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Vehicle Levy Math

By Mark Shapiro

Republish: EasyPublish™ Published: 05Feb2012 Word count: 1391 Viewed: 51 time(s) Get Free Content For Your Site

I am not an attorney, I am a Judgment Broker. This article is my opinion, from my California experiences, and laws are different in every state. If you ever want a strategy to use or legal advice, please contact an attorney.

Garnishing a judgment debtor's auto is complicated and expensive. This article has a car garnishment example, based on California law, showing example approximate costs.

State laws vary widely, so be sure to check the court and local laws for procedures, and check costs with the local Sheriff.

With California, if Sheriff garnishments aren't wages or bank accounts, the debtor's property has to be auctioned by the sheriff. This makes garnishments of any assets except wages and bank accounts really expensive.

The auction process is an imperfect sales mechanism that usually yields low relative prices, minimizing the amount available to satisfy the judgment. Some day, maybe Sheriff auctions can be on EBay.

The debtor's exemption is the first expense. The debtor's exemption is only for one of the debtor's vehicles. This exemption is $2,725, and when their vehicle is used in their job for a commercial vehicle, the exemption is $5,900. The first $5,900 or $2,725 from the action sale, is returned to the debtor.

Buying a writ of execute from the court is $25. The Sheriff fee is approximately $1,000 to begin a levy auction process.

Some good news is the Sheriff sometimes permits one to pay half the required amount (e.g., $500) to begin. Some bad news is that's only the start of a growing spiral of costs that might sometimes make you wish you did not levy a debtor's vehicle.

After the (so far) $6,900 or $3,725 in costs, there's the fee of a Sheriff's department charges for vehicle storage. For this article, the example is thirty days at $35 each day to store the vehicle, adding up to $1,050.

In certain situations, for example if the Sheriff's department is backed up, the storage fees you need to always pay, increase drastically.

Another way where bankruptcy can be unfair to creditors who levy a debtor's vehicle, is that creditors have to pay levy storage costs, even when the debtor's bankruptcy ends up being denied. Four months of storage charges could cost approximately $4,200.

After all these expenses, the auction fees are often 10% of what the selling price of the vehicle.

In our example so far, we're totaling at least $7,950 or $4,775. To break even, a vehicle needs to sell at more than $8,840 or $5,306, to get a chance of having anything to satisfy the judgment.

Last and not least, there can also be a expense of paying off all prior vehicle loans.

The opening price bid at the auction is most often the costs of the judgment debtor exemption and repaying prior vehicle loans.

Be sure to show up at Sheriff auctions if the debtor's property is for sale. While you may be allowed to bid with judgment credit at the auction, you can't credit bid for the debtor's exemption, or to repay any prior vehicle loans.

If assets are collected under a writ, they are recovered using a writ of execution, it is applied first to the cost of buying a writ, second to any interest, third to the levying officers fees and costs of performing the levy, and fourth to the judgment principal.

When the opening price bid isn't reached, the $25 writ, at least $500 (often $1,000) of the Sheriff department's charge, and the (at least) $1,050 for vehicle storage, are your expenses, even when the vehicle doesn't sell.

As discussed earlier, vehicle storage charges may be scary. When there are delays, it might be $4,000 or more, which means you could be spending more than $5,000. (You may get part of the Sheriff's charges back.)

I'm not an attorney. In my opinion, if the vehicle doesn't sell, it's usually returned to the debtor, and you might not be permitted to add your huge costs to what the debtor owes, which is not fair.

Here's a theoretical cost example on a vehicle levy in California. This example is based on an ideal situation, when it makes sense to levy a debtor's vehicle. As discussed before, in some cases, one may lose a bunch of money attempting this.

In our example, the debtor's vehicle is a car, having a private-party Kelley Blue Book value of $15,000, and a prior $4,000 loan that has to be repaid.

The highest auction bid (75 percent of the private-party Kelley Blue Book value) was $11,250.

Auction charges might go this way: $11,250, minus a ten percent auction charge of $1,125, minus $4,000 to repay the prior loan, and the debtor exemption for the personal vehicle of $2,725, leaving a gross total for the creditor of: $6,125.

Our $6,125 total total has expenses. The vehicle storage costs for example, could be $1,000. Also, levying office and writ costs of $525, auction inspection and detailing fees of $400, leaving a net $4,560 for a creditor.

After the auction sale, like a bank levy, the sheriff returns the writ to the court, listing the amount sent to the creditor. That amount is credited toward satisfying the judgment, no matter what costs the creditor spent.

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