Asset Protection for Your Vehicle

This short addresses state laws exempting vehicles -- including cars and trucks -- from collection by creditors. Examples are taken from the exemption laws of California, Texas, and Missouri. Some states provide more protection than others.

Each state has laws exempting assets including motor vehicles from creditor claims. These laws differ vastly from state to state. California protects $7,500 in equity in your motor vehicles. In other words, if a creditor who won a judgment against you and seized your assets to pay the judgment, he will not be able to access the first $7,500 in equity from your vehicle. Missouri protects only $3,000 in equity from your motor vehicles. Texas, by contrast, protects one motor vehicle regardless of its value from creditors. To protect your motor vehicle, know your state’s exemption amount. If you finance the vehicle and keep your equity under the exemption amount, then the vehicle will be protected from creditors. Of course, if you don’t pay the loan on the vehicle the lender can seize it regardless of your state’s exemption laws.