I had a judgement against me for late car payments by my bank. I agreed with the court to have my regular payments garnished from my payroll check. If not paid off yet, what do I do when I need a different vehicle? Can I sell it or trade it in?
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red41004
ANSWERS: 2
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Legally, the bank has a lien on the car: an "ownership interest". That means you can't sell it without satisfying their interest (giving them money). Normally this isn't a problem, when you go to buy a new car, the dealer helps with the paperwork to pay off the old loan and give you credit for the value of the old car (based on the wholesale market value of the car). If your wages are being garnished, the bank should stop garnishing when they receive their money from the new loan company for the new car. Of course, if they don't stop the garnishment, you would have the basis for a legitimate complaint.
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You cannot sell the vehicle until it is clear of all liens and encumberances. Depending upon where you live, your lien may be indicated on the ownership (Georgia for example). This must be cleared before the vehicle can be sold. At any rate, you must discharge the loan at the bank. Once this is done you can sell the vehicle (often this is done at the same time). It would be wise to discuss this with the bank. They want to loan money if their payment can be assured.
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