In some cases it will be necessary and advisable to seize property, so we'll
now discuss how to go about doing it.
The first consideration is that it is very important to
fill out the Court forms properly with accurate information. Make sure
that the debtors' names are spelled correctly and that all the other
information is correct, including spelling. Technical errors in the
forms can allow the debtors to have the judgment vacated or even require you
to return money that you've already collected.
Traffic Accident - May Be Special Case
When a judgment is the result of a traffic
accident some states allow you to enter an abstract of judgment which
suspends the person's driver's license until the judgment is paid.
Check your state code to see if this is allowed. The court will
have the necessary forms.
Writ of Execution
This writ is the primary order or form you will
be using. It is used to garnish wages, seize property, and do a third
party levy. Check your state code regarding how to file or call your Court
and ask. Each state is a little different, but as usual, you can get the
forms at your courthouse. You must put in the full amount of the judgment.
If your judgment includes court costs, be sure to include them. Do not
include the costs of locating your debtors or their assets. As explained
later, that will be done at a later time using a different form. Don't
forget about interest. Find out, by calling the court, what interest rate
is for your state.
Figuring the daily interest is quite simple.
For example, using an interest rate of 10% and a judgment amount of $2,000, the
calculation is:
$2,000 x 0.10 = $200.00 per year interest
Next, divide $200.00 by 365 = $0.55 per day
interest
The completed writ of execution must be
recorded by the court clerk. When the clerk has recorded the writ you will
be ready to take it to the levying officer in the county where the debtors or
the assets to be seized are located, along with a letter of instruction.
Levying officer
This will be the person who will be seizing the
property for you. Depending on the jurisdiction, it will be the sheriff,
constable, or marshal of where your debtors assets are located. You will
be giving them a "letter of instruction." This letter will instruct the
levying officer on what you want them to do. Some areas of the country
provide a form for this. If not, here is a sample letter of instructions
based on a bank levy (red items need replacement with specifics for your case).
To the constable of
CountyName County, State of StateName,
USA:
Please serve this writ of execution and levy against any and all
deposit accounts in the names of DebtorNames,
Social Security Nos.
000-00-0000
& 000-00-0000,
respectively, at the BankName,
BankAddress,City,State, USA.
Account Nos. 0000000, 0000000, and
0000000. Then after the legal waiting period please
mail the funds to me/us, CreditorNames,
the assignee of record, at
CreditAddress,City,State, USA.
A check for your fee of $20.00 is enclosed.
Thank you,
Creditor
Signatures
Bank Levy
A bank account is one of the easier assets to
seize. You can sometimes get a sizeable piece of your money all at once.
For these reasons, it pays to start here if possible. Furthermore, if you
have either received a check from the debtor or have written them one at some
time in your relationship with them, you should already have their bank name and
account number. Note that if you know where their account is and have
their social security numbers you can still levy without knowing the account
numbers.
From the credit report you should have the
debtors' social security numbers and places of employment. Just follow
them from work to the bank on payday to find out which bank their account is at.
This will also give you a time to put on your instructions to the levying
officer to best seize the account when its at its largest.
If there is a way for you or a friend to write
the debtors a check you would be able to find out for sure where they currently
bank because when you get it back it will have the account information on it.
Or if your debtor owns a business go in, or have a friend go in, and pay for
something by check.
You use a writ of execution for a bank levy.
After the writ of execution is recorded in the court you take your letter of
instructions for the bank levy to the levying officer. One special issue
regarding a bank levy. The constable may be willing to serve the writ at a
certain time on a certain day at the bank.
Doing the levy at a special time on a specific
date can be very important. For example, if you have found out through
your investigations that the debtors make their big deposit at 3 p.m. on
Fridays, ask in the instructions that the writ be served at say 3:45 p.m. on
Friday. Or ask the constable personally if he can do this for you when you
bring him the instructions. Usually they will do this if you give them
enough advance notice.
Following the service, the bank will place a hold
on the debtors' funds for 10 to 15 days, the exact period depending on the
jurisdiction. This is the legal time period that the debtors have to file
for an exemption. If a particular account is a joint account and only one
of the parties is your debtor, then you can only levy on one-half the
funds in that account.
You can see how tactics like this will get your
debtors attention and make them want to get this out of their life. But
this is just the beginning and life can become even more difficult for them.
Seizing From a Business
Businesses are usually very easy to collect from
because seizures are highly visible to their customers. A business will
usually borrow the money to pay you in order to avoid the various possible
scenarios and the the bad affect that they might have on their business and
reputation.
The first method is called a "till tap."
With this method the levying officer goes to the business and collects all the
money that is in the cash register. You have to pay a fee for this, but if
the levying officer can't collect any money or the cash register is empty you
usually get about one-half of your fee back. You can, of course, add this
amount to what the debtors owe you.
The next method is called an "8 Hour Keeper."
With this method the levying officer stays in the business for 8 hours and
collects all cash and check receipts, including any that come in the mail.
An hourly rate is charged in advance which can be added to the amount of your
judgment.
There are also 12 Hour, 24 Hour, and 48 Hour
keepers - obviously named for whatever time it takes to collect all of your
money. You just need to fill out and record the writ of execution
discussed earlier. Remember that writs of execution are the main tool that
seizures are carried out with. Just take the original and a letter of
instruction to the sheriff in the county where the business is located. In
the letter just give the instructions where you want them to go, how long you
want them to stay, and what you want them to do. Call the sheriff before
to find out the fee and include it in the letter of instruction.
Credit card purchases are not collectable, but
the receipts from all other purchases are. Debtors can avoid a keeper if
they close their business for the day. However, you just do it again.
A business can't keep closing forever if their business is profitable.
Furthermore, repeated closing will be bad for customers relations.
Property of The Business
The debtor can close his business to avoid a
keeper. However, such is not the case with a with a levy on business
property itself. If the the debtors try to avoid a seizure of business
property they can be jailed. They have ten days to file an exemption after
the property is seized for sale. Then they are notified ten days in
advance of an "execution sale." The debtor then has ten days to satisfy
the judgment or the sale will take place as scheduled. The debtor will
usually come up with the money before the sale.
If the business is open to the public you can
instruct the levying officer to seize all of the business property unless they
have a partner, in which case you can only get half of it.
Collecting From a Third Party
This is a good way to collect on a debtor who
doesn't have wages to be garnished. If there is a third person holding
wages, property, escrow funds, or deposits (legally a deposit of any kind is
property of the debtor) you can levy on that third person. This procedure
is common for collecting money from independent contractors and other
self-employed persons or unemployed persons.
Fill out and record a writ of execution and take
it along with a letter of instruction and a memorandum to the sheriff where the
third party is located. The sheriff will send a copy to the debtors and
also serve it on the third party. The third party usually has ten days to
fill out the form and respond.
If the third party doesn't turn the money
over to you they could be held responsible for the whole amount of the judgment
and other penalties.
Placing Liens on Property
As mentioned earlier, it is usually not a good
idea to force the sale of property. It can be expensive and can have legal
ramifications against you later if not done exactly right. Even if done
right it can often turn out bad. Placing liens on property though is very
effective even though collection is not usually immediate. Remember though
that interest is adding up each day and that someday day the debtors may want to
sell their home, car, boat, RV, or other property against which you placed liens
and they can't sell them or borrow money against them as long as the liens are
in place.
To put a lien on something use an "abstract of
judgment." After recording it in the court where your judgment was awarded
take it or mail it to the recorders office in any of the counties where the
debtors property is located. You have to adjust the abstract of judgment
to show any payments the debtor makes to you over time and show the accrued
interest.
You also have to remember to release the liens
when your judgment is paid off. If the property is sold, any liens filed
before yours will be satisfied first. If anything is left, it will go
towards satisfying your judgment.
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