10 Easy Steps to Perform a Bank Levy on Your Debtor
So, you finally received your court-ordered money judgment. Good for you. Now it’s time to finally collect on that debt owed to you. But how do you do that? Performing a bank levy is a great place to start.
A “levy” is the seizing of property. It can be seizing money in a bank, grabbing a vehicle, or taking possession of some other personal property. In this case the property is the money in the debtor’s bank account.
There are ten easy steps to performing a bank levy. These steps are fairly straightforward – but you must dot the i’s and cross the t’s. No mistakes here, as you may blow your only chance of collecting on your debt.
Step 1: Wait Thirty Days For the Debtor to File an Appeal
Yes, I know – you’re anxious to get that money. In most States, by law, you have to wait 30 days for that possible appeal. In fact, wait 32 days. You really don’t want to get dinged for failing to follow the law.
Do yourself a favor and look up the law in your State. I am not an Attorney, and am assuming that your are not one either. Some States may differ on how long you have to wait for a debtor to file an appeal.
Step 2: Find out Where the Debtor Banks
Obviously, this step is crucial. I have written other articles about Legal Bank Locates that you should definitely read. For now, here are a few options:
- Hire a Skip Tracer, Private Investigator or Information Broker
- Follow your debtor to the bank (And his work while you’re at it)
- Perform a Blind Levy
- Go through the debtor’s trash
- Conduct a Debtor’s Exam
Hiring a PI or someone else to find out where someone banks is going to cost you. Probably a couple of hundred dollars. At least. And, following your debtor to the bank isn’t the safest thing to do.
A “Blind Levy” is when you will pick out the largest four or five banks in the area where the debtor works and lives and then levy on each bank. You only need one Writ of Execution from the Court – but you need separate paperwork for each bank. Gonna cost you a few hundred dollars.
A “Debtor’s Exam” is simply serving the debtor, getting a court date, and then sitting down with him to find out what his assets are. This includes where he works and where he does his banking. Very effective, and will cost you a couple of hundred dollars including the serve. Make sure you have a Registered Process Server on stand-by!
Step 3: Apply For a Writ of Execution at the Court House
A “Writ of Execution” (or writ of garnishment or FIFA) is the court document that lists how much is owed by the debtor, including interest and costs. You can get the Writ of Execution from your local court or the court website online. Here is an example of a California Writ of Execution.
You have to fill out the form. You will also have to compute the interest up to the current date. If you’re not sure what the judgment interest rate is, perform a simple internet search for your state. For example, in California the rate is 10% per year.
In most states you will have to fill out an additional form that justifies the information on the writ. In the State of California it is called a Memorandum of Costs. With this document you add interest and additional costs you’ve had after getting the judgment.
Step 4: Determine When You Think the Most Money Will Be in the Account
If you have reason to believe that your debtor receives his paychecks via a direct deposit, it’s best to levy around the 2nd or the 16th of the month. You’re doing a bit of guessing here, but I know from experience that these particular days usually work out to your advantage.
If your debtor is a renter, then factor in when you think the landlord will cash the debtor’s rent check.
You want to levy before the rent check clears. That’s going to be around the first of the month, as I have found that most landlords or property management companies wait a few days to collect all of the rent checks before heading off to the bank. Do your homework, and look closely on the calendar. Timing is everything!
If the debtor owns a home and pays a mortgage, the mortgage will probably be due by the 15th of the month. If I were you, I would levy around the 2nd of the month. That’s probably when the most money is in the account.
Side Note: Don’t worry if the debtor banks at the same bank that holds his mortgage. The bank still has to honor your levy. It’s the law.
Step 5: Choose Either a Sheriff or a Registered Process Server (RPS) to Conduct the Levy
In some areas the Sheriff’s (or Marshalls, or Constables), are too busy to do basic levies, or they may be too busy to levy on the account on the exact day you want. In that case, use a registered process server (RPS) at a local Attorney Service Company.
Process servers are more expensive (about $75-$150 for a bank levy), but it’s worth it because you’ll be sure that the levy happens on the precise day you’ve requested. And the cost of the levy and the RPS can be added back onto the judgment.
Registered Process Server (RPS): A person registered in the county to serve legal papers. I prefer to use an RPS rather than a Sheriff because the RPS works for me, not the county.
When I levy on a bank, I can tell the RPS exactly when to do it (maybe the 2nd or 16th of the month when direct deposits come in). Sheriffs will usually levy on their own schedule. The RPS still has to file the paperwork with the Sheriff, but the RPS does the actual work.
Step 6: Complete the Additional Paperwork for the Sheriff
There may be additional paperwork you will need for the Sheriff. In the State of California this would include the Sheriff’s Instructions, a “Memorandum of Garnishee,” and a “Notice of Levy.”
Check with the Sheriff of your county to see what is required. If you don’t want the hassle of dealing with these forms, get the RPS to handle whatever additional paperwork there might be.
If you come across an RPS who won’t do it, look around for another one who will. Attorney Services have RPSs, and will fill out the forms too. That’s what they are paid for. It’s going to cost you a few extra bucks – but probably worth it.
Remember: The Registered (or Certified) Process Server will serve when YOU want – 1st of the month for example, when most funds are likely to be there. A sheriff will serve when it’s convenient for them.
Step 7: Pay the Sheriff’s Fees – They Will Serve the Bank
Whether you choose a Sheriff or Registered Process Server, there will still be Sheriff’s fees (Probably around $50-$100). Write a check to the Sheriff. Then, whichever one you choose—the Sheriff or RPS—will take the Writ of Execution and any other required paperwork to the bank
Step 8: Sit Back and Wait
Be patient. The bank will freeze the account and all monies in it up to the amount stated in the Writ of Execution. In some states, such as Missouri, the levy is good for several weeks, which means anything deposited during that time will be seized and frozen.
The bank will hold the funds for approximately 15 days and then turn it over to the Sheriff. The Sheriff will hold it for awhile and then send it to you. If the debtor files a claim of exemption you will have to oppose it.
Step 9: Sit Back and Wait Some More!
The check will be arriving in about 30-45 days. Due to budget cuts in local counties, it might take even longer. Call the Sheriff for the specific length of time. Relax – you’re almost home free!
Step 10: File the Satisfaction of Judgment
If your judgment is paid in full through a bank levy, or any other means, it is absolutely necessary for you to file a Satisfaction of Judgment with the court, and with the county recorder of every county in which you’ve recorded and Abstract of Judgment.
You must do it for two reasons: 1) It’s the right thing to do, and 2) The debtor can sue you if you don’t.
Yes, he can sue you. He might claim that you hurt his credit rating or something else. Or, he may say that he couldn’t buy the home he wanted, and the home values in his area appreciated, and therefore because of you he lost money he otherwise would have had, and you are liable, and he’s going to sue you. And on and on and on!
We are in a sue-happy society, and you already know many debtors are clever – and maybe devious. Don’t take a chance – file that Satisfaction of Judgment!
Final Thoughts on Performing a Bank Levy
Performing a bank levy can get complicated. This guide should point you in the right direction. Remember – just follow the law in your State and you should be just fine.
We always recommend using an Attorney Service. They know what they’re doing, are reasonably affordable, and will make sure everything goes smoothly.
You may only get one chance at a bank levy. If the debtor is on to you – he’s going to withdraw any funds he may have and use a relative or check cashing place as his banker
Related Topics on Bank Levies
Can I pre-text someone on the phone to get their banking information? The short answer is a resounding NO! I wrote an article on just this subject awhile back about pretexting and if it’s legal or not. Tread carefully here!
What about garnishing the debtor’s wages? Can I do that? You certainly can. The problem most people have with wage garnishments is finding our where the debtor works. Again, I have covered wage garnishments in a different article.
