I am not a lawyer, I am a Judgment 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.
One tool to recover a judgment is by paying a Sheriff to levy your judgment debtor’s vehicle, which could be a car, truck, motorcycle, etc.
Levying your judgment debtor’s vehicle can be risky and difficult for several reasons:
1) It requires a lot of money to have a Sheriff seize and sell a judgment debtor’s vehicle. Only the sheriff can levy the vehicle of a judgment debtor. If you do not have thousands of dollars to gamble, it is best not to try this. If the vehicle is inside a locked garage, you may have to get a break in order from the court to allow the sheriff to make (and possibly break) entry. The sheriff will then hire (any bill you) to hire a locksmith to open the vehicle and/or where it is stored.
For a vehicle levy, the creditor must pay for the tow truck, and then pay to pay for the storage of the vehicle until the Sheriff holds a public auction. That can be expensive. So you should be prepared to shell out some significant dough before you get to the auction payoff.
2) The auction sale may not make economic sense. The judgment debtor’s vehicle may not have enough equity in it because of previous leases or loans. There is usually ample time to view the levied items before the sale. You may also want to look up the value of the vehicle online and find the wholesale price before your vehicle levy attempt.
Other expenses and considerations are the State exemptions, the imperfect market (a forced sale) at Sheriff auction sales, and the costs involved with paying the Sheriff to tow, store, and sell at auction, the judgment debtor’s vehicle.
Especially if you do not calculate all these factors first, you can easily lose money attempting to levy a judgment debtor’s vehicle.
3) The Sheriff usually will not look for hidden vehicles, and will not pick locks or break into a locked area, without a separate court order instructing them to do so.
You have to describe the vehicle to the Sheriff in detail, supply the license plate number, and exactly where it is parked. Usually, the Sheriff will make just a few attempts to secure the vehicle for your initial fee.
4) Legally, one cannot threaten anyone. Due to laws, especially in California; believe it or not, you should avoid communicating to the judgment debtor that you plan to pay a Sheriff to take their vehicle.
In California, the safest legal way for a judgment creditor to pay the Sheriff to seize the judgment debtor’s vehicle, is by surprise.
Losing a vehicle can cause a strong reaction in the judgment debtor. Ideally that reaction would be to pay you or the Sheriff to stop the levy.
There is also a chance their reaction might be irrational. Most judgment debtors rely on their vehicles for transportation to work, to go shopping, or to take kids to school. Even if you are successful, it can take almost a year to get paid. For this reason, before you attempt to levy a judgment debtor’s vehicle, try a bank or wage garnishment first.
After you do your homework, you may decide to buy a writ of execution, and then pay the Sheriff to levy the judgment debtor’s vehicle. The judgment debtor may respond by filing a claim of exemption.
If the debtor files for bankruptcy protection, the money you spent will likely go down the drain. For every three judgment debtors that say they will file for bankruptcy protection, usually one actually does. Listen to them, then go back to the office and check with PACER.
You may hear from the judgment debtor, after they try to file a vehicle theft report, and find out what really happened, or if they see the Sheriff towing their vehicle. If you are lucky, the debtor will respond by paying off the judgment instead of losing their vehicle.
Sometimes the judgment debtor will contact you, to make arrangements to get their vehicle back ASAP, and that might be your best opportunity to work out a deal. Remember, whatever you paid the court and the Sheriff, is not refundable.
If the Sheriff auction goes through, be sure to contact the Sheriff’s office to learn what is required. In California, the Sheriff usually sends you a notice of the auction sale, with all cost up to the opening bid at auction.
Show up at the auction, to protect your position. If you are not there, someone could purchase the vehicle for the price of the opening bid. If that happens, you would get nothing toward your judgment – and you will lose what you paid for storage fees.
In California, one goes to the auction with certified funds (see CCP 701.590), for the minimum opening bid, which is the total of the liens, plus the debtor’s exemption.
You can credit bid for anything over the opening bid (which may include the debtor’s claimed exemption), to help keep the bidding prices up, up to the amount listed on the writ of execution for your judgment.
Unlike EBay, fierce bidding is extremely rare at Sheriff auctions. Usually, there are only a few bidders at each sale.
Sheriff’s sales are not well-advertised. The law only requires the Sheriff to post a flyer at a public place, for instance a grocery store or a post office. You could do your own advertising to try to attract more bidders.
If you are not the winning bidder, the Sheriff does the math, takes their cut, deducts expenses, and will eventually send you a check.
If you are the winning bidder, you can keep the vehicle or sell it. If you sell it, you must spend more, to make the vehicle ready for sale.
If you are the assignee of record, you have to decide if you will split any potential profit with the original judgment creditor. If you credit bid, you need pay the OJC is the agreed upon percentage of the amount you paid. If you resell the vehicle and make a profit, that profit is yours.
Many enforcers do not split any vehicle levy profits, because they do not get to split the costs of the vehicle levy, or the risk of losing all the money they spent; with the original judgment creditor.
In summary, here are the steps to levy a vehicle in California:
1. Use the license plates and VIN numbers on the judgment debtor’s vehicle. Verify the owner name, you might need to file an affidavit of identity at the court.
2. Verify the judgment debtor’s equity in vehicle. It must be enough to cover their claim of exemption (COE). In California, this is at least $2,725 and more if it is the judgment debtor’s only vehicle.
3. Get a Writ of Execution (EJ 130) from your court.
4. Complete and deliver your Sheriff instructions to seize the vehicle with your deposit of $1,000-$2,000 to cover the towing and storage fees.
5. Be prepared to respond with an opposition and a court appearance if the judgment debtors files one.
6. If all goes well, about 45-60 days later, you attend the Sheriff sale and you can credit bid.
7. The highest bidder wins the debtor’s vehicle. You must pay with cash or a cashier’s check. The Claim Of Exemption ($2,725 or more) must be paid by the highest bidder, even if you credit bid.
8. The Sheriff signs a bill of sale over to the auction winner.
9. If you win the auction, apply to the State equalization board for a tax exemption (because it is involuntary transfer).
10. Go to the DMV and register the vehicle and pay no tax – just a small transfer fee.