Wednesday, July 11, 2012

Auto Levy Math Examples

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

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

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

In California, if Sheriff garnishments are not bank accounts or wages, the judgment debtor's property must be auctioned by the sheriff. This makes garnishments of anything except bank accounts and wages very expensive.

Auction process are inefficient sales mechanisms which usually yield low relative prices, reducing what is available to satisfy the judgment. One day, perhaps Sheriff auctions will be on EBay.

The debtor's exemption is the first expense. That exemption is for only one vehicle owned by the debtor. This exemption is ,725, and if their vehicle is used in their work as a commercial vehicle, the exemption is ,900. The first ,725 or ,900 from an action sale, is returned to the debtor.

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

Some good news is the Sheriff sometimes allows one to pay half the required amount (e.g., 0) to start. The bad news is that is only the beginning of an upward whirlpool of costs that could sometimes make you regret levying a judgment debtor's vehicle.

After the (so far) ,725 or ,900 in costs, there is the fee of a Sheriff's department charges to store the vehicle. In this article, the example is thirty days at per day for vehicle storage costs, totaling ,050.

In some situations, for example if the Sheriff is backlogged, or the judgment debtor files for bankruptcy protection, the storage costs you must always pay, increase dramatically.

One more way that bankruptcy can be unfair to creditors that levy a judgment debtor's vehicle, is that creditors must pay levy storage costs, even when the debtor's bankruptcy is eventually denied. Four months of storage charges might cost about ,200.

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

In this example so far, we are up to at least ,950 or ,775. To break even, a vehicle needs to sell for more than ,306 or ,840, to have a chance of paying anything toward satisfying the judgment.

Last but not least, there can also be the cost of paying off all prior vehicle loans.

The opening price at an auction is most often the price of the judgment debtor exemption and paying off previous loans on the vehicle.

Always show up at Sheriff auctions when the debtor's property is for sale. While you may be allowed to bid with judgment credit at an auction, you cannot credit bid for the judgment debtor's exemption, or to repay any previous loans on the vehicle.

If money is collected under a writ, it is collected under a writ of execution, it is applied first to the cost of obtaining a writ, second to any accrued interest, third to the levying officers fees and costs of performing the levy, and fourth to the judgment principal.

When the opening price bid is not met, the writ, at least 0 (often ,000) of the Sheriff department's charge, and the (at least) ,050 for storage, are your expenses, even when the vehicle does not sell.

As discussed earlier, vehicle storage charges may be prohibitive. If there are delays, it might be ,000 or more, meaning you could be out of pocket more than ,000. (You may get part of the Sheriff's charges back.)

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

Here's a hypothetical cost example on a California vehicle levy. This example assumes a good situation, where it makes sense to levy the debtor's vehicle. As mentioned earlier, in many cases, one may lose a lot of money trying this.

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

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

The fees could go this way: ,250, minus a 10% auction fee of ,125, minus ,000 to repay the prior loan, and the debtor exemption for the personal vehicle of ,725, leaving a gross total for the judgment creditor of: ,125.

That ,125 gross total has expenses. The vehicle storage fee for example, could be ,000. Also, writ and levying officer fees of 5, auction inspection and detailing fees of 0, leaving a net ,560 for the creditor.

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

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