Can a Creditor Really Put a Lien on Your Car?

Are you losing sleep over the question, “Can a creditor put a lien on my car?” Or maybe you’re wondering what happens if they actually do? Well, it’s time to put your worries to rest! This article will walk you through the ins and outs of how creditors deal with your car. We’ll not only explain the nitty-gritty of car liens but also shed light on the protections you have as a debtor. So, let’s get started, shall we?

Can a Creditor Put a Lien on My Car?

Well, the quick and dirty answer is: it’s a big “maybe”. Here’s why:

  • Creditors usually only eye your vehicle if it’s got some serious value. If your car is valuable, they could sell it and use the money to pay off your debt.
  • But if your car isn’t worth much, or if you have a car loan that balances out the value of the vehicle, creditors often won’t bother with a lien.
  • Plus, you’re entitled to a personal property exemption up to a certain amount, which can also reduce the value of your vehicle in the eyes of the creditor.

What If a Creditor Does Put a Lien on My Car?

If your car is valuable, a creditor could ask the sheriff to sell it to pay off the debt. But let’s be clear, this is pretty rare. Most creditors don’t go around putting liens on cars or real estate. They usually prefer garnishments and levies on bank accounts because they’re easier to handle.

What’s This About Judgments?

Judgments are basically court orders that say you need to pay the plaintiff money. Whether you lost a lawsuit because you didn’t respond to a summons for a debt collection lawsuit or you genuinely owed the debt, once a plaintiff gets a judgement against you, they can start taking steps to sell your property to get their money. And yes, cars, being personal property, can typically be taken and sold by judgement creditors.

But What About Protections for Debtors?

Here’s the thing: while cars are considered personal property, they’re also super important for daily life. Courts understand that taking away a family’s only reliable transportation could cause serious problems, like unemployment or other hardships. That’s why every state has laws that protect these essential pieces of personal property through something called “exemptions.” Judgement creditors can’t touch things protected by exemptions.

Exemptions? Tell Me More!

Some property, like necessary clothing or burial plots, is totally exempt. Creditors can’t take this exempt property to pay off your judgment debt. Other property, like your car, has a certain amount of its value protected from creditors.

It’s important to know that the exemption protects your equity in the car. Your equity 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 key pieces of information that you need to know to figure out if your state’s exemption protects your car.

Frequently Asked Questions

1. How many types of liens are there?

There are three types of liens, namely consensual, statutory, and judgment. The judgment lien is the most dangerous form which is created when a court grants a creditor an interest in the debtor’s property after a court judgment. These can arise in a variety of circumstances.

2. Can I Get Rid of a Lien on my Car or Truck?

Yes, if your vehicle is worth $10,000 or less, or if your “ownership interest” is $10,000 or less, the creditor must remove the lien. This applies when you’ve taken out a loan to buy the vehicle and haven’t paid enough on the loan to give you a $10,000 “equity” interest, or if you own the vehicle jointly with another and your part-ownership is worth less than $10,000. Note that this exemption can apply only to one vehicle. You can remove a lien by filling out a request form, attaching the necessary evidence, and sending it to the company or person who placed the lien.

3. What if they refuse to remove the lien?

If the creditor refuses to remove the lien despite meeting the criteria and following the proper procedure, you may have to take formal legal action. A creditor who refuses to remove a lien when legally required to do so is potentially liable for financial damages they have caused you, plus your attorney’s fees. In such cases, you might need legal help and there are various offices like the Volunteer Lawyer’s Project and Maine Bar Referral Service which may help you find a lawyer.


Remember, no matter what your car is worth and how high your state’s exemption is, if you don’t make your car or lease payment, the lender can take your vehicle. So, it’s super important to stay on top of your rights and responsibilities when dealing with creditors and to make your payments on time to avoid any potential issues.


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