bankruptcy court for protection before they start losing assets like their homes and cars and start seeing their paychecks shrink. And if you’re a judgment creditor you should probably make sure your judgment is still enforceable before you start taking someone’s property, especially someone famous who will get you in the news, and not in a good way.
Steven K. Brumer, Senior Bankruptcy Counsel with Fleischer & Associates in San Diego, California, practices primarily in the areas of consumer bankruptcy, and the litigation of bankruptcy matters. Brumer is one of few attorneys who have earned a specialized post-graduate degree, the Master of Laws degree (LL.M.) in taxation, from the University of San Diego. This course of study focuses on tax planning, analysis, and litigation. Contact Steven K. Brumer at Fleischer & Associates; follow him on Facebook at www.facebook.com/brumerlawfirm.
Copyright © 2012 by Steven K. Brumer, Esq.
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