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Car Redemption After Bankruptcy, Chapter 7 Discharge

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  • Car Redemption After Bankruptcy, Chapter 7 Discharge

    I was discharged from NJ Bankruptcy, Chapter 7 in Sept 2017. I had an outstanding and delinquent car loan balance of 12k. My car was worth far less. Requested to redeem my vehicle. Based on proof and appraisals of similar cars the judge granted the redemption for the amount of 3k. This was reasonable but at the time did not have the funds.
    The car loan was discharged along with my other debt. Now 6 months later, I still have my car but not the title. The lingering thought that they can at anytime repossess my car is frightening! I now have the 3k and would like to negotiate an offer for payoff for the title. But is this really possible after the fact? Theoretically, there isn't a balance and how to trust that they would release the title? Lenders are not a traditional bank. They are unethical with tons of lawsuits and complaints. If we did come to an agreement how to make sure it is legal/binding and will hold up in court. I did not have an attorney for my bankruptcy or I would be speaking to him about.

    Thank you in advance for any advice or help in this matter.

  • #2
    It is possible if the lender will agree. In this situation, I bet they will. Call and make the offer. In fact, start by offering half of what you are willing to play or less. Once you come to an agreement, ask them to put in writing that they agree to return the title to you and release the lien upon receipt of payment of he agreed amount. If the terms of the agreement are in writing and signed by the creditor, you will be able to hold them to the agreement.

    If that is not successful, you might be able to reopen the case in order to redeem. Maybe somebody else knows is if that can be done.
    LadyInTheRed is in the black!
    Filed Chap 13 April 2010. Discharged May 2015.
    $143,000 in debt discharged for $36,500, including attorneys fees. Money well spent!


    • #3
      Thanks for your advice!


      • #4
        Yes, you can reopen the case and file a motion to redeem. That is sometimes necessary in order to obtain a title so that one can junk a non-functional car, which the lender never bothered to repossess. However, contacting the lender would likely be cheaper and easier. If the judge already set the value of the car at $3000, and you are willing and able to pay the $3000 now, then I see no reason why the lender would not accept that. If the redemption value is $3000, then that means that the selling price at a repo auction would be less than $2000, probably closer to $1200-1300, hence why they haven't picked it up.

        I would recommend contacting the lender and telling them that you have discharged the debt in bankruptcy, and would like to pay off the redemption amount set by the court in order to obtain the title. They are likely to cooperate because they want money, and attempting to repossess the car and auction it off would not make them any money--it would likely cost them money. Just be sure to get a letter from the company specifically saying that they accept $3000 as payoff in full, and will release any and all security interest in the vehicle before you send any money.


        • #5
          Thank you for your advice! Just spoke to my car lenders and we came to an agreement of $2500 to redeem the car. They agreed that the payoff amount would relinquish me of any liens and release any and all security interest in the car along with sending me the title after payment. But unfortunately, the rep explained they do not issue this agreement in writing after a customer has been discharged from bankruptcy! I was like how can I in good faith trust you on just your word. Especially, your company’s unethical reputation. All she could tell me was it is their policy; they record all their conversations and that they do these transactions all the time. As much as I would like to finalize this I will not send them the money. I will though, look into opening the case.

          Thanks again.


          • #6
            Originally posted by conniek View Post
            But unfortunately, the rep explained they do not issue this agreement in writing after a customer has been discharged from bankruptcy!...All she could tell me was it is their policy; they record all their conversations and that they do these transactions all the time.
            There is nothing to prohibit sending such a payoff letter for a discharged debt. The person you spoke to is full of it. If this really is the company's policy, that policy can only exist for one reason: so they can convince people to send money, hoping for a lien release, and then cash the check, keep the money, and "forget" about the verbal agreement. Remember that although companies record telephone conversations, they do it for their benefit, not yours.

            The correct way to proceed at this point is to reopen the bankruptcy, and request the redemption for $3000, the valuation already set by the court. The court will compel the lender to accept this amount and release the title.


            • #7
              Thank you bcohen, again for your advice, encouragement and wisdom! With your encouragement I felt confident to move forward. My request to reopen my case was detailed; explained my dilemma when I reached out to the lenders. But I also was very clear that this request was for the sole purpose of redeeming my car for the $3000, which was already set forth by the courts. To be paid in full immediately. The hearing was granted, but the request was denied! I was baffled and speechless. I remember thinking if I had an attorney would this outcome be different. The lenders did not oppose the request. The lender's attorney did not even show up at the hearing. The judge rattled off something about you had 30 days to redeem, which was back in Oct 2017. What I don't understand is why grant me the hearing to have me get my hopes up and show up in court to have the motion denied?

              I'm happy I tried to do, no matter what the outcome. I feel like I exhausted all options. I think rather than wait and worry for the repo guy to show up I would stop driving the car, take the insurance off and surrender the car. Is there a right way to do this? I have read and it is so confusing that if you surrender your car after being discharged they can report a repo on your credit report? I will call them to pickup. I will not drive the car somewhere to meet them. They will pickup from my garage. Do I need something in writing? Proof of the pickup.To relinquish my responsibility? Can they charge me for the tow to pickup my car? Of course, my luck they will not bother to pickup.

              I just want to be done with. I will buy another car. Their loss. Thanks bunches! for all your help!


              • #8
                I am not an attorney, but it sounds like the judge erred, or you made a procedural mistake in requesting the redemption. There is no expiration date to your right to redeem the car for its current value. If there was, then that would create the perverse effect of "trapping" people with an unusable car that they could not sell or even junk due to the lien on the title. Remember that as the loan has been discharged with respect to you personally, the lender's only right of recovery is the value of the car itself, a value which decreases as time progresses. It sounds to me that at this point, the lender does NOT want the car back, so the likelihood of a "stealth repo" is slim to none.

                Please see the following website for more information:

                IN RE: Carlton Dana PRATT and Christine Ann Pratt


                • #9
                  I wish I had seen the original post back in May.

                  OP - you state you had an Order to Redeem for $3,000.00. Is that correct? If so, why would you need to reopen your case to file a Motion to Redeem? Would you not simply seek to enforce the Order you already have? But. . . even enforcing the Order a year later is a problem since you really needed to “act on your intention” timely.

                  What OP put in the Motion to Reopen is not operative to this issue. It was just a Motion to Reopen and was granted in due course. The issue of redemption (or enforcement of the prior Order) was not before the Court until OP filed the second Motion and got a Hearing on the specific issue.

                  Had I seen the post back in May I would have indicated that your judge could deny a Motion to Redeem (or enforce the Order it previously issued). 11 USC 521(a)(2) requires a debtor to file a Statement of Intention. It further requires a debtor to act on his/her intention within 30 days after the 341 meeting. Pursuant to 11 USC 362(h) the automatic stay lifts if the debtor fails to timely act on his/her intention. With the lifting of the stay the property is removed from the bk estate and the court has no jurisdiction. My guess is the Order denying OP’s Motion to Redeem made reference to this. He/she probably needed to complete the redemption timely (unless otherwise agreed to by the parties).



                  • #10
                    Thank you both! I feel like I have a lot more clarity on the court's desicion. While in bankruptcy I was granted my motion to redeem but I had 30 days to pay the lump sum. While in bankruptcy the courts can enforce the motion. But after being discharged, along with the stay lifted, it is now considered the lender's property. bcohen, I did read the case you referred to, and I think the difference is that the Pratt's had decided to surrender the car. The lender's had decided that it was not cost effective to even bother and yet not willing to release the lien.

                    Which is similar to my situation and becoming more apparent as time goes by! On second thought, I have decided to drive my car, until I can't, save some money to buy another. The worse that can happen is they decide to repo it. Oh well! Thanks guys for your help!


                    • #11
                      Like I said back in June, the car is simply not worth enough for the lender to repossess it. You can--and should--continue to register, insure, and drive it until it no longer runs. At that point, you can worry about how to dispose of it.


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