What is a Levy?
A levy is a legal action whereby a creditor seeks to enforce a judgment by seizing the debtor’s assets or property.
How to Select Assets to Levy
When a judgment has been docketed in a district court for at least thirty (30) days, and the judgment has not been satisfied, a creditor, upon request, is entitled to information as the nature, amount, identity, and locations of all the debtor’s assets, liabilities, and personal earnings pursuant to Minnesota Statutes section 550.011. The creditor may then obtain satisfaction of the judgment by way of execution on nonexempt assets and earnings of the debtor.
How to Enforce a Levy
A levy is enforced by what is known as a “writ of execution.” A writ of execution is an order by the court directing a county sheriff to seize certain assets or earnings. The execution must contain the names of the parties, the amount of the judgment, and, if the judgment is for money, the amount actually due with accrued interest. The sheriff will then seize certain property, to be collected or sold, in an effort to satisfy the creditor’s judgment against the debtor.
Levy on Money
The most common asset used to satisfy an execution levy is money. Upon execution, a sheriff shall seize certain monies of the debtor and return those monies to the creditor as fulfillment of the judgment pursuant to section 550.09.
Levy on Property
Upon execution, all real and personal property, including rights and shares in the stock of corporations, money, book accounts, credits, negotiable instruments, and other evidences of indebtedness, may be levied and sold to satisfy a judgment on behalf of a creditor pursuant to section 550.10. Where the property to be seized cannot be immediately removed it is sufficient to file, in the appropriate filing office under the Uniform Commercial code, section 33.9-501, a certified copy of the execution pursuant to section 550.13.
Levy on Earnings
A creditor may recover a judgment by placing a levy against the debtor’s earnings. Unless the judgment is for child support, an individual’s earnings that are subject to an execution levy may not exceed the lesser of 25 percent of the debtor’s disposable income or forty (40) hours per week of federal minimum wages for the same pay period. Where a judgment is for child support, the creditor is entitled to substantially more under section 550.136, subdiv. 3(b).
The procedure for executing a levy on earnings is significantly more complicated than other writs of execution. First, a notice of the creditors intentions must be served upon the debtor no less than ten (10) days before service of the writ of execution on the employer. The notice must follow substantially the same format as the example provided in section 550.136, subdiv. 6, and must inform the debtor of potential earnings exemptions available to him/her under section 550.37, subdiv. 14.
If no statement of exemption is received within ten (10) days of the service of the original notice, the creditor may proceed with execution of the levy. At which point the creditor must provide to the sheriff an Earnings Disclosure form and Earnings Disclosure worksheet, along with the writ of execution, to be served upon the debtor’s employer. The disclosures must follow substantially the same format as the example provided in section 550.136, subdiv. 9. The creditor must then serve upon the debtor a copy of the writ of execution and all other papers served on the employer. The copies must be served by mail and within five (5) days after service is made upon the debtor’s employer.
Levy on a Bank Account
A debtor’s bank account may also be subject to the execution of a levy provided the creditor follows the procedures outlined in section 550.143. The creditor must provide the sheriff with several documents, to be served upon the financial institution, which include:
- Execution Disclosure form pursuant to section 550.143, subdiv. 2;
- writ of execution; and
- Notice of Levy, instructions, and two (2) copies of an Exemption Notice pursuant to section 550.143, subdiv. 3.
If no claim of exemption is received by the financial institution within fourteen (14) days after the notices are mailed to the debtor, the funds remain subject to the execution levy and the institution must remit the funds to the sheriff within six (6) business days. If the debtor does claim an exemption, the creditor has the opportunity to object by mailing or delivering a Notice of Objection and Notice of Hearing to the financial institution and debtor pursuant to section 550.143, subdiv. 7.
Attorney Levy Actions
A number of options may be available when seeking to levy funds or other property.
A continuous levy requires that a third party send regular, periodic payments to the Minnesota Department of Revenue.
Levy Debtor’s Assets & Funds, an Overview
A levy is a legal tool used in debt collection. A levy is a legal action where a creditor seeks to enforce a judgment by seizing the debtor’s assets or property.
A one-time levy that requires a third party to send 100 percent of any payments due to the debtor within 30 days of the levy notice.
A bank levy is a legal action that takes property and rights to obtain property, including bank deposit accounts, of the person liable for a delinquent tax or other agency debt.
A levy on securities is a legal action used to take non-exempt publicly traded securities owned by the debtor.
Seizures are a type of levy with special requirements.
A wage levy, sometimes referred to as a garnishment, is a legal action used to take up to 25 percent of a debtor’s wages to pay a debt.