When a car is repossessed due to nonpayment, the financing company hires a unit to retrieve the vehicle. However, it is also possible for another unrelated creditor to perform a repossession of a vehicle in some cases. When a car is at risk of repossession by a judgment creditor, the ability for the creditor to proceed depends on whether the consumer owns or leases the car.
Judgment Creditor
If a creditor wins a judgment in court against a consumer for nonpayment, he becomes a judgment creditor. With a judgment in hand, the creditor can try to seize the consumer’s assets . In some cases the creditor can place a lien on the consumer’s automobile and attempt to repossess it to cover the debt. The rules vary by state — some states do not permit this action.
Leased Car
When a dealership closes a car lease deal, a financing company, usually associated with the dealership, takes over ownership of the car. The lessee agrees to make payments on the car for a set period of time, then return it to the dealership later. So the lessee is not the official owner of the car — he is just a renter. The financing company is the owner of the vehicle. This arrangement is similar to renting a car from a car rental company, only for a much longer term.
Repossession
Since a leased car is not the property of the consumer, a judgment creditor cannot legally seize it to compensate for the amount due. A creditor trying to repossess a leased car would be similar to an attempt to lay claim on a car that the consumer rented for a weekend trip. If the creditor somehow gets the car’s vehicle identification number and runs a check on the car’s title, it would show the financing company as the owner — not the person listed on the judgment paperwork.
Other Considerations
Even if the consumer has purchased his car instead of leasing, the creditor may face challenges to repossessing the vehicle. If the consumer already has a loan on the car, the primary lien holder has the title and first priority for taking over the car if necessary. The judgment creditor might be able to apply as a secondary lien holder on the vehicle, but cannot take action until the consumer pays off the primary lien holder.
