Can a Collection Agency Take My Car?

Facing a collection agency is hard enough, but when the prospect of having your car repossessed looms, you need to know what your rights are. While a creditor is allowed to take your car in certain situations, it can only do so if it has met all legal prerequisites. Talk to an attorney if a creditor is threatening to take your car away or you need legal advice about your debt situation.

Secured Transactions

When a person's car gets repossessed, it is usually because the person had entered into a secured credit agreement. A secured agreement happens when, for example, you take out a car loan to buy a car and agree to pay the lender back with installment payments. In these transactions the lender "secures" the loan by taking a legal interest in the car, essentially taking the car as collateral. If you've entered into a secured agreement and have defaulted on the terms, the creditor probably has the right to repossess your car.

Judgments

Let's say you haven't paid your credit card payments in a while and have been receiving endless calls from collectors. Further, you do not have a car loan and own your car without encumbrances. Can a collection agency take your car? Yes, if the agency gets a judgment against you. A judgment is a court order a court gives to the party that wins the case. So, a creditor has to take you to court, win the case and receive a judgment before it can try to come after your car. Once creditors win a judgment, they can attach your assets, impose a judgment lien on your car and take other actions.

Other Situations

So, suppose that you don't have a car loan, the creditor has not sued you and won a judgment and there are no other encumbrances on your car, such as going to a title loan company for some quick cash. In general, a creditor will not be able to take your car. The only way a collection agency can legally take your car is if it has a legal interest or right to take it. Otherwise, the car is your property and no one can take it without your permission.

Threats and Other Communications

Not only can a creditor or collection agency not take your car if there is no secured transaction or it has not sued you in court and won, but collectors cannot threaten to do so, either. The Fair Debt Collections Practices Act prevents creditors from using harassing or threatening language. If the collector threatens to take away your property, have you arrested or uses any other threats that are not within its legal authority to carry out, you can file a complaint against that collector. Further, you may be able to take it to court and sue it for money.