If a co-owner of a car owes a creditor money, can the car be taken to satisfy the debt?

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If a co-owner of a car owes a creditor money, can the car be taken to satisfy the debt?

My mother and I are co-owners on my car. I have 5 payments left and my mom just received a letter from her credit card debt stating that they will come all her assets to pay off the debt. Can they take my truck since we are co-owners? She has never paid a cent towards the car I have paid for everything (monthly payments, insurance, registration). What are my options or what can I do?

Asked on May 2, 2011 under Bankruptcy Law, California

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

The creditor can potentially force a sale of the car for your mother's debt, since she is a co-owner. They would have to sue her and win, then get the proper court order, but this is possible. If you are 50-50 owners, then in theory, the creditor could only reach your mother's 50%; i.e. whatever is left after a sale and after paying off any secured financing (e.g. a car loan), the creditor could get 1/2 of.

You should speak with an attorney. If the above happens, it may be possible to show that you really own much more than half of the car, since you've been making payments, and therefore your mother's interst in the car is small; then it may be possible to arrange to pay the creditor an amount commensurate with your mother's interest to preserve your ownership. Or possibly you could buy your mother's interest out, so long as you do so for a fair value (if for noticeably below market value, the creditor would likely succeed in setting the sale aside).


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