Levying on Personal Property of a Debtor

One option for collecting on a judgment in Maryland is to levy on the debtor’s personal property and, if necessary, forcing the sale of the debtor’s personal property.  Generally the most expensive personal property a debtor owns is his vehicle, so this post will focus on levying on a debtor’s vehicle.

Initial Considerations

To sell a debtor’s vehicle to satisfy a judgment, there are a few initial considerations. First, you must consider the costs.  The creditor is responsible for any costs associated with the sale, so it is important that the estimated proceeds from the sale outweigh the costs by a significant margin for this procedure to be worth your time and effort.  Also consider the fact the cars are auctioned and are generally sold for only a third of the bluebook value.

Second, you must consider the ownership status.  You cannot levy on a vehicle that is held jointly if you only have a judgment against one of the owners.

Third, you must consider ownership and costs together.  Although the debtor may not own the car jointly with another person, the debtor may have financed the vehicle and therefore any sale would be futile as the financing company would collect first.  It doesn’t take long to recognize the conundrum here: if a car is worth enough to satisfy the judgment, it is probably new and thus still under financing, but once the car is paid off in a few years the value is likely to drop significantly.  

Further Investigation

Once you have determined that the debtor is the sole owner of the vehicle and that the estimated value of the vehicle is worth the cost in forcing a sale, you are ready to proceed but not without further investigation.

You must locate the vehicle.  If the vehicle is located in a county other than where you obtained judgment, you must transmit the judgment to that county.  You must also locate the vehicle so you can inform the sheriff where to find it.  You also need to locate a copy of the title, or a certified copy of the registration information from the DMV to deliver to the sheriff so the sheriff is certain he is levying on the correct vehicle.  The court also requires you to include the vehicle identification number (the VIN number) of the vehicle in the request.  

Filing the Request

The creditor should then file the Request for Writ of Execution under Maryland Rule 3-641 for levies in district court.  This request is filed in the county where the vehicle is located. You must include in the request a detailed description of the vehicle along with the VIN and a copy of the title.  

If the court grants the request, the clerk issues the writ which directs the sheriff to do one of a few options under Md. Rule 3-641.

On the writ, if you indicate “leave the property where found,” the sheriff will post a notice alerting the defendant that the property has been levied.

If you indicate “exclude others from access to it or use of it,” the sheriff will leave the vehicle in its location but render it inaccessible. The court may require you to post a bond with the sheriff if you choose this option.  

If you indicate “remove it from the premises,” the sheriff will impound the vehicle. If you choose this option the court may also require you to post a bond.  If you would like to sell the vehicle, you must select this option and have it seized.  The sheriff’s office uses the bond to meet its costs but any unused funds will be returned to the creditor.  Additionally, you must pay a private tow company to tow the vehicle.

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Selling the Debtor’s Vehicle

If you choose to have the sheriff sell the vehicle, you must wait at least 30 days before the sheriff can do so under Md. Rule 3-644.  During that 30 days, the creditor must pay to store the vehicle per day. If 30 days has passed and the debtor has not responded with an election or a motion, the sheriff may go forward with the sale upon request of the creditor.  If a sale is not made within 120 days, the debtor can have the vehicle released.  

Under Md. Rule 3-644, the sheriff must give notice of the time, place, and terms of the sale.  The sheriff posts the notice on the courthouse door or on a bulletin board in the immediate vicinity of the door and publishes the notice in a newspaper of general circulation in the county where the property is located.  The creditor must pay for the costs of the advertisement in the newspaper.  The sheriff must do this at least ten days before the sale of the vehicle.

The sale must be public and must be held at the time and place given in the notice.  The creditor must pay an auctioneer to conduct the sale.  The sale must be for the highest cash offer, but the sheriff may reject all offers if they are unconscionably low.  If this occurs, the sheriff must offer the property for sale at a later time.

Keep in mind that the sheriff may withdraw from the proceeds of the sale all appropriate unpaid sheriff's expenses and fees incident to the enforcement proceedings.

Distributing the Proceeds

To conclude the process, unless otherwise ordered by the court, the sheriff must distribute the balance of the proceeds of the sale first to the creditor in satisfaction of the amount owed under the judgment plus costs of the enforcement proceedings advanced by the creditor as directed under Md. Rule 3-644(f).  This is important because it gives the creditor the opportunity to recoup some of the enforcement costs if the property’s sale price is enough to satisfy these costs.  Finally, if there are any remaining proceeds from the sale, the sheriff must return these proceeds to the debtor.

Conclusion

Levying on a vehicle is a costly and time consuming process and should only be carried out in exigent circumstances where the creditor is certain he will recoup his costs and obtain a substantial payout from the sale.  As mentioned above, many times this is not the case as debtors don’t generally own expensive vehicles outright with value to satisfy any claims.