Possession through judicial process

     The secured party must resort to judicial process to obtain possession of tangible personal property collateral when a debtor in default declines to voluntarily surrender possession of the property and when self help repossession is either prohibited or would breach the peace.  In the lawsuit, the secured party may plead both a cause of action seeking to obtain possession of and foreclose on the collateral and a cause of action seeking a judgment for the debtor's personal liability on the debt. Once a judgment of possession is obtained, the secured party may obtain a writ of possession instructing a levying officer to seize the collateral from the debtor and deliver it to the secured party. These are the "legal papers" to which the court is referring in Stone Machinery v. Kessler.   If subsequent sale of the collateral by the secured party fails to net proceeds sufficient to satisfy the debt, the secured party's monetary judgment on the obligation may be enforced to the extent of any deficiency. The judgment creditor, having exhausted its security, must now proceed like any other unsecured creditor, seeking to enforce its judgment against other property of the debtor.

     Alternatively, the personal property secured creditor may seek to enforce a judgment of personal liability of the debtor without first resorting to the collateral. This may be particularly appropriate when the secured party cannot locate the collateral, when the collateral has become virtually worthless (through deterioration or from market conditions), or when the collateral has been destroyed.  

     The personal property secured creditor wishing to exert additional leverage over the debtor, or fearful that collateral may be secreted, damaged, or less valuable by the time judgment of foreclosure is obtained, may seek a pre-judgment writ of possession. In California, the procedure for accomplishing this objective is known as "Claim and Delivery" (Cal. Code Civ. Pro. 511.010, et. seq.). To secure a pre-judgment writ, the secured party, following the filing and service of a complaint, will typically need to establish, upon noticed hearing, the probable validity of its claim to possession of the property, and will need to post a bond. If the secured party is successful in this preliminary effort, the debtor will often concede the lawsuit.