Sheriff Third Party Levies

I am not a lawyer, I am a Judgment and Collections Broker. This article is my opinion, from my California experiences, and laws vary in each state. If you ever want a strategy to use or legal advice, you should contact an attorney.

Most of the time, the only method of recovering a judgment is with the courts, Sheriffs (or levying officers), and often registered process servers; levying and/or selling a debtor's assets.

Sometimes judgment debtors have assets with third parties, where a debtor owes your judgment debtor. 3rd-party levies may usually reach judgment debtor assets controlled or possessed by third parties.

The first step in a 3rd-party levy is determining who is paying your debtor, or possesses assets belonging to your debtor. The following step is to determine the right plan to try to reach those assets.

If the debtor is self-employed, or gets paid from trusts, royalties, or distributions; assignment orders may be needed. Assignment orders are fairly complex, and require a court hearing.

Levies are usually fairly easy because they don't require court hearings.

When in California, one gets a writ of execution, then fills in a few judicial council forms, then delivers a check and a letter of instruction to the Sheriff, and sometimes a registered process server. Then, the levy gets served on the third-party entity or person that would some day be paying your debtor.

When the debtor works and gets paid a wage, or has a bank account, these assets may be reached with regular types of third-party levies.

Bank account levies are a one-shot levy of the judgment debtor's funds. A wage garnishment is an ongoing levy of a portion of the judgment debtor's wages. Most 3rd-party levies are one-shot levies, however they do not have to be.

Many types of money and assets retained by third parties which belong to your judgment debtor, can be garnished For example, payments to independent contractors, rents, commissions, tips, and bonuses.

It is also possible to have the Sheriff garnish uncommon property. For example vehicles at the repair shop, and animals in a boarding kennel, if you pay for and arrange storage, and proper handling of the assets. Everything relies on cooperation from a local Sheriff.

When the debtor owns a property, and renters send them payments, a 3rd-party levy may be used to levy rent payments, but this requires proper instructions to, and assistance from, the local Sheriff.

A (third Party Levy/Rent Levy) gets served on one or more renters. The Sheriff can collect the rent directly from the renter(s) as a payment toward satisfying the judgment. Be sure you don't request the Sheriff to over-collect, because legally you can only recover what is owed.

If a Sheriff agrees, a third-party levy may last as long as is needed. Some Sheriffs will continue to collect rental payments as long as they have a valid writ of execution in their file and money is due.

A renter may not be evicted for failure to provide the manager/landlord with the monthly rent when a court or a Sheriff mandates that the tenant sends the rent to the sheriff or you, rather than to the landlord.

After one gets a 3rd-party levy served, the 3rd-party could claim the assets belongs to them, not your judgment debtor. Or, a different 3rd-party to the judgment debtor's third-party, could claim the property belongs to them. (See CCPs 720.130 and 720.230.)

If a third-party files a claim with the Sheriff, the Sheriff the judgment creditor an opportunity to quickly post a bond, or pay cash (file an undertaking) with the Sheriff or the court, for the value of the (now disputed) claim.

When the creditor does not provide a bond or cash, and doesn't have a valid restraining order, the Sheriff will release the property back to the party who filed the claim. If the judgment creditor can successfully provide an undertaking, the assets already levied on can be sold, or delivered by the Sheriff.

After a third-party claim is entered, and either a creditor's restraining order is in effect, or the creditor purchased a bond or provided cash; the third-party claimant must arrange a court hearing quickly.

The 3rd party claimant usually has the burden of proof, that the assets belong to them. When the creditor claims a fraudulent transfer, then the burden of proof shifts back to the creditor.

At the court hearing, the court decides the validity of the third party claim, and that decision can be appealed. When the third party claim is upheld by the court, the judgment creditor will not get paid.