Auto Loan issue - Sold car after collections

[Tyler19]

Hello,

Would like to here your advice on this.

I had an auto loan that I stopped paying 2 years ago. The transmission blew out and was going to cost more than it was worth to get fixed. 6 months later the bank charged the loan off. The car sat at the auto repair shop for a year and the bank would not come take it. I sold it to a junk yard for $300. If I go into bankruptcy is this going to be a problem? The loan is $1200. The car was a 98 volkswagon new beetle with no transmission.

[justbroke]

I don't think that this will be a problem at all. Interesting that the Junk Yard took it without a title... but in many states, titles aren't required when the car is more than 10 years old. Still, the car was encumbered. Did you disclose that to the Junk yard? Again, I still see no real issues. Especially if you have actual documentation that the bank refused to repossess it and claimed it "worthless". (However, realize that the bank is not required to foreclose upon or repossess any property where they hold a security interest. It's just their right.)

[Tyler19]

Well the junkyard had me sign a bill of sale. I asked them if it matters that I had a lien on the title, they obviously didn't care since they came and got it. I have no documentation that the bank wouldn't come pick it up besides it sitting at the auto shop for a year. I told them where it was at but they never came and got it. What if they decide to forclose on it after i file?

[justbroke]

You no longer have the collateral. There is nothing they can do except go after the collateral. The collateral has been disposed of; probably parsed into parts and sold for parts (which will probably yield over $3K for the parts if all sold).

I don't see this going anywhere since the bank would need to file an adversary proceeding to recover the $1,200. They'd spent upwards of $4-6K for that! You probably won't hear a peep from them.