Judgment creditors can use a variety of procedures when seeking to enforce a civil money judgment. One important procedure is obtaining an Order for Appearance and Examination of the Judgment Debtor (“ORAP”). The ORAP requires a judgment debtor to appear in court to answer questions about assets available to satisfy the judgment.
Service of the ORAP also automatically creates a lien against all of the judgment debtor’s personal property for a period of one year. For some time, there has been uncertainty about the impact of a judgment debtor’s bankruptcy on the duration of an ORAP lien. The uncertainty is whether a bankruptcy tolls the ORAP lien expiration period or whether the lien may expire while the bankruptcy is pending and the creditor is stayed from taking any action to enforce the lien. If the lien period is not tolled, then the creditor may lose its lien rights as the result the delay in enforcement rights imposed by the automatic stay of the bankruptcy.
A recent case by the Ninth Circuit Bankruptcy Appellate Court, In re Swintek, 543 B.R. 303 (2015), resolves that uncertainty. The court held that the running of the ORAP Lien is tolled during the bankruptcy. The lien therefore will not expire while a judgment debtor’s bankruptcy case is pending and will remain enforceable no matter the length of the bankruptcy case.
This holding provides significant leverage for judgment creditors holding ORAP liens in the event of a debtor’s bankruptcy filing. Please contact us if you have questions or need assistance with protection of creditor rights in bankruptcy.
