Article Bookmarked
Bookmark Removed

Can Debt Collectors Repossess My Car?


Feb. 23, 2015 Yahoo! Finance

If you’re like many of us, you need your car to get to work or school, carpool kids or grandkids, or to do your shopping. But what happens if you are getting calls from debt collectors who you can’t pay? Can a debt collector take your car?

Our reader, Marbella, who lives in California, says a collection agency told her she must appear in court over a debt of $1,200 that she defaulted on a while back:

I’m not working right now and I don’t think I am until about a year. Now the thing is that I have a car under my name but my (boyfriend) also appears on the title. Could they go after the vehicle?

“Like many life situations, there’s the formal, legal answer, and then there’s the practical answer,” says Northern California bankruptcy attorney Cathy Moran, who blogs at BankruptcyInBrief.com. “Legally, a creditor with a judgment could reach the share of a co-owned asset that its debtor owns. If there is a loan attached to the car, there has to be enough value in the car to pay off the debt from your share of the car before a creditor could have the sheriff tow the car and sell it. They’d have to give the co-owner his share of the sale price.”

But practically speaking, there are a few hurdles. The first is the fact that some personal property is off-limits to creditors. In our reader’s case, the California exemption protects $2,900 in equity in a vehicle. (In each state, specific property is “exempt” or safe from creditors. Types and amounts of exemptions vary by state.) “So the car would have to have enough value to pay the sheriff’s fees to tow and sell it and the exemption to which you are entitled before the creditor gets anything from the sale,” says Moran.

In fact, Moran says that in 37 years of law practice, the only creditor she’s seen try to seize and sell a car is the Internal Revenue Service.

Read More on Yahoo! Finance

Gene Upshaw Player Assistance Trust Fund

Apply Today

All Resources

Tell Me More

Are Debt Collectors Allowed to Text Me?

There are new rules for debt collectors as of November 30th.

Read More

Understanding Your Credit Score

Find your credit score and come up with a plan.

Read More

One Common Finance Question:

Can a Collection Agency Charge More Than The Original Debt Shown On My Credit Report?

Read More

Which Debt Should You Pay Off First?

Some debts are worse than others.

Read More

The Power of a "We"

Choosing the right pronoun can be the ultimate power move.

Read More

Study links sleep breathing disorders to severe COVID-19 outcomes

If you have a sleep disorder, you may want to be extra careful this winter.

Read More

The Guilt of Living with Chronic Pain

Questioning the legitimacy of a person’s pain induces guilt and worsens pain.

Read More

Ways to Manage Your Everyday Stress

Watch what you eat, how often you move and how you're incorporating mindfulness.

Read More