Creditors Seizing Income and Property

Can a Creditor Take My Property?

A creditor may occasionally take your property to satisfy a debt you owe. In some cases, creditors prefer to have your wages garnished, but if you own any property, they could try to seize it to collect the debt.

Maybe you’re wondering: Can a creditor take your income or property? Creditors should first file a case in the Supreme Court and succeed in that lawsuit against the debtor to seize property or garnish wages from the debtor. Creditors often only file a debt collection action in court after some months of unsuccessful collection efforts. The debtor will then have 30 days to provide a court answer. 

The time it takes for a case to be scheduled for a hearing depends on which county the court action is filed in. The debtor will therefore need to be named as the defendant in any subsequent judgment. After a judgment is rendered against a debtor, the debtor has an additional 30 days to file an appeal before the judgment is rendered final.

As a result, debtors will, at the very least, be given six to twelve months’ notice before a judgment is rendered against them and their property is taken to satisfy the judgment. This provides the debtor a long time to act before their property is seized or their income is garnished.

There is no need for debtors’ properties to be attached or their income to be garnished as long as they do not disregard their situation in the early stages since there is more than sufficient time to prepare and stop their properties from being taken. For instance, the debt may be disputed, payment arrangements may be negotiated with the creditor, or bankruptcy protection may be requested if the debtor cannot pay the debts.

What are Exemptions?

However, there is an exemption in the case of secured debts. If a debtor defaults on a car loan, the creditor may seize the vehicle immediately without a court order. Therefore, the lender can repossess the vehicle also without going to court.

Even if the court awards the debtor a judgment, the debtor may still be able to claim some properties as being exempt from execution under the law. A debtor has ten days from the moment they receive notice that their property is being attached to deliver a Claim of Exemption to the Sheriff. The form outlines the item and justifies why it cannot be attached. You may request exemption from, among other things:

• If you live in a family unit, up to $75,000 from the equity in your house ($50,000 if you’re single). If you’re 65 or older, disabled, or on a low income, up to $150,000
• A $2,300 equity in at least one car
• Up to $6,075 for tools and other work-related items
• Up to $2,525 each in your direct-deposited social security payments’ bank accounts
• You and your spouse may request an exception for necessary household items and apparel
• A cemetery plot
• All or a portion of the retirement, health and disability insurance, workers’ compensation, welfare, unemployment, and other benefits required to support your family

As long as debtors don’t ignore the issue, attachment and garnishment of their property and income are unnecessary. Debtors having problems making ends meet need to be informed of their legal rights and options.

What Actions Can Creditors Take if I Don’t Pay?

Be aware that you cannot be imprisoned for failing to pay your bills (back child support is an exception if you can pay but choose not to). Unless you have unpaid taxes or student loan debt, a creditor cannot make a bank account garnishment or take your tax refund. Most commercial creditors must typically file litigation against you to get a money judgment (a court award) before they may attempt to collect a debt from you.

However, there is a significant exemption to this rule: If the obligation is secured by property, creditors do not have to file a lawsuit first. You must comprehend the legal status of every single one of your debts and the rights of each creditor because you can be up against creditors with sophisticated financial knowledge and legal resources.

Due to the numerous legal classifications that debts and creditors come under, some of your creditors may be able to easily extort more money from you and your firm than others.

What Can and Cannot Be Taken by Creditors?

You have defaulted if you fall behind on secured debt payments or if you ignore a critical term of the security agreement. Even though you’re current on your payments, the creditor may be able to declare a secured debt in default in particular circumstances, such as if you let your insurance lapse or become insolvent. In most security agreements, the creditor may seize the assets you offered as collateral without first going to court and obtaining a judgment.

In general, creditors may seize the following items from you if you go into default:

• Motor Vehicles, Including Cars and Motorcycles: Most auto loans grant the creditor the right to seize the vehicle in the event of default, regardless of whether you obtained the loan from the dealer, a bank, a credit union, or another lender. The lender is usually not obligated to give notice before taking the vehicle. 

Your car will be sold by the lender after it has been repossessed to get the money you owe. You can be required to pay the difference between the outstanding loan balance and the sale price, as well as the creditor’s repossession costs.

• Rent-to-Own Items: Repossessed items include furniture, electronics, and appliances you rent with the opportunity to buy. The sofa, television, or other objects that are rent-to-own cannot simply be taken from your home by the creditor. To enter your home, the creditor must obtain a court order or consent from a family member first. 

Leaving the house with lawn furniture and a new gas grill in the backyard is probably fair game. However, the repossessor cannot throw you from the outdoor appliance or destroy a fence to get access to your property.

• Any Secured Personal Property You Used as A Form of Debt Collateral: A debt is “secured” if a particular item of personal property (referred to as “collateral”) is used as a security for repayment. Most states let the creditor seize the secured property before even suing you and obtaining a court judgment if you fail to pay back the debt or are in default for another reason. 

Check your credit agreement if you’re unsure if a debt is secured. The agreement will also specify what constitutes a default, such as falling behind on payments or failing to maintain the required insurance.

Without the approval of the judge or court clerk, creditors without a security interest cannot seize property. Take note that the creditor will always be able to sue you to recoup the money you owe. If the creditor prevails in the lawsuit, they may be able to take and sell your personal property, garnish your wages, or place a property lien on any assets you hold.

Here is a list of things creditors cannot seize if you are in default:

• Property You Haven’t Designated as Collateral: Nothing can be taken back if it is not designated specifically as collateral for an outstanding debt. Take for instance where you have a car loan and an unsecured personal loan. You stop paying back the personal loan. The bank cannot seize your car as long as you make payments on the car loan because it was not mentioned specifically as collateral for the personal loan.
• Items You Purchased Using a Credit Card: Credit card debt is unsecured, which implies that nothing is specified as collateral for the loan in the credit agreement. Therefore, items you bought with a credit card cannot be seized.
• Property Designated as Collateral in an Unenforceable Contract: A contract that does not adhere to your state’s statute may be unlawful and unenforceable. The creditor may not be able to seize the collateral specified in the agreement if the contract is found to be unenforceable. An attorney can examine your contract to ensure its legality and inform you of your consumer rights.

Protect Your Income and Properties Today!

You need to hire a debt defense lawyer who will battle tenaciously to safeguard your rights, money, and property if you’re still concerned and thinking, “Can a creditor take my property?”

Our debt defense attorneys at Northwest Debt Defense Law Firm have expertise in negotiating and effectively defending clients against aggressive, unfair, and even deceptive creditors.

To ensure that you receive compensation for your losses, our attorneys will fight for you to the fullest extent of the law. For a free debt analysis, contact our law office immediately and learn more about how you can protect your earnings and real estate.

We offer our services to people in Seattle, Tacoma, and Vancouver, Washington, as well as in Portland, Salem, and Medford, Oregon. Contact us right away to find the debt relief you seek and more legal advice.