If a creditor sues you and gets a judgment against you, it can take certain items of your personal property in order to get paid. This is called a property levy. The judgment creditor must first get a “writ of execution” from the court before it can instruct the sheriff or marshal to “levy” on it. (For more on what happens when a creditor sues you, see Creditor Lawsuits.)

It’s important to understand that only a judgment creditor can levy your property. If a creditor does not have a judgment against you, it cannot levy your property. (If the property secured a debt, however, it may be able to repossess the property with a judgment. To learn more, see Repossessions of Cars & Personal Property.)

What Is a Property Levy?

“Levy” basically means that the officer takes the property (your baseball card collection, for example) or instructs the holder of the property (your bank, for example) to turn it over to the officer. After taking your property, the sheriff or marshal sells it at public auction and applies the proceeds to your debt. In the case of a bank account, the amount taken from your account is applied to your debt. You must be notified any time the sheriff or marshal levies against your property. You can request a hearing to show that the property is exempt or that the seizure will cause you financial hardship.

How the Levying Process Works

Here is how the levying process generally works:

The judgment creditor gets a court order authorizing a levy on your property. This order is usually called a writ of execution.

The judgment creditor directs the sheriff to seize (levy on) a particular asset, such as your car.

The sheriff comes to your home. If you are present, the sheriff explains that he or she has an order to take a particular item of your property to sell to pay off your debt. You do not have to let the sheriff into your home, however, unless the sheriff has a special court order allowing entry.

If you aren’t home or don’t cooperate, the sheriff can use a duplicate car key or hotwire a car, as long as it is not in a locked garage. Stay calm; in most states you can be arrested for interfering with the sheriff. The sheriff can’t enter your house without your authorization to take other property without a special court order allowing entry. But again, if the sheriff insists on entering anyway, don’t interfere.

The sheriff puts the item into storage.

If you don’t file an objection (often called a “claim exemption”) within the time allowed by your state, the sheriff will put the item up for sale.

After the sale, the proceeds are used to pay whatever you still owe the original lender, then to pay the sheriff’s costs (seizing, storage, and sale), and then to pay the judgment. If the sale doesn’t cover all of what you owe, the judgment creditor can still come after you for the rest. This is called a deficiency or deficiency balance.

(To learn about other ways judgment creditors can collect from you, see How Creditors Enforce Judgments.)

This is an excerpt from Nolo's Solve Your Money Troubles: Debt, Credit & Bankruptcy, by Margaret Reiter and Robin Leonard.

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