Curious Question about Car Lien Release

[paula61]

Hi everyone: This forum has been extremely valuable to me with all the information it provides. I have a curious question. We are 2 years into a 3 year Chapter 13 repayment nearly 100% to all creditors both secured and unsecured. As of February all of the secured creditors had received the full amount. We have two vehicles, 2002 Jeep Wrangler and 2002 Ford Windstar. The Jeep had $1696 in unsecured left as of March 1 and the Ford Windstar had $8700 left in unsecured as of March 1. Yesterday, in the mail, I received a very official looking Certificate of Title with a Lien Release for the Ford Windstar that was notarized. I am assuming they are releasing the lien. Why would they do that when they haven't yet received all of the unsecured portion of the car and the Chapter 13 is not yet over? Am I supposed to file this with our DMV office? The Ford Windstar has way more owed yet in unsecured charges than the car is worth. Do I assume I will be receiving the same thing with the other car? Do I need to notify my attorney?

Thanks,

Paula 61

[lrprn]

Yesterday, in the mail, I received a very official looking Certificate of Title with a Lien Release for the Ford Windstar that was notarized. I am assuming they are releasing the lien. Why would they do that when they haven't yet received all of the unsecured portion of the car and the Chapter 13 is not yet over?

During Ch 13, the trustee makes payments in a required order.
- First each month your trustee takes his/her administrative fee (up to 10%), pays your lawyer (if that fee wasn't paid in full before you filed), and pays any support orders (if any)
- Next the secured debts like your cars are paid the remainder of your payment each month until they are paid in full.
- Next priority debts like money owed to the IRS are paid the remainder of your payment each month until they are paid in full.
- Last the unsecureds are paid each month until your plan ends or 100% of all the debts are paid, whichever comes first.

It looks like one of your cars has now been paid off in full - that's probably why you received the title free and clear before your Ch 13 is over.

The Ford Windstar has way more owed yet in unsecured charges than the car is worth.

Was your Windstar loan more than 910 days old when you filed and so the 'extra' owed was crammed down to the real value of the car? Or was the loan newer than 910 days (which can't be crammed down)?

Do I assume I will be receiving the same thing with the other car?

Yes, once it is paid off in full.

Do I need to notify my attorney?

He/she probably already knows, but I would call or email just to be sure.

Check with your lawyer to be certain, but it looks like the first big benefit of your filing Ch 13 has happened - this car is now yours! Yay!!!

[rrockinggramma]

This is my take on the situation. I also had a 2000 malibu included in my plan. When I filed, it was close to repo. Under old laws, the car was crammed down to FMV. The lein holder received their 3000 first (well after lawyer and IRS) and the remaining amount was the unsecured crammed down. I also received a release of lein. I also was into my BK 13 by more than a year. I believe that the lein holders figure that if you are past 1 year, you will probably make it to the end and any unsecured portion will be discharged so they go ahead and release the title. I received my release of lein also and it was a nice thing to have in hand. I am hoping for early discharge, I am currently 26 months into a 36 month and now all of my unsecured creditors have received their percentage as well. But I think that when you are close to the end and the lein holders figure you will make it, they release the title. And because it was Ford that did it, I think it might just be their policy. I was financed through Triad, then owned by Ford as well.

[paula61]

Curious Question about Car Lien Release

Yes, we had had both cars over 910 days when we filed in 2005. It is nice to know that we now own one of the cars. Thanks for the information.

Paula 61