Release of Title

[NoMoney30]

We just finished our last payment on the 8th. The trustee entered the order to stop payments yesterday. I called my credit union today to see about getting the title released and they said oh we haven't been paid for everything... and I was like no, you put in a claim for 3,500 and it was fully paid off and I had the check number the trustee wrote and everything. But she's like oh the payments must have gotten lost or something.... you need to call them and find out where the money is. I'm like umm if you didn't get your money you probably should be trying to get it, that's not my problem. Right? Cause once the discharge is granted... my debts are gone no matter what right?

It isn't my responsibility to find out why they didn't get paid also right? I believe I just need to wait for the official discharge and then they have to release my title ... correct?

[justbroke]

Technically a bankruptcy doesn't make debts go away; it simply prevents a pre-petition creditor of a discharged debt from using legal means to collect from you personally. That's known as the permanent discharge against collection. When it comes to secured debt, such as vehicles and homes, it is important that the creditor was actually paid. Even if the underlying debt was discharged, secured creditors retain their "in rem" rights unless you surrendered the property. Those "in rem" rights include the right to pursue foreclosure and repossession against the collateral.

The issue may be that it is too soon to be asking for the title. Typically the bank will not give you the title until the discharge is actually entered. You ask why? Because you may have been paying a stripped-down value in the Chapter 13 and discharge the unsecured portion. You say that you paid the total claim? But was the vehicle "re-amortized" over the life of the plan and was subjected to the Till rate. (Till is a change in the contractual interest rate). All of that matters because the bank hasn't been paid for everything. In fact, late charges (technically) accrued over the life of your plan. (Side note... the banks and creditors wait for Chapter 13 debtors to fail so they can tack on all that missed interest, late fees, attorney fees, and any other contractually allowed fee.)

Unless and until the discharge is entered, you still "technically" owe the bank that difference between the secured portion and the unsecured portion of the claim, plus the "lost" interest (due to Till), plus the late fees which have been accruing (even though you did pay the Trustee on time).

TL/DR: Banks will wait 30-60 days after discharge for the dust to settle. Once the dust has settled they will then issue the title for a vehicle included in the plan. Right now, you probably still owe the bank money based on their system and without the discharge. Until that discharge is entered, and their system updated to reflect the discharge.... you still owe them money.