Auto secured loan

[bankit]

I bought a car from a business that I knew. I signed a loan agreement for the purchase, since I did not have all the money. I transfered the title into my name, but did not list them as lien on the title. I did have them listed on my insurance as loss payee. The vehicle had some problems and they gave me time to pay them, since I had to pay for repairs. I have now filed bankruptcy and listed them as secured loan. I also let them know that I would make regular payments to them.

Can they add their lien to the title this late, and if they do will the trustee set-aside the lien?

Also would I be able to redeem if I borrowed money from my family?

Thank you!

[StaciMM]

You may have an issue w/ the title not showing them as a lien holder. Technically, you own the car outright and your loan to them is unsecured (and fully dischargable).

What is your state's vehicle exemption, and is this car over it? If so-problem. The trustee can & likely will take the car. I don't believe you can add them as lienholder now-the trustee is going to look at things as of the time you filed. Putting them as lienholder after filing might make it appear you were borrowing (against the car) after filing.

Edited to add that redemption in this situation is not applicable as the company you owe the $$ to doesn't have a security interest in the vehicle.

[HHM]

Is there any type of written loan agreement?

The issue here is a possible unperfected lien, and thus Staci is right, the court may deem the car to have no valid lien, so unless you can exempt the entire value of the car, the trustee will take it.

But, the trustee would have to ask for the title...to check, and most don't ask to see the car title.

However, If there is a written loan agreement that references the security interest in the car, you may still be able to add them as lien holder.

Since its still your understanding that this companies loan was a purchase money security interest, still list it on your petition as a secured loan. Its not inaccurate to say that as that was the agreement between the parties, the only issue is the technical failure to perfect the lien on the title.

Unless the trustee asks to see the title, you really shouldn't have any problem.

[bankit]

If the business and I enter into an agreed redemption, would that be allowed. Since I do not have to file motions?

Or will the trustee take the vehicle after I payed off the loan to the creditor? I hate to give up the vehicle, since it is my primary vehicle. The vehicle exemption would cover it, but I currently am claiming a lower value vehicle on it, so I am truley a no asset case. I originally thought I would be fine, since I thought the vehicle was fully secured and would not need the exemption. Oh how life can get complicated fast. I felt like I was having a stroke when I went to file and now I might be getting close again. I hate to surrender back the vehicle or give it to the trustee and still owe the debt.

Thanks

[bankit]

HHM,

There was an agreement signed. It was an unperfected lien. I think I will go ahead and redeem the vehicle if they agree and this way everything should be correct, since they would no longer have a lien on the vehicle.

Am I thinking about this correctly?

Thanks

[HHM]

I am not sure you need to redeem it. Simply list the car on your schedule of property and list this company on your schedule of secured creditors showing they have a secuirty interst in the car, and keep making payments.

Honestly, I don't think it will go any further than that...but, realize, there is a risk because of this unperfected lien. Basically, just sit tight, and see what happens.

[bankit]

One last question... I hope

If I am able to redeem the car from the creditor at a favorable price and pay it off. I would now have clear title. Can the trustee, if he views the previous loan as unperfected, either take the vehicle or force the creditor to give the pay off proceeds to the estate? I may be able to negotiate a decent agreement. I just don't want to borrow money from my parents to pay it off, just to have it taken by the estate.

Thanks

[HHM]

First, how exactly do you plan on redeming, how are you going to pay for it?

[bankit]

My family said they might be able to loan me the money to pay off the car. Either they would pay it off for me or they would give me the money and I would pay it off. The loan is less than 5k.