A Writ of Possession Permits a Secured Creditor to Exercise Control over a Debtor’s Asset Before Judgment
When a debtor defaults on a secured loan, the creditor generally has the right to recover and sell the collateral to raise money to satisfy the debt. If the debtor can recover the collateral without breaching the peace, it can exercise its right of self-help and take the property without involving the courts (e.g., repossession of equipment). On the other hand, if the creditor is unable to recover the collateral without breaching the peace (i.e., almost any resistance by the debtor), it must file suit against the debtor and commence claim and delivery proceedings. If these claim and delivery proceedings are successful, the court will issue a writ of possession
Requesting a Writ of Possession
A creditor must submit a written application with supporting documents to the court after the complaint is filed. The court will decide whether to issue a writ of possession at a hearing, which is generally held at least 15 days (longer in federal court) after the debtor is served with copies of the debtor’s moving papers. The debtor normally has an opportunity to file opposition papers five days (longer in federal court) before the hearing.
In certain extraordinary circumstances, the court will grant an application for a writ of possession on an ex-parte basis, with little or no notice to the debtor. To obtain a writ of possession on an ex-parte basis, the creditor must either establish that there is a danger that the collateral will disappear, loose substantial value, or perish (e.g., the collateral is fresh produce) if the court delays issuance of the writ of possession until after a noticed hearing. The court can also issue a writ of possession on an ex-parte basis to help a creditor recover a credit card in the hands of a debtor.
To obtain a writ of possession, the creditor must establish that it is entitled to possession of the property. In the case of a secured creditor, this requirement is generally met by establishing that the debtor has defaulted on a secured obligation with declarations submitted by the creditor or its employees. If the collateral sought is located on private property - which is almost always the case - the creditor must also establish the location of the collateral.
Before the court will issue a writ of possession, the creditor must post a bond in an amount which is equal to two times the debtor’s interest in the property. If, for example, the collateral is worth $100,000 and the amount of the debt is $70,000, the creditor is required to post a bond in the amount of $60,000 (i.e., twice the amount of the debtor’s equity of $30,000 in the property). Because of this requirement, the creditor should try to obtain an evaluation of the collateral’s worth before seeking a writ of possession. The sheriff will generally hold the collateral for a period of approximately two weeks, during which time the debtor can recover the property by posting a bond equal to the credit grantor’s bond. If no bond is posted during that time, the creditor can take possession of the collateral.
Most sheriffs will not take any action to recover the property unless the creditor first pays levy fees to cover the cost of the repossession of the property. These fees vary depending upon the type of property involved. If the property is small and easy to move, the fees probably will not be too high. If the property is delicate, large, or difficult to move, the fees could be high.
If a creditor wrongfully obtains and levies upon a writ of possession, it could be liable for substantial damages. Such damages could exceed the amount of the bond. For this reason, a writ of possession should only be sought when there has been a clear breach by the debtor. For many sheriffs, enforcement of writs of possession is a very low priority. In certain counties, the local sheriff’s department will wait several weeks before it enforces the writ of possession.
On the other hand, the order for issuance of the writ of possession generally also orders the debtor to surrender the collateral to the sheriff. Many business debtors will surrender the collateral once the creditor applies for a writ of possession rather than risk the embarrassment of having a deputy sheriff come to their premises and forcibly remove property.