Can (or Will) A Creditor Take Your Car if You Have a Judgment Against You?

If you owe money, especially a judgment, you probably have concerns about creditors coming to take your property. If you don’t have a lot of assets, you may wonder what you have that a creditor could possibly take. But what about your vehicle?

Although vehicles are legally considered luxury items or non necessities, for many people, vehicles are our lifelines: the way we get to and from work, get the kids to where they need to be, etc. That’s why the prospect of losing a car to a judgment creditor can be so frightening.

Repossession and Creditor Claims

Note that there is a difference between your finance company repossessing the vehicle with a repossession and an outside creditor taking the vehicle to satisfy a judgment.

When you agreed to your car loan, you agreed to the vehicle as security for the loan. So, while there are restrictions on how a car can be repossessed, generally, the finance company of your car loan can take your car if you don’t pay much more easily than an outside creditor can.

Is It Worth It?

If you owe money to a creditor, or more specifically, you have a judgment against you that the creditor is looking to collect on, the first question is whether or not the creditor will even bother to come after your car (or if you are the creditor, whether it’s worth going after someone’s car to satisfy what is owed to you).

Cars come with unique problems for creditors.

The first problem is simply equity—many people with car loans don’t have that much equity in their vehicles. Vehicles aren’t an appreciating asset—quite the opposite. So, older cars will have nominal value and newer cars may have too little equity in them to make it worth the creditor’s while in taking them.

On top of this is that the creditor has no idea what condition the vehicle may be in. Condition, maintenance and upkeep play a large role in car valuation. The creditor may have no way of knowing what shape your car is in, until the creditor actually has and inspects it.

Selling cars isn’t so easy either: most will get sold at public auction, but that takes auction costs, as well as listing and advertising. This can eat into any profit the creditor is thinking about taking.

Statutory Exemption

Add all this to the $5,000 vehicle exemption that Florida law gives to debtors. Even if the car has equity, $5,000 of that equity cannot be taken by the creditor. So, a vehicle with, say, $7,000 in total equity, may only yield $2,000 for the creditor—hardly an amount that is worth the risk and trouble.

For people with car collections, multiple cars, collector cars or exotic cars, they may be more targeted for collection on their vehicles to satisfy debts that are owed. For them, some asset protection for those vehicles, maybe the best avenue to avoid creditor claims.

Owe money or does someone owe you money? Let the West Palm Beach business litigation lawyers at Pike & Lustig help with your judgment problem.

Source:

leg.state.fl.us/statutes/index.cfm?App_mode=Display_Statute&URL=0200-0299/0222/Sections/0222.25.html