Collecting from Third Parties

Orange County Third Party Judgment Levy Lawyer

Third Party Levies as a Judgment Collection Tool

The third party levy is an effective and under-utilized debt collection tool.  It is particularly useful when the creditor has information regarding the debtor’s ongoing business activities.  A third party levy requires a third party in possession of the debtor’s assets to deliver the assets to the creditor.  For example, suppose the judgment debtor sells goods to Company X, invoices Company X for such goods, and generally receives payment 30 days after invoice.  A properly executed levy on Company X will require all amounts owed by Company X to be paid to the creditor rather than the debtor.  As an additional example, suppose the debtor stores its excess inventory at a warehouse owned by Company Y.  A properly effected levy on Company Y will require the inventory to be delivered to the creditor.

Need Help Collecting a Judgment from a Third Party in California?

Collecting from third parties can be highly effective, but requires a well-developed strategy and the proper expertise.  Please contact us to discuss the ability to use third party levies to collect your judgment in Orange County or elsewhere in California.  We are happy to perform a complimentary analysis of your judgment and collection options.

How to Collect Business Debt via Third Party Levies

1. To execute a third party levy, the creditor must first obtain a writ of execution in the county in which the levy will take place.  See CCP § 699.520.
2. The creditor must then deliver the original writ of execution to the sheriff’s department, along with instructions explaining how and where the levy-related documents will be served.
3. Each sheriff’s department has its own procedures, but most allow registered process servers to serve the levy-related documents.  If so, the creditor must instruct the process server, who will serve the third party with a copy of the writ of execution, along with a Notice of Levy and Memorandum of Garnishee.  See CCP § 700.040.
4. The third party is then required to complete the Memorandum of Garnishee, indicating the amount of funds, if any, to be turned over to the sheriff.  See CCP § 701.030.  In most cases, the third party will also notify the debtor of the levy (as otherwise the debtor will be surprised when it does not receive payment).
5. Finally, the funds are delivered to the sheriff, who then delivers the funds to the creditor.

The Importance of Timing in Collecting Judgments from Third Parties

Timing is very important when utilizing third party levies.  The levy serves to “sweep” any of the debtor’s assets in the third party’s possession, as of the date the levy documents are served.  If the levy is served the day before a large account receivable is created, the levy will not serve to sweep the account receivable.  By the same token, if the levy is served the day after the third party pays an invoice, the creditor will have missed an opportunity.  For this reason, knowledge of the debtor’s business activities is very helpful, as is quick action.

The Importance of Properly Drafting Notices of Levy

As explained above, third party levies are performed by serving the third party with a Notice of Levy.  The Notice of Levy must contain clear, unambiguous instructions as to what the third party must do.  Otherwise the third party may refuse to respond on grounds that the instructions were unclear.  If the creditor wants a particular vehicle or piece of equipment from the third party, the Notice of Levy must describe such property in sufficient detail to allow the third party to easily identify it.

Contact The Wallin Firm Today for a Judgment Review

We are happy to speak with you to determine if third party levies may be an effective way to collect your debt or judgment in Orange County or elsewhere in California.  The Wallin Firm does everything necessary to maximize the likelihood of collecting our clients’ judgments.  We understand that collecting is extremely important to our clients, and we take our responsibility very seriously.  Please contact us at (949) 203-3870 for a complimentary review of your business debt or judgment and collection options.

References & Helpful Links:

http://www.courts.ca.gov/documents/ej130.pdf  (Writ of Execution)

http://www.courts.ca.gov/documents/ej150.pdf  (Notice of Levy)

http://www.courts.ca.gov/documents/ej152.pdf  (Memorandum of Garnishee)

http://codes.lp.findlaw.com/cacode/CCP/3/2/9/d2/3/2/s699.520

http://codes.lp.findlaw.com/cacode/CCP/3/2/9/d2/3/4/s700.040

http://codes.lp.findlaw.com/cacode/CCP/3/2/9/d2/3/5/s701.030