I am not a lawyer, I am a judgment and debt referral expert (Judgment and Collection Agency Broker). This article is my opinion, based on my experience in California, and laws vary in each state. If you ever need legal advice or a strategy to use, please contact a lawyer.
There can be bad apples in every group, and pastors and churches have their share. When you have a civil money judgment against a church or a pastor, there may be two extra challenges:
First, there may be a hesitation by some to enforce a judgment against a religious person or entity. This should not be an issue, because the bible reminds us, in Romans 13:8, that we all reap what we sow, and “Let no debt go unpaid”.
Next, there is the problem that most churches are tax-exempt corporate or LLC entities that can sometimes hide the assets of their Pastor and other important staffers at churches.
As an example, what if you have a landlord/tenant (also known as unlawful detainer) judgment against a pastor of his own church. The church is a corporation, and the pastor’s wife works there, and even their kids work there doing “contract labor”. The church owns several properties including the nice house the pastor and his family live in.
If one tried to garnish the pastor’s wages by serving the church corporation, they would likely answer that the pastor is a volunteer, not a paid employee. This is now a tough judgment, because only the pastor is named as a judgment debtor, not the church itself.
Even if the church corporation itself was named a debtor on the judgment, there could be corporate shenanigans that could make a judgment recovery difficult. If the judgment was against the church, one could have the sheriff levy the collection plates as they are taken to the back of the church. One could also have the sheriff levy other assets of the corporation.
However, if your judgment is against the pastor only, and the judgment is small, one might be better off to give up, unless they can spend a lot of time and money, or make it a learning experience, or for the “principal of it”.
If one performed debtor exams, with document production requests on the debtor and the officers of the entity, one might discover interesting things. Perhaps, the church is paying the pastor’s credit cards, cable bill, insurance, car payments, and more – instead of paying him a conventional income.
It is not cheap or easy to pierce a corporate veil. You might need an attorney’s help to prove this in court. If the pastor is using the corporation as his personal piggy bank, then the corporate assets may be subject to a levy.
If the pastor has “imputed income”, where payments of his expenses and costs of living are considered income attributable to him, they probably have a monetary value. If so, 25% of that value could be going to you through the sheriff, the same 25% that a California wage levy could produce, or a reasonable percentage to ask for on an assignment order.
Corporate entities cannot simply pay for a debtor’s expenses and support him and his lifestyle, and then successfully claim that he is only a volunteer, because that would be considered imputed income for the debtor.
In theory, a lawsuit could make the church (or any company paying a debtor with imputed income) pay what they would have paid on a successful wage garnishment. Of course, when served with a new creditor’s lawsuit, most corporate entities would encourage the debtor to satisfy the judgment immediately.
If you have time and money, or want to make it a learning experience, you can try to make the debtor, or their imputed income employer, pay off the judgment by proving imputed income, or that the corporate entity is a sham, or a personal piggy bank of the judgment debtor.
Visit your law library, or research your state case law or codes on the subjects. You might find pleadings or motions that could easily become a template for your case. If you do this Pro Per, have an attorney review your motions, to minimize the chance of a judge’s objection.
Source by Mark D Shapiro