Is this legal???

[jessegirl]

Hi everyone,
I am discharged for over a month now. So today, I receive in the mail a letter from American General Saying:

"You have received a discharge from your indebtedness on the above referenced account from the Bankruptcy Court. However, American General Financial Services, Inc. holds a purchase money security interest in the colleteral of this loan and retains a lien on its property despite the bankruptcy discharge. Please contact our office at XXX-XXX-XXXX immediately to arrange for surrender of the collateral".

Detach upper portion and return with payment.

Then on the very bottom it says not an attempt to collect a debt, BUT its clearly states to detach upper portion and return with payment.

Now, Aren't they SOL...

What do you think about this letter?

Thanks

[relief13035]

I don't see how that can come after you for something that was discharged.

[DebtEnder]

Tell them to get a court order to come repo the stuff if they want it that bad. They can take the stuff back or leave you alone.

[Floridagail]

I think its a bluff, I would tell attorney about it. I think they are too late now.

[dingdong]

What is the property in question?

Ususally these types of letters are a bluff by the finance company. Most the time debtors ignore them and they go away.

If the item is something of significant value, which can be resold, it may be a different story.

It kind of seems like these finance companies don't want the debtor to "get away" with discharging and getting something for "free", not that they could really sell the property for anything significant and recoup their losses.


I would probably ignore it and see what happens, they will probably disaapear into the sunset. IF they become aggressive, then perhaps you can negotiate with them.

[JRScott]

Basically the debt is discharged but as they say if there is property involved they do hold a security interest in it. However in almost 90% of such cases the value of the property is not worth the recovery costs. Basically call them up and tell them to come pick up the stuff, in essence calling their bluff. In the vast majority of cases you'll never hear from them again.

And yes it is legal.....

[justbroke]

This is completely legal and they are exercising their right to cure by taking possession of the property that you pledged as collateral for your loan.

Now for the bad news. You need to go look at your original loan documentation. Be very careful where you pledged a "class" of items! So, let's say in 2005 you pledged your "computers" and at the time, you had an old 2001 Dell. Now, you purchased a 2009 HP Pavillion and it's shiny and new. They can take the 2009 HP Pavillion. Yep, so make sure you read your paperwork and see if you pledged a class of items or something very specific.

Of course, as has been mentioned they would need to get a court order, but if they think you have good items to take, they will. Of course this is a game of who blinks first, so you can call their bluff by ignoring the letter. However, they may then call your bluff and seek an order of replevin and seek to enforce their lien!

[MSH]

Well here is a question..... Citifin asks you to list a bunch of product brands in your home (TV, stereo, Car.. a few others) when you are getting a loan. But, right on the paper work it says that the loan is unsecured. Does this mean they may try and get this stuff?

[justbroke]

Well here is a question..... Citifin asks you to list a bunch of product brands in your home (TV, stereo, Car.. a few others) when you are getting a loan. But, right on the paper work it says that the loan is unsecured. Does this mean they may try and get this stuff?

If your paperwork reads "unsecured" then it is unsecured.

Usually, they'll have a spot on the paper which reads something like "this loan is secured by" and it's filled in with a description. If that reads "unsecured" then you are okay.

Many times, CitiFinancial and even others like EquityOne, Beneficial, and HSBC, won't even ever record the "loan" (chattel) with the appropriate service. Which means, essentially, that it's unsecured.

Here's my public service message of the day. If Beneficial or CitiFinancial actually tells you that it is secured and they want the collateral, just check with your State's financial registry (where UCC-1s are filed) to see if they actually recorded the loan/note. If they never recorded it, they are SOL. In my case, American General never recorded the loan, so they weren't able to file a secured claim!