non purchased secured loans

[karm43]

I was just reading aarticle that stated if you have a non purchased secured loan and the propery that you put up can be a exemption, that then the loan becomes non secured. Anyone out there have any dealngs with these?

[karm43]

For instance if you put up a old vehicle and it is worth hypothetically say1200 this could be exempt?

[justbroke]

First, a non-purchase money security interest (or non-PMSI), is what happens when you get a loan against property; not a loan used to actually purchase the property. A non-PMSI can be "avoided" by filing a Motion to Avoid Lien in the bankruptcy court. You must have an actual impairment, and it is only for household goods and certain other property (11 USC 522(f)). It is not for extinguishing a lien against a motor vehicle.

If you are talking about a "title" loan against a vehicle, you have issues. Vehicles are not covered in the exemptions code covering avoidance of non-PMSI liens (11 USC 522(f)).

There are no exemptions to cover "consensual" liens. Liens always pass through bankruptcy unaffected; unless avoided. In this particular case, I don't read any facts that show me this lien could be avoided. However, you might be able to redeem for the value of the vehicle, if it's worth less than the title loan.

[karm43]

ok guess it is added to my secured debt.

[karm43]

Actually it is not worth anything maybe 500 for parts. Does not run. i will just have to pay it

[justbroke]

You could file a Motion to Redeem and pay $500 if you can prove -- with admissible evidence -- that the vehicle is only worth that amount. That would require a hearing in the bankruptcy court to determine the value of the vehicle and set the redemption price. (Unless your District allows negative noticing or your credit will file a stipulation allowing the value to be set at the lower amount -- which is unlikely.)