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Can A Judgment Creditor Take My Car?

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In a Nutshell

Once a creditor files a lawsuit and is awarded a judgment by the court, it has several options to satisfy its debt. It can garnish wages or levy a bank account. It can also obtain a judgment lien and place it on real property such as a house or even personal property such as an automobile. This article will explain your options and how you can use them when a so-called judgment creditor files a lien on a motor vehicle.

Written by the Upsolve TeamLegally reviewed by Attorney Andrea Wimmer
Updated August 11, 2020

Once a creditor files a lawsuit and is awarded a judgment by the court, it has several options to satisfy its debt. It can garnish wages or levy a bank account. It can also obtain a judgment lien and place it on real property such as a house or even personal property such as an automobile. This article will explain your options and how you can use them when a so-called judgment creditor files a lien on a motor vehicle. 

What is A Debt Collection Lawsuit?

Unsecured debts such as credit cards, medical bills, student loans, and personal lines of credit usually require timely payments each month. Once you miss a payment, you face increased collection efforts by the original creditor and a negative entry on your credit report. Once you default, the original creditor may use a third-party collection agency as an additional means of trying to persuade you to repay the debt. Remember, not all third party debt collectors obey federal laws like the Fair Debt Collection Practices Act (FDCPA). 

If the collection efforts of the original creditor and any third-party debt collectors fail, the creditor will initiate legal action. It will likely use a local law firm to file a civil lawsuit in your local county court. If you fail to answer this lawsuit, you will get one more chance to answer when the creditor requests a judgment by default. If you continue to ignore the lawsuit, you will forfeit and the court will enter a default judgment on behalf of the creditor.   

When a court enters a judgment, including a default judgment, on behalf of a party like an unsecured creditor trying to collect a credit card debt, it converts this unsecured creditor into a judgment creditor, who has many more options than an unsecured creditor when collecting a debt. At this time, any consumer who was the defendant, and lost a debt collection lawsuit faces increased hardship as the result of a judgment creditor having more direct collection efforts. Now, it can legally seize assets, including both real estate and personal property, to satisfy the debt. 

What Happens When A Judgment is Obtained?

Obtaining a judgment, including a default judgment, provides a creditor with more efficient and effective options other than an endless bombardment of phone calls and letters to collect its debt. These options include wage garnishment and levy on a bank account. Another significant option is the power to place a judgment lien on any real property and personal property. Unless you’re collection proof and have nothing but exempt property and exempt income, such as disability benefits, Social Security, child support, public assistance, or workers’ compensation, you may have to consider legal advice to weigh all your options. 


With the judgment in hand, a judgment creditor now has the means to obtain a lien known as a judgment lien. It can place a lien on real property such as a home or even certain personal property such as an automobile.

A lien is a property right that secures a creditor’s right to payment. Liens must be perfected, which is the legal process required to be taken to make a security interest effective against third parties or to retain its effectiveness in the event of default by the party granting the security interest.  

The most important takeaway from a lien is that it converts an unsecured debt into a secured debt, which provides a creditor with more tools to collect its debt. If you are subject to a lien, you are no longer only subject to collection efforts consisting of constant phone calls and letters. These forms of contact will continue, but now a lienholder has more tools in its debt collection toolbox.  

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How Does This Affect My Personal Property?

A creditor, like a credit card company, armed with a court judgment has more options than an unsecured creditor under state law. While a lien converts the underlying debt to a secured debt, there are other better options available to a judgment creditor. These less expensive, fast, easy, yet effective options include wage garnishment and levies on a bank account.

While a judgment lien involves recording the judgment and waiting for the property to be sold or refinanced, wage garnishment or bank account levy involves filing the appropriate paperwork with the court and awaiting a court order that it can serve on your employer’s payroll department or your bank to immediately seize wages or funds in an account. 

Personal Property

While a garnishment or levy allows assets in the form of money to be seized, a lien allows your personal property to be sold. Wage garnishments and bank account levies are limited in what they may seize over a thirty-day period, which means although there is some immediate satisfaction of the debt, any recovery is limited by statute to a specific amount each month. 

However, while a judgment lien may take more time to process and execute, it allows a judgment lienholder to sell your personal property. Depending on the value of the personal property, this allows the lienholder to potentially satisfy the debt in full instead of having to wait to satisfy the debt in monthly increments with a garnishment or levy.     

Executing on personal property that is the subject of a judgment lien also requires your county sheriff to come to your residence and inventory and appraise your personal property for sale.  

What is the Personal Property Exemption?

Fortunately, every state has laws that exclude or exempt property from the reach of creditors. These exemption statutes are based on the notion or policy that every consumer needs a minimum amount of property to exist. There are exemptions for many types of property including, but not limited to, homesteads, household goods, money in bank accounts, and motor vehicles. Notably, the amounts of most exemptions vary by state. If you receive notice that a creditor is about to place a lien or worse, sell your property that is exempt under present law, you must assert this exemption immediately or you will likely lose the property despite possessing the exemption.

What About My Car?

Because a car is considered personal property, any lien that is placed on your personal property will apply to and cover your car. You must immediately determine the exemption for automobiles that your state allows. For example, Arizona allows an exemption of $6,000 in a motor vehicle whereas Ohio allows an exemption of $3,675. This amount represents your equity in the vehicle rather than the vehicle’s value. It is therefore absolutely crucial to establish the value of the car for purposes of calculating the exemption and whether it protects the car.

Many people own cars that are not yet paid in full and therefore are subject to a lien in the form of a purchase-money security interest. Many owners have little or no equity in their vehicles and never will during the course of their ownership. A creditor is unlikely to sell your vehicle where its only effect is the payment of the car loan. 

Problems arise when you have no car loan or you have equity above the amount of the exemption. Once a judgment creditor perfects a lien on the car, it will have converted an unsecured debt into a debt secured by your car. At this time, it may be appropriate to consider filing a bankruptcy case. Arizona allows up to $12,000 of equity in a vehicle to be exempt for an elderly or disabled person who files bankruptcy, or an elderly or disabled spouse or dependent of someone who files bankruptcy. 

Will Filing Bankruptcy Save My Car?

In a word, yes. However, this also depends on the status of the judgment and the type of bankruptcy that is filed. If the lien is not yet perfected, you won’t have to worry about it in a Chapter 7 bankruptcy case. However, if the lien has been perfected, the debt is now a secured debt and must be treated like any other secured debt in a bankruptcy case.

If you have any secured debts and file bankruptcy, your secured debts such as a mortgage or car loan will be treated differently than your unsecured debts like credit cards and medical bills. A secured debt is a loan where you provide collateral for payment of the debt. If you have defaulted on payments for any secured debt and file a Chapter 7 bankruptcy, you can still lose the property.    

Secured creditors have the right to force a sale of or repossess property designated as collateral for a debt. Any proceeds of a forced sale or eventual sale after a repossession will be used to satisfy the remaining loan balance. If this amount is enough to pay the debt in full, a creditor may also sue for the deficiency. Any obligation to pay this deficiency balance may be discharged in a Chapter 7 bankruptcy case. 

Chapter 13 bankruptcy cases allow you the additional option of avoiding any lien on the car. However, a Chapter 13 bankruptcy case is more complicated and you may want to consult an attorney to learn more about legal services and Chapter 13 bankruptcy cases. 

If the creditor hasn’t reduced the judgment to a lien and perfected it, it is likely relying on the garnishment of wages and the levy of a checking or savings account to recover the debt. In the case of a judgment that hasn’t been reduced to a lien or remains unperfected, perhaps because you are judgment proof, the debt remains an unsecured debt and may be discharged in a Chapter 7 bankruptcy case like any other unsecured debt. 

When filing bankruptcy, the treatment of your car is subject to federal bankruptcy law as well as the law that applies to the judgment lien. Bankruptcy exemptions make it easy for you to retain a car after filing bankruptcy. Car loans may be reaffirmed in a Chapter 7 bankruptcy case. Reaffirming the debt excludes the debt from discharge in a Chapter 7 bankruptcy case. If you can’t afford a bankruptcy attorney, Upsolve can help you file a Chapter 7 bankruptcy case. 


In conclusion, remember that a creditor placing a judgment lien on your automobile is an unlikely scenario since there are faster and easier methods of collection. But it rarely pays to wait in this situation, especially in the face of COVID-19 pandemic in the United States. Filing a bankruptcy case is a great option for dealing with creditors attempting to place liens on property, but is only effective if filed quickly. Upsolve’s web app can help you file for bankruptcy.

Written By:

The Upsolve Team

Upsolve is fortunate to have a remarkable team of bankruptcy attorneys, as well as finance and consumer rights professionals, as contributing writers to help us keep our content up to date, informative, and helpful to everyone.

Attorney Andrea Wimmer


Andrea practiced exclusively as a bankruptcy attorney in consumer Chapter 7 and Chapter 13 cases for more than 10 years before joining Upsolve, first as a contributing writer and editor and ultimately joining the team as Managing Editor. While in private practice, Andrea handled... read more about Attorney Andrea Wimmer

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