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Trustee to take car - should out of state family titleholder repo?

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  • Question: Trustee to take car - should out of state family titleholder repo?

    My bk filed a month ago and the meeting with the trustee was last week. They plan to take my vehicle (value ~ $22,000) which was purchased from a family member who currently holds the title and owned it free and clear. This will leave me without a car, and owing $20K+ to the family member.

    Why is this family member not being treated as a secured interest holder? The car was not a gift, and they could not afford for it to have been a gift.
    Can this out of state family member repo the car and sell it to protect their interest prior to the trustee taking it?

  • #2
    Originally posted by Westerly View Post
    My bk filed a month ago and the meeting with the trustee was last week. They plan to take my vehicle (value ~ $22,000) which was purchased from a family member who currently holds the title and owned it free and clear. This will leave me without a car, and owing $20K+ to the family member.

    Why is this family member not being treated as a secured interest holder? The car was not a gift, and they could not afford for it to have been a gift.
    Can this out of state family member repo the car and sell it to protect their interest prior to the trustee taking it?
    Sounds like the lien wasn't perfected. If there isn't a perfected (properly recorded) lien your family member doesn't hold legal title to the car and you are out a car and owe your relative money. The ONLY way the trustee could take that property is if there isn't a perfected lien.

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    • #3
      Originally posted by Westerly View Post
      My bk filed a month ago and the meeting with the trustee was last week. They plan to take my vehicle (value ~ $22,000) which was purchased from a family member who currently holds the title and owned it free and clear. This will leave me without a car, and owing $20K+ to the family member.

      Why is this family member not being treated as a secured interest holder? The car was not a gift, and they could not afford for it to have been a gift.
      Can this out of state family member repo the car and sell it to protect their interest prior to the trustee taking it?
      Something seems to be missing here. You say the family member owns the car free and clear, and holds title to the car. Was the car ever in your name? (Did you transfer title recently?)

      Is there a paper trail of the monthly payments that you have made on the car to the family member?
      Filed Chapter 13 02/2006 - Confirmed 05/2006 - Discharged 09/2011
      I'm not an attorney. My replies are merely suggestions or observations, not legal advice. As always, consult with an attorney before making any decisions.

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      • #4
        Do you mean they have physical possession of the car - or that they are on the title as lien holder? There is a difference. If they transferred the title into your name, but kept it, then you own the car free & clear and can lose it in bankruptcy. Nothing the relative can do to stop it. I don't know which state you're in - but every state has some amount determined as being exempt in a vehicle. The trustee would have to pay you the exemption amount after selling the car, you could take that to buy a used vehicle.

        Your obligation to the relative will be discharged in the bankruptcy - though how you choose to handle the family situation regarding repayment after bankruptcy is your choice.
        Get mortgage modified: DONE! 7 months of back interest payments amortized, payment reduced over $200/mo
        (In the 'planning' stage, to file ch. 13 if/when we have to.)

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        • #5
          I agree with the others, this sounds like a failure to properly perfect the lien on the title.

          Mere possession of the title is not enough, if the title was transfered into your name, but on the back of the title, that family member did not put himself as lien holder, and that title was not submitted to the DMV to issue a new title showing the family member as lienholder, you are out of luck.
          Last edited by HHM; 06-15-2010, 03:10 PM.

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          • #6
            The original purchase in Early 2009 used a generic car sale and loan agreement template. The title was transfered to my name. Payments were made for for three months after purchasing the car, until I was unable to continue making payments. I had thought that the family member was included on the original change of title, though found that it was not recorded a few months before filing. I requested a replacement title be sent to the family member which includes them as a secured lien holder. This was recorded one month prior to filing in the state of Oregon.

            I owned another car, with a slightly upside-down conventional auto loan, which was sold at a loss prior to filing. Another concern is that my employment requires having a reliable vehicle and if the trustee takes the car to sell it, I could be left without a vehicle or exemption value until the car sells (does not bode well for my wife and baby at home either)

            The family member wants to take the car and sell it so that they do not lose what they had 'thought' was a secured interest.

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            • #7
              Are you filing pro se, or do you have a lawyer retained? If it were me, I would really want to run this past an attorney. It sounds like if the lien was not properly registered on the car, and your family takes it back and sells it, they could be forced by the trustee to pay that money back to your BK estate. I would be really careful in doing that.

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              • #8
                I usually like to provide some hope, but I think you are and your family member screwed the pooch on this one. Many states have a requirement that the lien be perfected within a certain time frame of the sale transaction. Even without that issue, the way your title situation went down, the trustee can avoid that claimed security interest 9 ways to Sunday.

                Probably the only thing that can be done is negotiate an amount with the trustee that he/she will except in lieu of actually selling the car.

                If your family member sells it, that can create bigger problems then you already have.

                You fell into one of the biggest pro se traps.
                Last edited by HHM; 06-16-2010, 12:04 PM.

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                • #9
                  Oregon Exemptions

                  See what you can dig out of there. I don't know if you can sell it to the court, but if your employment requires reliable transportation and this is your only vehicle you MIGHT be able to squeak a lot of that out of the "tools of trade" exemption.

                  Like HHM says, you are likely in a very bad spot. You are probably going to need to buy the car back from the trustee. I think this is a case where an ounce of lawyer would have prevented a pound of misery. Good luck!

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                  • #10
                    Originally posted by walkthaplank View Post
                    Oregon Exemptions

                    See what you can dig out of there. I don't know if you can sell it to the court, but if your employment requires reliable transportation and this is your only vehicle you MIGHT be able to squeak a lot of that out of the "tools of trade" exemption.

                    Like HHM says, you are likely in a very bad spot. You are probably going to need to buy the car back from the trustee. I think this is a case where an ounce of lawyer would have prevented a pound of misery. Good luck!
                    That's not a bad idea, you may try amending your petition to include your car under the tools of trade exemption if your job literally requires a vehicle (beyond commuting to and from work).

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                    • #11
                      *deleted* oh, that was dated 2004

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