|Potential costs to you||x|
|Potential for producing cash||x|
|Potential for settlement||x|
|Potential time and trouble||x|
|Potential for debtor bankruptcy||x|
Motor Vehicle Levying and Problems With Levies
California law permits a judgment creditor to go after a debtor’s motor vehicles to satisfy a judgment. This includes a debtor’s car, truck, motorcycle, boat, plane or recreational vehicle. To the uninitiated, going after a debtor’s motor vehicle to satisfy a judgment seems like a good idea. In reality, a forced sale of a motor vehicle nets little or no cash for the judgment creditor. It usually makes sense to levy on a vehicle only if:
- The vehicle is valuable and the debtor has substantial equity in it (ownership interest free and clear from loans)
- You want the vehicle for your own use (you can force a sale and buy the vehicle yourself for much less than its market value)
- You think the debtor will be scared into settling with your. Because nobody in California wants to be without wheels, an indication that you are actively considering seizing and selling her vehicle may give the debtor and adequate incentive to pay the judgment. Anyone who has been around the collection business for any length of time knows that when a person feels threatened with the loss of his precious wheels he/she often pays off a debt with money that he claimed absolutely didn’t exist the day before.
Problems With Vehicle Levies
There are several practical reasons why going after a debtor’s vehicle is often fruitless (and why you should think carefully before using this approach). Here are the principal ones.
Debtor May Not Own Vehicle
If the vehicle is valuable, chances are a lot of money is owed to a lender a car dealer, bank or credit corporation. If so, that lender must be paid off before you are. Because sales seldom net what the vehicle is really worth, usually there is little or no money left for you.
Vehicle May Not Be Worth Much
If the judgment debtor is the legal owner of the vehicle (It’s paid for), it’s probably an older model or has greatly depreciated in vale, and will be worth too little to warrant the cost of sale.
Vehicle May Be Partially Exempt
If you seize a debtor’s only motor vehicle (as shown by DMV records), the debtor is automatically entitled to receive from the sale proceeds the first $1,200 of his equity in the vehicle. If the debtor owns two or more vehicles, he may still be entitled to the $1,200 exemption, but he/she must come forward and claim it. And if the debtor uses the motor vehicle you seize in his/her business, and doesn’t have a vehicle that both qualifies for the $1,200 exemption and is fit for the business use, he may exempt $2,500. In short, for you to receive cash from the sale of a motor vehicle, the debtor’s equity in the vehicle must be substantially over the applicable exemption amount.
Vehicle Will Sell for Less Than Value
Anyone who has sold a used vehicle knows that what it fetches depends greatly on how it is sold. For example, a car that can be sold for $5,000 through a newspaper ad may only bring $2,500 as a trade-in.
Cars that are levied on are sold by the levying officer at an auction, which tends to bring in even less for the car than a trade in. As a general rule, cars sell for approximately two thirds of their low blue book value (the law value listed in the Kelly Blue Book for cars utilized by California dealers or Edmund’s Used Car Book). Most levying officers will not consider going after a car with a low blue book value of less than $1,600.
High Costs of Levy
One major problem with levying on a judgment debtor’s vehicle is that the costs of seizing, storing and selling it can run from $1,500 (the typical costs for levying on a car) to over $10,000 for boat and plan levies. These costs must be paid to the levying officer in advance of the levy, in the form of a deposit.
You May Need Court Order
Normally, a vehicle can only be levied on if it is in a public place, such as street. If it is in a garage or other private place, you must first get a Seizure Order from the court.
How To Levy On a Vehicle
Let’s consider in more detail each of the steps for levying on a vehicle.
Get Vehicle Information
When you initiate the levy, you will need to provide the levying officer with a description of the vehicle, license or vehicle ID number and location where the vehicle can be found (a public place or on the street). You will also want to know what ownership the debtor legally has in the vehicle (legal owner, registered owner, joint owner). That way, you won’t initiate a levy on a vehicle owned by a financial institution, for example.
Other than the obvious going to the debtor’s home or place of business to see where he/she parks his/her vehicle here are some ways to get vehicle information:
- Debtor’s examination and Subpena Duces Tecum. To keep the debtor from concealing the vehicle, we suggest that you ask questions about it in a routine manner, not as though you are seeking to levy upon it.
- Judgment debtor’s Statement of Asset.
- Court records.
- Use a pretext. Make modification to obtain the information you need.
- Data search firms, asset tracing firms, investigators.
Another source of information is the Department of Motor Vehicles (DMV), which maintains information on all vehicles registered in California. Bear in mind, however, that the DMV will send a copy of your request to the judgment debtor or actual owner, who will have 10 days to object to your request. The only way to restrict the debtor’s right to object arises if you’re also seeking to serve the debtor with legal papers Form INF 1129.
- Vehicle Registration Information: This will provide information about what cars, boats, trucks, RVs and motor homes are registered under the name of the judgment debtor. You can also find out information about legal owners of the vehicle.
- Asset Search: The form does not give this option, but you may write the words “asset search” under Type of Request/Fees (the charge is currently $5,000), and again in Part C: Reason For Requesting Information and the Intended use. You’ll need to attach a copy of your judgment to the form.
The DMV’s notice will alert the debtor that you are inquiring about his vehicle. You might gainfully follow up a license search by contacting the debtor and suggesting a settlement before you initiate a levy.
You can get a copy of form INF 70, Driver License or Vehicle Registration Information Request, by stopping by or calling your local DMV office or by requesting one from the central DMV office. The form is a two part carbon form.
- The DMV checks for an exact match of the name you provide. Thus, if you specify Randy Jonathan, and DMV records show the judgment debtor as Randy Jonathan, the search may turn up a blank. Your best bet may be to submit several requests with variations of the debtor’s full name (Randy A Jonathan, Randy J Arman, Arman R Jonathan). However, you must pay for each name search.
- Fees depend on what information you request se the DMV form for a fee schedule.
Determine Debtor’s Ownership
If you sent in a DMV vehicle registration request, look on the DMV printout to see who is listed as the legal owner. The registered owner is indicated by the code R/O. If the debtor is neither the legal owner or registered owner, you may have reached a dead end. If the vehicle is in the name of a business owned by the debtor as an individual proprietor, ask the levying officer how to proceed next. Similarly, if the vehicle is jointly owned, ask the levying officer what additional documentation is needed for the vehicle to be levied on.
Obtain Writ of Execution
To initiate a motor vehicle levy, you need a Writ of Execution from the county where the vehicle is located. Don’t get fooled into thinking that the vehicle is automatically in the same county as the debtor’s residence. Rather, find out where the street or public parking garage near where the debtor works.
To find the levying officer for a county, call the sheriff’s office in that county and ask if it make levies on civil money judgments. If not, find out who does or call the levying officer and ask:
- the deposit amount required for a vehicle levy
- Whether the levying officer has form instructions
- If the vehicle must be worth a certain minimum amount.
For car, you need the license plate number, the make and year, The vehicle identification number helps provide positive identification, in case the license plates have been put on a different car, but it isn’t required. Include the car’s color and known identifying factors. Get as much detail as you can as to where and when the officer is likely to find the car. An officer can’t go into a private garage or warehouse to get the car unless the owner invites him/her in. But as long as the vehicle is parked on the street or in a public place, it’s fair game. For instance, if you know the car is likely to be within a block or two of the debtor takes his car to work and parks his/her car on the street or in the company parking lot, advise the officer accordingly, and give him/her the times when the debtor is at work.
For boats, planes, motorcycles and RVs, give the same type of identifying information, including the manufacturer, license number, color and type of vehicle or craft.
Finally, if someone other than the judgment debtor is either the legal owner or a lienholder of the vehicle, you must provide the levying officer with their names and addresses so that they can be served with a Notice of levy. This is where you will need the information form DMV records. The levy will be ineffective if you don’t provide this information.
Connect with us on Google+ at Collection Agency – KB American Group
This information is not intended to be legal advice and may not be used as legal advice. Legal advice must be tailored to the specific circumstances of each case. Every effort has been made to assure that this information is up-to-date as of the date of publication. It is not intended to be a full and exhaustive explanation of the law in any area, nor should it be used to replace the advice of your own counsel.