Already Sued in California? What You Can Still Protect

By Eric Ridley, attorney, Ridley Law. Updated October 2026.

What moving an asset costs you now

Say you cause a car accident, and the other driver’s injuries are going to run past your policy limits. You own a rental worth $700,000, free and clear. A week later you deed it to your daughter.

The deed doesn’t take the rental off the table. It adds your daughter to the lawsuit.

A creditor who challenges a transfer sues the person who received the asset. The court can void the deed, freeze the property, appoint a receiver, or let the creditor levy on it once there’s a judgment (Civ. Code, § 3439.07). It can also enter a money judgment against the person who received it, for the value of the asset or the amount of the claim, whichever is less (§ 3439.08, subd. (b)). In Filip v. Bucurenciu (2005) 129 Cal.App.4th 825, a man’s former wife and her daughter helped him move property out of a judgment creditor’s reach, some of it through a company the two of them owned. The Court of Appeal affirmed a judgment for the full $547,574.94 against all of the defendants, the former wife included. The statute says a court “may” enter that judgment, and the Court of Appeal reads the word as permissive (Renda v. Nevarez (2014) 223 Cal.App.4th 1231, 1237). Either way, your daughter is now a defendant who needs her own lawyer.

The people who help can be sued too. California recognizes liability for aiding and abetting a fraudulent transfer (Berger v. Varum (2019) 35 Cal.App.5th 1013), so the relative who holds the title or the friend who “buys” the boat for a dollar is exposed along with you.

It can also be a crime. A debtor who sells, conveys, or conceals property with intent to defraud, hinder, or delay creditors faces up to a year in county jail (Pen. Code, § 154), and every person who is a party to a fraudulent conveyance is guilty of a misdemeanor (§ 531). Those two statutes are why no careful professional will touch the transaction.

Bankruptcy stops being a way out. A bankruptcy court denies the discharge to a debtor who transferred or concealed property within a year before filing, with intent to hinder, delay, or defraud a creditor (11 U.S.C. § 727(a)(2)). The judgment you might have discharged stays with you.

California’s voidable transactions law has no attorney fee clause of its own, but if the creditor’s judgment already carries a right to fees, from a contract or a statute, the cost of chasing the transfer can be added to it (Code Civ. Proc., § 685.040; Conservatorship of McQueen (2014) 59 Cal.4th 602). In McQueen the creditor’s second lawsuit alleged the debtor had transferred real property after the verdict, and it named her husband and two children as defendants. One Court of Appeal has also let a creditor ask for punitive damages over transfers made to avoid paying a judgment (Berger). That was a ruling on the pleadings and no damages had been awarded.

Jay Adkisson, who litigates these cases, lists a similar set of consequences across the states where he practices. Writing in Forbes, he concluded: “A post-claim transfer is very dangerous if not often suicidal.” He adds that creditors’ lawyers welcome one, because the debtor has made his own position worse.

The clock started when the claim arose, before anyone served you

People assume they have until the lawsuit is filed, or until the judgment. They don’t.

The statute defines a claim as “a right to payment, whether or not the right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed” (Civ. Code, § 3439.01, subd. (b)). The Court of Appeal read that the way it’s written: “an individual need not have a judgment to have a claim” (Potter v. Alliance United Ins. Co. (2019) 37 Cal.App.5th 894, 909). A disputed, unfiled claim for an amount nobody has calculated yet is still a claim. Adkisson puts the moment at the collision itself.

So the demand letter isn’t a warning that you have time. By the time it arrives, the date that matters has passed.

Moving things before any claim exists doesn’t guarantee safety either. A transfer made with actual intent to hinder, delay, or defraud any creditor is voidable “whether the creditor’s claim arose before or after the transfer was made” (§ 3439.04, subd. (a)), and the California Supreme Court has said the same about present and future creditors (Mejia v. Reed (2003) 31 Cal.4th 657, 664). Planning done for ordinary reasons while you’re solvent and nobody is hurt is hard to attack. A transfer made because you can see the claim coming doesn’t, whatever the calendar says.

The creditor has four years from the transfer to challenge it. For a transfer made with intent, that stretches to one year after the creditor discovered it or reasonably could have. Nothing can be challenged after seven years (§ 3439.09). For how courts find intent from the circumstances, see Myth 7 on the asset protection page.

Why a lawyer can’t help you move it

A California lawyer “shall not counsel a client to engage, or assist a client in conduct that the lawyer knows is criminal, fraudulent, or a violation of any law” (Rules Prof. Conduct, rule 1.2.1(a)). The same rule lets a lawyer discuss the legal consequences of anything you’re thinking about doing (rule 1.2.1(b)). So I can tell you what the law will do to a transfer. I can’t help you make one.

In Townsend v. State Bar (1948) 32 Cal.2d 592, a lawyer who knew a judgment was about to be entered told his client to deed her property to her mother “right away.” The Supreme Court found he had advised the conveyance to defraud his client’s creditor, cited Penal Code section 531, and, in view of his prior record, suspended him for three years. Forty years later the court disciplined a lawyer who set up a client trust account that his client used to hide money from creditors (Coppock v. State Bar (1988) 44 Cal.3d 665).

What you say to the lawyer may not stay private, either. There is no attorney-client privilege “if the services of the lawyer were sought or obtained to enable or aid anyone to commit or plan to commit a crime or a fraud” (Evid. Code, § 956). A creditor who can make that showing can ask a court to open the file.

If someone offers to do this for you anyway, for a fee, look hard at who carries the risk. It’s you and the person who receives the asset.

What’s still yours, whoever sues

California sets aside a good deal of property before a judgment creditor gets to it, and you don’t have to do anything clever to qualify.

Home equity. The homestead exemption protects a slice of the equity in the house you live in. In Ventura, Santa Barbara, and Los Angeles Counties the 2026 figure is the statutory cap, about $744,000 (Code Civ. Proc., § 704.730). If your equity is under that number, a forced sale produces nothing for the creditor and a court won’t order one. See how the homestead exemption works in 2026.

Retirement accounts. A 401(k), 403(b), or pension under federal ERISA law is out of a judgment creditor’s reach, and California adds its own exemption for private retirement plans (§ 704.115, subd. (b)). An IRA is protected only to the extent a court finds it necessary for your support in retirement (subd. (e)). The retirement account section of the asset protection page explains the difference.

Trusts someone else set up for you. An inheritance your parents left in a trust with the right restrictions is theirs to protect, and they did it before your creditor existed. See spendthrift trusts and creditor protection in California.

Your insurance. If the claim is the kind your policy covers, the carrier hires and pays the lawyer who defends you, and the number the two sides land on is usually inside the policy limits.

Those protections were in place before the claim, and no court can call them a transfer.

What you can still do

1. Tell your insurance carrier now

   Send the carrier the claim, the letter, or the complaint as soon as you have it. Most policies require prompt notice, and the carrier can’t start defending you until it knows.

2. Leave the titles alone

   Don’t deed, gift, retitle, or “sell” anything to a relative. Paying your ordinary bills and living your ordinary life isn’t the problem. Changing who owns things is.

3. Find out what’s exempt before you assume the worst

   List what you own, what’s owed against it, and which exemption covers it. The exposed amount is what’s left.

4. Let the case be negotiated

   The number in a complaint is an opening position. A defense lawyer’s job is to push it down, and a plaintiff’s lawyer who can see that your reachable assets are modest has a reason to take the policy limits and stop.

5. Talk to a bankruptcy lawyer before you move anything, if it may come to that

   A transfer in the year before filing can cost you the discharge. The bankruptcy lawyer also picks which of California’s two exemption systems fits you.

6. Plan again when this is over

   Once the claim is paid, settled, or dismissed, real planning is available again: the right insurance limits, entities formed for business reasons, and trusts for your children’s inheritance.

I don’t defend lawsuits or file bankruptcies, and I refer both to lawyers who do. My part is the planning that happens while things are calm, and telling you plainly when it’s too late for that.

What a creditor still has to prove

A creditor has to show the transfer hurt them. “Mere intent to delay or defraud is not sufficient; injury to the creditor must be shown affirmatively” (Mehrtash v. Mehrtash (2001) 93 Cal.App.4th 75, 80). Someone who bought an asset from you in good faith and paid what it was worth keeps it (Civ. Code, § 3439.08, subd. (a)). And the right to challenge any transfer ends after seven years (§ 3439.09, subd. (c)).

Those are defenses for a lawyer to raise about something that has already happened. They aren’t a plan for what to do next week.

Frequently asked questions

Can I transfer my house to my spouse or my kids after I’ve been sued in California?

You can sign the deed, but a court can void it and enter a money judgment against the person who received the house (Civ. Code, §§ 3439.07, 3439.08, subd. (b)). The transfer can also be a crime under Penal Code sections 154 and 531.

Is it too late for asset protection if no lawsuit has been filed yet?

Usually, yes. A claim exists once the event that caused the liability has happened, whether or not anyone has sued or won a judgment (Civ. Code, § 3439.01, subd. (b)).

Is it illegal to hide assets from a creditor in California?

Yes. Concealing or conveying property with intent to defraud, hinder, or delay creditors is punishable by up to a year in county jail, and everyone who is a party to a fraudulent conveyance commits a misdemeanor (Pen. Code, §§ 154, 531).

Can my lawyer help me move assets after a claim?

No. A California lawyer may not counsel or assist conduct the lawyer knows is criminal or fraudulent (Rules Prof. Conduct, rule 1.2.1), and the Supreme Court has suspended a lawyer who advised one (Townsend v. State Bar (1948) 32 Cal.2d 592).

How long can a creditor go back to undo a transfer in California?

Four years from the transfer, or for an intentional transfer one year after the creditor discovered it or reasonably could have, if that’s later. The outer limit is seven years (Civ. Code, § 3439.09).

Can a creditor take my house after a judgment in California?

Only if your equity is more than your mortgage plus the homestead exemption, which is about $744,000 in Ventura, Santa Barbara, and Los Angeles Counties in 2026 (Code Civ. Proc., § 704.730).

Will moving assets before bankruptcy hurt my case?

It can cost you the discharge. A court denies it to a debtor who transferred or concealed property within a year before filing with intent to hinder, delay, or defraud a creditor (11 U.S.C. § 727(a)(2)).