What happens to a vehicle if one of the owners owes a debt and a creditor is taking legal action?

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What happens to a vehicle if one of the owners owes a debt and a creditor is taking legal action?

My mother and I co-own a vehicle. She has an outstanding debt and I was just notified that the credit card company forwarded paperwork to the finance company of my truck. Can they take my only car away from me? I have paid for everything for this car my mom has paid nothing, not a dime. I have kids and a job. Can they do this and leave me with no car?

Asked on May 4, 2011 under Bankruptcy Law, California

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

A creditor can look to execute on, or force the sale of, a debtor's assets. If the debtor jointly owns an asset, like a vehicle, it may be possible to force the sale and take part of the proceeds (the part belonging to the in-debt owner). However, if your car is financed and the loan is not paid off--at least if there's still a fair amount owing--it is unlikely this will happen, since the company that financed the car will have to be paid first from the proceeds of a sale, potentially leaving very little. That said, this is something that could potentially happen. The fact that your mother didn't pay for the car doesn't matter in this context, not if she is a co-owner; it's possible that you might in turn have a claim against your mother, but that doesn't affect a creditor's claims on her assets or share of assets.


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