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Discharge of secured (?) personal loan Personal Bankruptcy

Discussion in 'Bankruptcy Law' started by bobterry99, Feb 10, 2010.

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  1. bobterry99

    bobterry99 Law Topic Starter New Member

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    In September I sold my neighbor my 1988 Mercedes for $3700. He gave me a $200 downpayment and is paying $200/month until the $3700 is paid in full. The title is in his name and has no liens. He signed a purchase agreement that outlines the payments and explains that if he falls behind on the payments ownership of the car returns to me.

    In late January he filed for bankruptcy. I am listed as a creditor holding an "unsecured low priority claim".

    Questions:
    1. Because of the signed purchase agreement isn't my claim in fact secured?
    2. Based upon the answer to #1, is his debt to me likely to be discharged; and if so, is there anything I can do to prevent it? In this regard I should mention that I can probably get him to sign either a new loan agreement or a document reaffirming the original loan if this will help my situation. (The car's ignition switch seized yesterday and he needs me to replace it for him; plus, for now he seems willing to continue the $200 monthly payments).

    Thanks in advance for all replies.
     
    Last edited: Feb 10, 2010
  2. Theresagail

    Theresagail New Member

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    Your claim is not secured because you have no security in the vehicle (you should have listed yourself as a lien holder)

    You are SOL as you are a unsecured creditor if he filed a chapter7 you are not going to get a penny, if he filed a 13 you may get 50$. You have every right to go to the 341 meeting of creditor and state your case however in the eyes of the trustee you are just as important as a credit card since you failed to secure your interest in the vehicle. Expensive lesson learned.
     
  3. Theresagail

    Theresagail New Member

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    When you go to the 341 Meeting ask him to reaffirm the loan-- the only trouble with this is your loan is not secured the trustee and even his attorney will more then likely not let him do that as you are not to reaffirm unsecured loans.

    If he is still just paying you 200$ a month then he has retained you meaning he can default at anytime and you have no rights to collect the rest of the $$'s owed. regardless of reaffirmation or retain you do not have a interest in the vehicle you would never have the right to repo it. It is up to you if you want to fix this car of not.
     
  4. bobterry99

    bobterry99 Law Topic Starter New Member

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    As an aside, I am surprised he can even declare bankruptcy. His net monthly income is $4800; his monthly expenses are just $26 more!
     
    Last edited: Feb 10, 2010
  5. Theresagail

    Theresagail New Member

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    The reason you are unsecured is because you ARE NOT ON THE TITLE, this is not his error this is your error. He does not need to do anything to his bankruptcy.


    If he and the attorney agree to reaffirm this debt and the trustee ok's it -then his attorney will have the paper work all three of you sign. Are you talking to him already? if so, ask him if he wants to reaffirm if he says yes then you two call his attorney and tell him -- you need to go to the 341 meeting and sign those papers or you two can go to his attorney's office.

    You could get into some trouble having him sign over the title to you at this point-- as he does not have to do that. That is a violation of the bankruptcy automatic stay and him giving the title to you and signing off on it still does not give you interest in the car -- getting the title and adding a lien hold on it and filing it w. DMV is the difference
     
  6. Theresagail

    Theresagail New Member

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    He may be filing a chapter 13 in which case There is no reaffirmation or retain you are really SOL and there is nothing you can do about it. Just remember even though he may be a friend he is still protected by the bankruptcy courts and if you violate the stay you will be in some deep trouble
     
  7. bobterry99

    bobterry99 Law Topic Starter New Member

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    I have not mentioned the bankruptcy to him. But he has been calling me to arrange to have me repair the car.

    Is it possible for him to reaffirm the debt quickly before the meeting of creditors? I would like this done before I begin working on his car (for free -- this is a $500 repair I am doing).
     
    Last edited: Feb 10, 2010
  8. Theresagail

    Theresagail New Member

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    What chapter is he filing a 7 or 13?
     
  9. bobterry99

    bobterry99 Law Topic Starter New Member

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    He has filed chapter 7.

    Wouldn't a simple solution be for me to draw-up a work contract to do repair work for the balance owed on the car? In addition to the $500 repair he desperately needs now the A/C needs repair.

    As an aside, I am amazed he is eligible for bankruptcy. Assests total $160K, debts total $182K. His annual gross income is $70K; his monthly expenses exceed his income by just $26 -- but expenses include the item $200/month to charity!
     
    Last edited: Feb 11, 2010
  10. Theresagail

    Theresagail New Member

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    It is up to you the bankruptcy has not been discharged yet and he is still in the middle of it--

    What if you write up a contract do the work and he adds this in the bankruptcy too? tell him you want to be PIF or do it, and hope he pays- your choice
     

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