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Car title in my name, but not my vehicle

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  • Car title in my name, but not my vehicle

    Hi, Im planning on filing chapter 7. I met with 2 different lawyers & received 2 different answers. I have a car title in my name. The vehicle doesn’t belong to me though. I did my friend a favor. The vehicle is worth about $6000 to $7000. Her is my dilemma. I know I can’t transfer the vehicle back out of my name, which would be considered fraud. 1 lawyer told me to get an estimate on the vehicle and pay the difference after the excemption @$4000 in IL to the trustee. The other one told me, that if I (we) can prove that the vehicle is not “mine” the trustee will not take the vehicle. Can somebody please please advise me on what’s correct?! Also, I don’t have anything valuable besides clothes which is maybe worth $600 that’s it.

  • #2
    First, I would obtain 2-3 more consultations and specifically ask this question again. I think that discussion will go a little like this.

    This is an issue that comes up every so often, and it relates to something known as "bare legal" title versus "equitable" title. Bare legal title means that property is titled in someone's name but they only own the property in (legal) title because they have no equitable ownership of the property. Equitable ownership means the person actually making the payments, maintaining the property, insuring the property, and otherwise taking on all economic responsibility.

    The question will rest on whether you have "bare legal" title or not. The other issue that you can get into is if you defrauded the registry of motor vehicles because the person is otherwise prohibited from registering a vehicle. That could be used against you in the "bare legal" title stance.

    So what was this favor that you did for the friend? Did you finance the vehicle for the friend and they are otherwise making all payments, have they been the only person to regularly drive the car (e.g. you don't drive that vehicle even 1-2 times a month), and have they been meeting all other repairs and maintenance requirements? You would need to prove that the friend is the only person with an equitable right to the vehicle.
    Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
    Status: (Auto) Discharged and Closed! 5/10
    Visit My BKForum Blog: justbroke's Blog

    I am not an attorney. Any advice provided is not legal advice.


    • #3
      The favor was registering the car in my name. The car is fully paid for. I do not drive the car. She is taking care of insurance, repairs etc.


      • #4
        Why is it really in your name? Convenience? Who's convenience? (Don't answer that...) If you registered it in your name so that she could hide the asset from creditors (or others), or to circumvent DMV registration/title laws... I don't know how to respond. Perhaps the first attorney is correct and you should cover it with an exemption and negotiate the difference with the Trustee.

        I think the response lies in the details of why it's in your name (a favor is not a reason). As a public service message, a person should never leave their name on the legal title of a car that is technically owned and operated by a mere friend. The liability issues are astronomical. I speak from experience on this. It's simply not worth the risks. At least mine were of an arrangement where I had free transportation when necessary in that vehicle.

        Alas, the second attorney could be right and the Trustee doesn't care. I don't see how the Trustee wouldn't care, and probe into this matter further. Simply put, you have to list the asset on Schedule B and that it is titled in your name. You'll have to explain why you have a vehicle titled to you and claim that it is not yours.

        The proof is in just why it's in your name; again, a favor is not a valid reason that it's in your name. A valid reason could be that they couldn't get financing or you sold them the vehicle and held the title until they paid everything back (which doesn't explain why you are still on the title since it is paid off). (And I'm not asking that you disclose why you did this risky favor. Just providing some insight into what the attorneys may be thinking.)
        Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
        Status: (Auto) Discharged and Closed! 5/10
        Visit My BKForum Blog: justbroke's Blog

        I am not an attorney. Any advice provided is not legal advice.


        • #5
          The question JB was getting at is "why did you register the vehicle in your name for your friend?". JB makes a good point that you could be opening a can of worms if you did this because your friend was prohibited from owning a vehicle. This issue is not really a bk issue.

          For bk purposes, both options that you were given work. The first is the safer option meaning you are not raising an issue as to litigating over who really owns the vehicle. I have done both and choosing one over the other depends upon the amount in controversy.

          If I can nearly protect all of the value of the vehicle by utilizing an exemption why would my client want to open the door as to who really owns the vehicle? On the other hand, if the value justifies it and I know I can prove that every dime that went into the purchase and maintaining of the vehicle was paid by the other party, then arguing legal vs. equitable ownership works.

          Please note: Theoretically the argument over ownership is the responsibility of the equitable owner since the one who will be damaged by the loss of the vehicle is the equitable owner.

          I agree you should talk to more bk attnys to get a feel for the consensus in your district when dealing with the local trustees.



          • #6
            Thank you for the quicker and more intelligible response Des!
            Chapter 7 (No Asset/Non-Consumer) Filed (Pro Se) 7/08 (converted from Chapter 13 - 2/10)
            Status: (Auto) Discharged and Closed! 5/10
            Visit My BKForum Blog: justbroke's Blog

            I am not an attorney. Any advice provided is not legal advice.


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