King County residents who are hounded by debt collectors may worry that they could have their vehicle seized if they are unable to pay off their debts.
One bankruptcy attorney and blogger from Northern California answered that while a creditor can potentially obtain a judgment against a debtor and go after some assets, in most cases each state will have exemptions for personal property of the debtor up to a certain value. To seize a car legally, it would have to be towed and processed for sale by the sheriff's office, and any co-owners given their share of the proceeds, before the creditor would get anything from the sale. Unless your car has an intrinsically high value, under most circumstances this labor-intensive process would not be worth it to the creditor.
And there is another caveat: consumer protection laws on the state and federal level could be violated by any type of errors in legal procedures and expose the creditor to a potential legal battle.
Other types of seizure are more readily available to creditors, like bank accounts or wages through court-ordered garnishments. If creditors are blowing up your phone about unpaid debts, chances are your financial situation is very precarious. It might be in your best interests to try to negotiate a settlement with the creditor.
Another financial option to consider when struggling to emerge from underneath a mountain of debt is filing for consumer bankruptcy protection. While Chapter 13 requires a repayment plan to be followed to repay at least a portion of the debts, Chapter 7 wipes the slate clean and allows debtors the opportunity to start over.
Some debts like student loans are not dismissed by consumer bankruptcy. To learn more about exemptions and requirements, consult a Washington bankruptcy law professional.
Source: Credit.com, "Can Debt Collectors Repossess My Car?" Gerri Detweiler, Feb. 23, 2015