Bank May Put Lien On Home For Bad Auto Loan

Added January 19, 2009 by Ilyce R. Glink and Samuel J. Tamkin

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Summary: If you fail to make payments on an auto loan it's possible for the auto lender to try to recover the money you owe on the car in other ways. The bank can put a lien on your home if you owe them money for another debt such as an auto loan. The lien remains on the home until you repay the auto loan debt and the lien will have to be dealt with when you sell the home. Both the bank and the mortgage lender will have to be repaid for the home sale to go through.

Q: I had to turn in my car because I could not make the payments anymore. My home is in my sister's and my name. Can the bank that gave me the car loan put a lien on my on my home? If they can and I go to sell it what will happen? Do they get whatever money is left over or will it block the sale of the home?

A: We're sorry you're having financial difficulties. Many people are in a similar situation these days.

Here's the story: If the value of your car was less than what you owed on the car, the finance company can still sue you for the amount you owe.

If the finance company does come after you, sues you and gets a judgment against you, they can use that judgment to place a lien on your home. If you and your sister sell the home before the bank gets a judgment and files a lien against you, the bank won't be able to stop the sale but will want to get any money that you might have gotten from the sale of the home.

If you haven't sold the home and the bank places a lien on the home, you won't be able to sell the home unless you pay off the lien. If the home doesn't sell for enough to pay off the existing mortgage lender or it's just enough to pay off the existing mortgage lender, you would have to work with the finance company to release their lien on the home and allow the sale to move forward.

Please talk to a real estate attorney for more details.

Jan. 19, 2009.

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