Would I get charged with fraud if I sold my collateral?

Asked about 1 year ago - El Cajon, CA

I owe $1000 on a personal loan I put my car up for collateral .If I sold the car what will happen?

Attorney answers (4)

  1. Michael Charles Doland

    Contributor Level 20


    Lawyers agree

    Answered . If you paid your debt from the proceeds of sale, nothing.

    The above is general legal and business analysis. It is not "legal advice" but analysis, and different lawyers may... more
  2. Albert Lee Crosner

    Contributor Level 18


    Lawyers agree

    Answered . Best answer goes to my colleague Attorney Doland.

    Mr. Crosner is licensed to practice law in California and has been practicing law in California since 1978. The... more
  3. Scott Richard Kaufman

    Contributor Level 20


    Lawyers agree

    Answered . If the lender has a lien on it, you may not be able to sell it at all, maybe.
    I agree with two prior responses.

  4. Benjamin H. Ballard

    Contributor Level 7


    Lawyer agrees

    Answered . There is a difference between having a "lien" on collateral and "perfecting" it so it is enforceable. An agreement to use a car as collateral creates a lien on the car. The lien can only be perfected by registering the car in the lienholder's name with DMV or taking possession of the car. If you sell the car and the lien hasn't been perfected, the lender has a right to sue you for the $1000, but the new owner (if a "bona fide purchaser") of the car takes it free and clear of the lien, absent some other notice or extenuating circumstance.

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