I was just notified that a lien was placed on my car. The car is only 8 months old and is technically upside down. What good is it for them to put a lien on a lien? Steve
They don't take priority but as Jlynn noted, you can't get rid of it until you pay off the lien creditor.
What if you keep the car for a long time, to the point that it's paid off, and the value is very low. Meanwhile, interest on the judgment has been accumulating. For example, the car could be worth $1000, and the judgment $10,000. This doesn't seem equitable.
There are some work arounds. One is to drive all the value out of the car right down to the point where the engine or transmission is totally shot then let somebody haul it off to the junk yard and eventually the smelter. You will have paid off the original creditor by that time. The original creditor will send you a release of lien once it is paid off. That's one way. Another way is to have somebody you know put a mechanic's lien and storage lien against it and see if they can get a clear title through that process. Might work and might not but it costs less than $100 to do it in most states. If none of that works drive it until it won't run no more and then just park it somewhere and let the cops haul it off. Of course, the best way is to pay the second lien off before it gets to be so high. Then you don't have to worry about pulling any shady tricks.
From an accounting point of view, given the depreciating nature of a car, and the long term appreciating nature of a judgment, it makes no financial sense whatsoever. I don't see how a judgment creditor is going to get paid very often using this method of enforcement. I've heard of cars being seized that are above the value of a vehicle exemption, but never the placement of liens. Judgment liens are usually for real estate. I would like to see some state statutes that allow a judgment creditor to place a lien on a vehicle. In the handful of states I've looked at, the closest you can get is a mechanic's lien, which is a different principle of law from a judgment lien.
They would have to register the lien with your county register of deeds or records. There has to be a filed notice of lien. Legally, they also had to send you a notice of the lien, offering you the chance to "remedy" the debt (by paying it off). As a further note, the "2nd lien holder" is actually placing a lien against your vehicle, and is in "second position". To control the lien, they would have to pay off the original first debt on the vehicle before they could exercise any legal action. All this means is that you cannot conduct any legal transaction (sale or trade) until both the original note and the lien are satisfied. So, drive it into the ground...
