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Can a Judgment Creditor Take my Car?

George Simons | December 01, 2022

Summary: A judgment creditor can take your car. If you've been sued, use SoloSuit to respond in 15 minutes and protect your precious car.

Can a Judgment Creditor Take Your Car?

Summary: Losing in court is scary, particularly when you are afraid that a judgment creditor may try to take your car. Luckily for debtors, all states have legal exemptions that protect a portion of a car's value from the judgment creditor. If your vehicle's value falls below the exemption amount, it is safe from the judgment creditor.

Yes, a Judgment Creditor Can Take Your Car?

Judgments are court orders requiring you to pay the plaintiff money. Whether you lost a lawsuit because you did not know how to answer a summons for a debt collection lawsuit or legitimately owed the debt, once a plaintiff gets a judgment against you, they can take steps to sell your property get their money. Cars are personal property, and that means that judgment creditors can typically take and sell them.

While cars may be personal property, they are also really important for daily life. Vehicles help us get to work, feed our families, and get kids to doctor's appointments. Courts recognize that taking a family's only means of reliable transportation could create a severe problem that could result in unemployment or other hardships. Luckily for debtors, every state recognizes that some types of personal property, like your car, are crucial to daily life that losing them would have terrible effects for you and your family.

State laws protect these critical pieces of personal property through “exemptions.” Judgment creditors cannot take things protected by exemptions. Some property, like reasonably necessary clothing or burial plots, is totally exempt. Creditors cannot take the exempt property to pay down your judgment debt. Other property, like your car, has a certain amount of its value protected from creditors.

It is essential to understand that the exemption protects your equity in the car. The equity you have is the difference between what you owe on the vehicle's loan and its market value. Knowing what the car is worth when you lost your lawsuit, and the amount of your state's auto exemption are crucial bits of information that you need to know to determine if your state's exemption shields your car.

Keep in mind that no matter what your car is worth and how high your state's exemption, if you do not make your car or lease payment, the lender can take your vehicle.

Your Car Can Be Seized Even If You Own It Fully

Whether a judgment creditor can take your car depends on how much the car is worth. Because you do not owe anything on the vehicle, your equity equals the car's value. Whenever the vehicle's value is lower than your state's automobile exemption, a creditor probably cannot take it. If it is worth more than the automobile exemption, a judgment creditor can take the car and sell it. They will need to refund you the value of your state's exemption and can use the rest to pay down your debt.

To understand how this would play out in real life, assume that you are in Colorado and can claim a $7,500 motor vehicle exemption. Your vehicle is owned free-and-clear and is worth $20,000. A judgment creditor could sell your car and would need to refund you $7,500 while applying $12,500 towards the judgment.

What if I Owe Money on My Car?

Let's be real for a minute - most people who have a car also have a car payment. Whether you owe more than what your car is worth because you paid a high-interest rate, did not put much money down, or were involved in an accident, judgment creditors are probably not going to take your vehicle from you. You have no equity in the car, so you have less equity than whatever your state's exemption is. That is a losing proposition for judgment creditors!

Things can get dicey if you have a bit of equity in your car. This is where knowing what your state's personal property exemption comes into play. Assume that you owed $6,000 on a car that was worth $12,500 in Massachusetts. The auto exemption in that state is $7,500. Because the exemption is worth more than your equity in the car ($6,500), the creditor is probably not going to seize it.

What if I lease my car?

A leased car typically cannot be seized to pay off your judgment because you do not own the vehicle. Lessees rent leased vehicles from the lessor, so unless you start missing lease payments, the car will probably stay in your driveway.

What is SoloSuit?

SoloSuit makes it easy to respond to a debt collection lawsuit.

How it works: SoloSuit is a step-by-step web-app that asks you all the necessary questions to complete your answer. Upon completion, you can either print the completed forms and mail in the hard copies to the courts or you can pay SoloSuit to file it for you and to have an attorney review the document.

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