Levying from Third Parties
Obtaining an entry of judgment does not always result in a debtor voluntarily paying off the debt. It may be worthwhile to record the judgment in a county where the debtor has real property, but this only results in a lien, rather than the immediate payment of the debt. A judgment creditor also may look at which of the judgment debtor's nonexempt assets are subject to levy. However, in some instances, a creditor can also levy upon third parties. The New York commercial debt collection lawyers at Klapper & Fass can advise creditors on whether this may be a useful option to pursue.Levies Involving Third Parties
Levies are legal orders that require a third party—not the creditor or the debtor—to pay off the debt. To remove a levy, a party must pay off the debt or show that the basis of the levy is exempt. A levy can be used to reach many types of property, including intangible property like royalties from copyrighted works. Generally, when a third party owes money to a debtor, a judgment creditor can levy on that obligation so that the person or entity owing the obligation must pay the creditor rather than the debtor. Before a judgment creditor can levy on property, however, it needs to serve a writ of execution.
Under Section 5232 of New York’s Civil Practice Law and Rules, which controls levying on personal property by service of an execution in the State of New York., the sheriff can levy on any debt owed to the judgment debtor by serving a copy of the execution upon the garnishee, which in this situation is the third party. A levy in this manner is effective only if, at the time of service, the judgment debtor is owed a debt by the party served, or the party served has custody of property not capable of delivery in which it knows the judgment debtor has an interest. This method is also effective if the judgment creditor provides an accompanying notice about the specified debt.
The garnishee, or the party properly served with an execution, is then required to transfer all the property, pay the debts to the sheriff or support collection unit, and execute documents to support the transfer. After the transfer, property of the debtor that comes into possession of the garnishee is not subject to the levy. However, until the transfer is made, or 90 days expires after service, or such further time passes as provided by court order, whichever is first, the garnishee cannot make a sale or dispose of the relevant debt to anyone other than the sheriff or support collection unit.Consult an Experienced Litigation Lawyer in New York
If you need to collect a commercial debt, one potential way to do so is to levy on a third party. The New York litigation attorneys at Klapper & Fass can help you determine what the most efficient way to recover money may be based on the particular circumstances of your case. From our offices in White Plains and Manhattan, we serve all five boroughs of New York City as well as Rockland, Orange, Suffolk, Dutchess, Nassau, and Westchester Counties. We also represent creditors nationwide, including in states such as Texas, California, Illinois, and Pennsylvania. Contact our office at 914.287.6466 or use our online form to set up a free consultation for your debt claim.