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.
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.
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.
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.
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.
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)