Can a Bank Garnish Wages for Vehicle Repossesion?

Except in states where garnishment for private debts is prohibited, most creditors are allowed to pursue the collection of an unpaid debt by garnishing the wages of the person who owes them the money. This includes debts that stem from the repossession of a vehicle. In some cases, even after a vehicle is repossessed, a debtor may still owe the creditor money. In such a case, the debtor may have his wages garnished.

Car Loans

When someone takes out a car loan, he is obligated to have the loan secured by the vehicle he is purchasing. This means that if the loan goes into default, the creditor can use the vehicle as collateral. The finance company will be allowed to seize the vehicle as compensation for the borrower's failure to pay back the loan. In some cases, however, this may not cover the full debt.

Repossession

Car repossessions cost money. In addition, after a car is repossessed, the car must be sold. If the money the finance company receives from the sale of the car does not equal to the amount of money owed on the loan plus the cost of the repossession, then the creditor can sue the debtor in court for the difference. If the creditor wins, he may try to garnish the debtor's wages.

Garnishment

Garnishment can only occur once a civil judgment has been attained by a creditor, not before. A garnishment in the case of a vehicle repossession can therefore only occur after the creditor has repossessed the vehicle, sold it, sued the debtor and won damages in the case. The garnishment order must then be presented to a party providing the debtor with regular payments, such as an employer.

Bank's Role

Unless the debtor owes the money to a bank, the bank will play no role in a garnishment. The three parties involved with be the debtor, the creditor and the person who must divert money to the creditor, known as the garnishee. However, if the creditor convinces a judge to allow him to take money out of the debtor's bank account, then the debtor's bank will have to abide by any court order presented to it.