Collecting Accounts Receivable Part VIII: Executing and Levying on a Debtor’s Personal Property
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This Blog is Part VIII in a series of Blogs designed to provide business owners with a high-level overview of the legal process for collecting on past-due accounts receivables. Specifically, Part VIII focuses on executing and levying on a debtor’s personal property as a method for creditors to satisfy an outstanding judgment balance.
When a creditor records the judicial lien certificate with the Florida Department of State upon obtaining the judgment order, the judgment becomes a lien against all existing, nonexempt personal property of the debtor. Then creditor will then want to request a writ of execution from the clerk of court, which is the official document by which a creditor can enforce its money judgment against the debtor’s personal property. Fla. R. Civ. P. 1.570(a). Once the writ of execution is issued, it is valid and effective during the life of the judgment. Fla. Stat. § 56.021. The creditor can then use the writ of execution to enforce its lien against the debtor’s personal property through a process called “levying,” which is performed by a sheriff of the state.
The Florida Statutes list what property is subject to execution and levy. This property includes, “lands and tenements, goods and chattels, equities of redemption in real and personal property, and stock in corporations.” Fla. Stat. § 56.061. These classifications of property are very broad and one court has ruled that it encompasses any personal property that is “capable of manual possession and whose chief value is intrinsic to the object itself.” Williams Mgmt. Enterprises, Inc. v. Buonauro, 489 So.2d 160, 163 n.3 (Fla. 5th DCA 1986). Concerning intangible personal property not capable of “manual possession,” such as bank accounts, salary or wages, that is available to a creditor through a writ of garnishment rather than execution and levy.
After the creditor records the judicial lien certificate with the Florida Department of State and obtains the writ of execution from the clerk of court, the next step for the creditor is to provide the sheriff with the writ of execution and instructions to levy on the property identified. According to the Florida Statutes, the sheriff is only to levy on the debtor’s property that is specifically described in either the writ of execution or the instructions to levy. Fla. Stat. § 30.30(1). The best way for the creditor to uncover the debtor’s property subject to execution and levy is through post-judgment discovery. There is no limit to the number of separate instructions that can be provided to the sheriff or the amount of property that can be levied so long as the judgment balance remains unsatisfied. The instructions for levy must also include the outstanding judgment balance. Fla. Stat. § 30.30(1)(b).
In addition to the writ of execution and instructions to levy, the judgment creditor must also provide the sheriff with a certified copy of the recorded judgment lien certificate and an affidavit in support. There are also some costs and expenses that accompany the levying process, which the creditor must cover. The sheriff is able to estimate expenses for carrying out the levy and can require the creditor to first make a deposit to cover those expenses. While the Florida Statutes fix certain costs associated with levying, other expense deposits will vary from county to county based on the property to be seized. See Fla. Stat. § 30.231(1)(d). Also, in order to protect the sheriff from liability due to a wrongful levy, the sheriff can require the creditor to furnish a surety bond for the reasonable value of the property described in the writ of execution or instructions to levy. Fla. Stat. § 30.30(3).
Upon receiving the instructions to levy and all required fees and deposits are covered, the sheriff will then execute the levy by seizing the debtor’s property. Once seized, the sheriff will sell the property at what is commonly referred to as a “sheriff’s sale” in order to generate funds for satisfying the judgment. The sheriff must provide public notice of the sale, which includes the time, date and place of sale, in a newspaper within the county where the property is located. That notice must be made once a week for four consecutive weeks prior to the sale being held. Fla. Stat. § 56.21. The debtor can avoid a sale of the property by providing funds to satisfy the judgment balance at any time prior to the sale.
If a judgment debtor has substantial personal property as defined in Section 56.061, Florida Statutes, then the process of execution and levying on that property can be an effective way for a creditor to satisfy his or her outstanding judgment balance. Stay tuned for Part IX of this series, which will focus on the ability of creditors to obtain a receiver to oversee the operations of a debtor’s business as a method for satisfying the outstanding judgment balance.