Pre-Paid Car Lease Subject To Judgment Creditor

Your judgment creditor cannot levy upon a car which you lease because you do not have title to the car. True, most of the time. One of my asset protection clients of my clients stated this past week  that his personal car was not at risk to his creditors because he had leased the car for four years and pre-paid the entire lease. I think the client’s judgment creditor is unlikely to pursue this car after the client declares that it is a leased vehicle. Technically, the creditor could attack this car.

A lease can be an asset. I’ve stated before on this blog that while most people consider leases such as real estate rentals and car leases to be liabilities because of their payment obligation a lease is also an asset. A lease gives the lessee a right to property during the lease term subject to making lease payments. This client had acquired the right to drive his car for four years with no lease payments because he pre-paid the lease. I think a judgment creditor could levy upon the client’s fully paid lease. Someone would pay the creditor money for the right to drive the debtor’s car for the next four years.

A pre-paid car lease is an asset subject to levy; better to pay monthly lease payments or buy a car subject to a lender’s lien.

Last updated on May 22, 2020