Cavalry LLC is suing us and wants to put a lien. Can they force a sale of our home?

[David916]

Jurisdiction

California

Cavalry is suing my mother for $9,909 and we have 2 more weeks to respond to the summons. We tried to settle for 50% of the debt and Cavalry won't go past 80% and said they would rather place a lien on the property since they found out my mom owns real estate. My mom has lived in the home and owns it outright. The property value is about $850k but my mom fell behind on credit cards (only has 2) after my father who passed away and she lost his income. I don't care if Cavalry puts a lien on the property but can they force a Sherrifs sale and force us to sell the home? It would break us if we lost all this equity for a $9,909.

Thanks in advance,
Dave

 

[flyingron]

No. The judgement lien that they would get just means that if Mom did sell the property, that lien would ensure they get their money (because nobody would likely buy the property without also having the lien paid off).

It does mean that if mom does decide to take a mortgage out on the property, the lien will likely need to be paid at that closing.

 

[Zigner]

Why not take out a small loan against the house to pay the credit cards?

 

[Tax Counsel]

No. The judgement lien that they would get just means that if Mom did sell the property, that lien would ensure they get their money (because nobody would likely buy the property without also having the lien paid off).

I disagree. The creditor certainly could force the sale by foreclosing the lien if it chooses to do, if there is sufficient equity (taking into account the homestead exemption) to justify doing it. California's homestead exemption is generous but given the huge increase in value in many California homes over the last two decades there often is equity there to pursue. The creditor needs a judgment lien, which only comes after a court determination of what amount the creditor is owed. Prejudgment liens only secure the creditor's position and alert potential buyers to the pending lawsuit.

There are only a couple of states that do not allow a judgment creditor to foreclose the lien on a personal residence, but California is not one of them.

See the California Courts page on collecting a judgment for more information on what a judgment creditor can do.

 

[Tax Counsel]

Why not take out a small loan against the house to pay the credit cards?

If she does that, she ought to take advantage of the creditor's offer of 80% of the debt to settle this.

 

[zddoodah]

Cavalry is suing my mother for $9,909 and we have 2 more weeks to respond to the summons.

We? You meant to write "she has," right?

I don't care if Cavalry puts a lien on the property but can they force a Sherrifs sale and force us to sell the home?

How you feel isn't relevant, and there is no "we" or "us" here. If this creditor obtains a judgment against your mother (and it sounds like it will because the debt doesn't appear to be contested), then it can enforce the judgment by recording an abstract of judgment in the county where she lives, and that will create a lien against any real property she owns in the county.

In theory, the creditor could also enforce the judgment by levying on and forcing a sale of the property. However, practically speaking, that isn't going to happen for a $10k debt (although your mother's home would be a good candidate since, according to you, she has tons of equity in excess of the exempt amount). The process for levying on and forcing the sale of a judgment debtor's personal residence is cumbersome, complicated and expensive. In over 30 years of being involved with California civil litigation (much of which was spent on debt collection), I've never heard of a creditor going through with it for an ordinary civil money judgment.

It would break us if we lost all this equity for a $9,909.

Again, she has equity. You don't. Even if the creditor sought to levy and an execution sale occurred, she wouldn't lose the equity (at least not all of it). The proceeds of sale, after satisfaction of the judgment and payment of costs of levy and sale, would go to your mother.

Why on Earth doesn't she get a home equity loan to consolidate her credit card debt?

 

[David916]

We? You meant to write "she has," right?



How you feel isn't relevant, and there is no "we" or "us" here. If this creditor obtains a judgment against your mother (and it sounds like it will because the debt doesn't appear to be contested), then it can enforce the judgment by recording an abstract of judgment in the county where she lives, and that will create a lien against any real property she owns in the county.

In theory, the creditor could also enforce the judgment by levying on and forcing a sale of the property. However, practically speaking, that isn't going to happen for a $10k debt (although your mother's home would be a good candidate since, according to you, she has tons of equity in excess of the exempt amount). The process for levying on and forcing the sale of a judgment debtor's personal residence is cumbersome, complicated and expensive. In over 30 years of being involved with California civil litigation (much of which was spent on debt collection), I've never heard of a creditor going through with it for an ordinary civil money judgment.



Again, she has equity. You don't. Even if the creditor sought to levy and an execution sale occurred, she wouldn't lose the equity (at least not all of it). The proceeds of sale, after satisfaction of the judgment and payment of costs of levy and sale, would go to your mother.

Why on Earth doesn't she get a home equity loan to consolidate her credit card debt?

She can't get an equity loan because her credit is too low. We tried.

She doesn't plan on buying another home and is strongly considering filing chapter 7 bankruptcy, which would alleviate this debt as far as I understand.

 

[zddoodah]

She ... is strongly considering filing chapter 7 bankruptcy, which would alleviate this debt as far as I understand.

What debt does she have beyond this $10k debt?

If she owns an unencumbered $850k home and only $10-20k in debt, BK would be incredibly foolish, and she wouldn't likely qualify.

What about a reverse mortgage?

 

[David916]

She makes only earns $900 per month from SSI, is 65, has no other income and is below the poverty line. Why do you think she may not qualify?

 

[David916]

Why not take out a small loan against the house to pay the credit cards?

We tried. Her credit score is too low.

 

[Red Kayak]

She makes only earns $900 per month from SSI, is 65, has no other income and is below the poverty line. Why do you think she may not qualify?

Now might be good time for her to sell the house and downsize to something she can afford.

 

[David916]

Now might be good time for her to sell the house and downsize to something she can afford.

My new business is starting to pick up and I will be able to support her very soon. Just worried about this one bill. Wasn't sure if a property lien can cost us the home but now that I know it can, I will do anything to avoid it.

 

[zddoodah]

She makes only earns $900 per month from SSI, is 65, has no other income and is below the poverty line. Why do you think she may not qualify?

She owns an asset that is, according to you, free and clear of encumbrances and worth $850,000 and has only $10k in debt. Her income is of no consequence. She has a net worth of $840,000, which probably puts her ahead of about 90% of the population.

IF she did qualify, here's what would happen in a bankruptcy: The bankruptcy trustee would sell the house and pay the proceeds as follows: (1) costs of sale; (2) the first couple hundred thousand dollars after costs of sale would be paid to your mother for her homestead exemption under CA law; (3) then the debt would be paid; and (4) whatever is left would be paid to your mother. Is that what you want to have happen?

The better move would be an equity loan or reverse mortgage or selling the property herself. A voluntary sale will almost always generate more money than a forced sale.

Also, if she's 65, she should be receiving social security old age benefits in addition to SSI.

Wasn't sure if a property lien can cost us the home but now that I know it can, I will do anything to avoid it.

Hold on. Please re-read my first response in the thread. The lien itself will not cost her the home (yes, there is a teeny, tiny chance that the creditor might try to obtain the required order for an execution sale, but I'd put the odds of that actually happening at about a million to one). The lien will only act as a cloud on title and will have to be paid when the house is sold or otherwise financed.

 

[Tax Counsel]

Also, if she's 65, she should be receiving social security old age benefits in addition to SSI.

That assumes she has the 40 quarters (10 years) of work income on which FICA taxes were paid. Without that, she cannot get the old age benefits.

 

[retic]

That assumes she has the 40 quarters (10 years) of work income on which FICA taxes were paid. Without that, she cannot get the old age benefits.

Wouldn't she also qualify for old age benefits if she were married to the OP's father while he worked 40 quarters?

 

[army judge]

Wouldn't she also qualify for old age benefits if she were married to the OP's father while he worked 40 quarters?

Correctemundo, @retic

Social Security survivors benefits are paid to widows, widowers, and dependents of eligible workers. This benefit is particularly important for young families with children.

You should notify us immediately when a person dies. However, you cannot report a death or apply for survivors benefits online.

In most cases, the funeral home will report the person's death to us. You should give the funeral home the deceased person's Social Security number if you want them to make the report.

If you need to report a death or apply for benefits, call 1-800-772-1213 (TTY 1-800-325-0778). You can speak to a Social Security representative between 8:00 a.m. – 7:00 p.m. Monday through Friday. You can find the phone number for your local office by using our Social Security Office Locator and looking under Social Security Office Information. The toll-free "Office" number is your local office.

Survivors Benefits | SSA
...

 

[Tax Counsel]

Wouldn't she also qualify for old age benefits if she were married to the OP's father while he worked 40 quarters?

Social Security has several distinct programs that pays benefits to people. Each has its own requirements and benefits. The old age program then is slightly different from the survivors benefits. For the widow/widower's benefit, the person qualifies based on his/her spouse's earnings records. But those earnings do not have to have occurred while they married.