How to Seize Vehicles to Collect Debt
If your judgment debtor owns a valuable car, consider seizing it to partially satisfy your judgment. Doing so will disrupt the debtor’s life and/or business and will make it abundantly clear that you are willing to move swiftly and aggressively to collect. It is relatively easy to do if (i) the debtor owns the vehicle outright and (ii) if you know where the vehicle is located.
Here are the necessary steps:
Step 1: File a Notice of Judgment Lien with the Secretary of State. This creates a lien against the debtor’s personal property. It is crucial that judgment creditors file their Notices of Judgment Liens immediately. This is because of lien priority. Judgment liens are given priority on a first-to-file basis, meaning a judgment lien filed on Day 1 will have priority over a judgment lien filed on Day 2. When the sheriff seizes and sells the vehicle, the sale proceeds are distributed based on lien priority (i.e., the 1st position lien holder gets paid first, etc.).
Step 2: Obtain a Writ of Execution directed to the sheriff of the county in which the vehicle is located.
Step 3: Levy the Writ of Execution by delivering it to the sheriff along with written instructions detailing: (1) the specific vehicle to be seized (including license plate number), and (2) the vehicle’s exact location. The creditor must pay the sheriff’s fee (usually approx. $1,500).
Step 4: The sheriff will then attempt to locate and seize the vehicle.
Step 5: If the sheriff seizes the vehicle, it will be sold at public auction. The sale proceeds will be distributed as follows: First, all outstanding sheriff’s fees will be paid. Second, the debtor will receive his exemption amount of $2,300. Any remaining proceeds will be paid to the judgment creditor, so long as no senior liens exist.
Consider this collection technique if your debtor owns one or more valuable vehicles. For more information, please give us a call at (949) 203-3870.
Helpful Link:
http://www.sos.ca.gov/business/ucc/ra_9_jl1_barcode.pdf (Notice of Judgment Lien)