Filing Chapter 7 and John Deere

[limalawn]

Ok, I am filing chapter 7 and have a John Deere account that I bought a zturn tractor with for about $6500. I had it for 2 yrs and sold it recently for cash to a random person after I put it up for sale. I used the cash to pay bills and kept paying my John Deere debt. Like I said I am filing chapter 7 soon and I have heard John Deere can put a lean on the tractor even though I don't own it and the poor guy who bought it can lose it if he takes it in for service. Is this true and if so what should I do? I don't even know the guys name or contact info to tell him there could be an issue.

[AngelinaCatHub]

It is nice that you care, but I doubt they would do much for such an old machine and the balance is probably small. Not knowing what he paid, and what you owe, you need to do what you need to do, and don't start worrying about "what-ifs". 'Hub

[hereforinfo]

You need to read your paperwork and find out if the loan was secured by the tractor. If it is and they want to repo it, you are going to have a problem.

[frogger]

If John Deere financed the mower, they have a lien on it until it is paid in full. It was not your lawnmower to sell. You may have a problem on your hands with this one. Talk to your attorney.

[Chowder]

If they want the thing back, I'd say the person he sold it to has the problem.

[Calthius]

No you would have the issue. You would have sold something that wasn't yours to sell. So it wouldn't legally belong to the other person even though he paid for it.

[hereforinfo]

If they want the thing back, I'd say the person he sold it to has the problem.

No, it wouldn't work that way. They wouldn't likely even know how to find that guy. The debtor would be responsible for producing the collateral, or they could potentially make it non-dischargeable.

[frogger]

No you would have the issue. You would have sold something that wasn't yours to sell. So it wouldn't legally belong to the other person even though he paid for it.

It could also be called theft by conversion...

[drowningNdebt]

or theft by deception and criminal simulation. both felony offenses. i would figure this one out ASAP!

[joh]

Take internet advise with a grain of salt.

[Never_Again]

I had a John Deere account. I sold the tractor, but I paid John Deere off, and used the extra equity to pay off another bill (I was trying to clean up my own mess.)

You will find, if you look at your note, that the serial number of the tractor and any implements that you purchased will be listed on the note as collateral. The note also strictly says that you may not sell or give away the collateral. That is just the way that it works. You are not talking a computer that you buy with a best buy card (they will say that is collateral, but not really.) John Deere credit offers purchase money loans, generally at very good interest rates. Plus, their equipment holds its value very well, so they probably take their security lien seriously.

That said, it is now done, and you need to deal with it. I doubt that they will take the tractor from the person who purchased it from you. Theoretically, they probably could, but think about it... they will want to sell him a new tractor someday, and that move certainly would not make him consider a John Deere very highly now, would it?

What about you? Yes, you committed an act of fraud at best, and theft at worst. This debt will probably become non-dischargable, given this. They will probably threaten you with legal (criminal) action, so you will end up paying. It still might be better in the long run, if you are discharging significant other debt.

Yes, this is a relatively small amount, but to report the act of fraud to the trustee and to a district attorney will really not cost John Deere much money (none), and could cause you a great deal of headache. Therefore, they have nothing to lose.

This is still a legal matter for your lawyer to handle. I am not sure, but if you warranted a clear title, and you misrepresented this to the purchaser, who is liable in this circumstance.

Not a smart move, but we all have done stupid (myself probably more than anyone!) You will probably have to now make this right.

[catleg]

Three possibilities come to mind.
1. Just list as a secured debt on your bankruptcy, reaffirm and continue paying.
2. List as a transfer (sold to unknown party for cash), list debt as unsecured, hope Deere walks away.
3. Talk to Deere, ask them how they want to handle it (honesty is the best policy).

In the 2nd case your exposure is if they repo it from guy you sold it to, then he sues you for what he paid you for it. In 3rd case, Deere still has security interest in mower but if the guy services it himself they may never find him. So again maybe they object to being listed as unscheduled and you reaffirm the debt. Need to ask a lawyer what to do really. Probably a negotiated settlement with Deere is the easiest way out. (They probably don't really want a 2 year old used mower back).

[debtmonster]

Take internet advise with a grain of salt.

Agreed... except for my Internet advice. Add pepper to mine along with the salt.

[Chowder]

Ok, I am filing chapter 7 and have a John Deere account that I bought a zturn tractor with for about $6500. I had it for 2 yrs and sold it recently for cash to a random person after I put it up for sale. I used the cash to pay bills and kept paying my John Deere debt. Like I said I am filing chapter 7 soon and I have heard John Deere can put a lean on the tractor even though I don't own it and the poor guy who bought it can lose it if he takes it in for service. Is this true and if so what should I do? I don't even know the guys name or contact info to tell him there could be an issue.

Bottom line.

Purchase money security interests, like this, are almost never acted upon. They do not want the items back, they want your money.

I've read dozens of posts here about debtors surrendering quads and jet skis, that are NEVER picked up.

Of course your hitch is that you don't actually have the item.

You could play hard ball, act as if you still have it, and see what happens.
Chances are, nothing will.

But I'll bet your Attorney will suggest you settle with them.

[Never_Again]

I think that your attorney will suggest that as well.

However, many purchase money security interests are acted on. How about cars? They are generally repossessed

The quads and jet-skis that you read about on here never being picked up are generally ones that are bought through the manufacturers credit cards (these are really credit cards, with the extremely high interest rates to go with them.) Many times, they consider this high interest rate compensation for the losses.

Plus, quads and jet skis may really be worth very little by the time that they have depreciated.

Still, purchase one with a loan from a bank or credit union, and they WILL repossess it, to recover some of their money.

Having some experience with John Deere credit, and how they operate, they are more like a bank. They loan money at lower (more market) interest rates. The assets that they are financing also tend to hold their value very well. It isn't like buying a Sears or a Wal Mart lawn mower... most of the John Deere equipment like a zero turn radius mower, has commercial value, and a pretty good secondary market value. Get behind with them, and they WILL come get the collateral.

Still, all is not lost, and you should be able to get out of this situation, with some effort. It may cost you some, but they would have gotten their money had you paid them off when it was sold, and the unsecured creditors you paid would have gotten nothing in a bankruptcy.