QUESTION
Do I have to give her the car back and if I do does she have to pay me the money she is behind?
Asked on Sep 13th, 2013 on Bankruptcy - California
More details to this question:
I own a car dealership. I repossessed a car and the customer just applied for chapter 7 on August 19th. They did not add this car in the bankruptcy. I repossessed the car on Sept 7th. Today I get a letter from the attorney that they are going to do a reaffirmation agreement to get her car back. She is about a $1000 behind plus repo fees.
7 ANSWERS
Bankruptcy Attorney serving Florissant, MO
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Law Offices of Thomas Corcoran Phipps
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You have to give the car back. You cannot get the back payments until the case is over.
Answered on Oct 31st, 2013 at 4:02 AM
2 Awards
A debtor can avoid the repossession by a secured party if the debtor still has equity/rights in the property. However, a condition on returning physical possession of the property back to the debtor is to assure adequate protection of the secured party's interest in the property. Under Nevada law, which adopts Article 9 of the UCC, title doesn't transfer until the property is foreclosed upon. Repossession is merely a means of facilitating transfer of title. But if the debtor is completely underwater, courts have held that the debtor no longer has any interest in the property and is not subject to turnover. Reaffirmation must be approved by the court. I would not surrender the car but rather make the debtor file a motion for turnover or otherwise force you to enter into a reaffirmation agreement.
Answered on Sep 17th, 2013 at 2:48 AM
Deborah F. Bowinski
You didn't say when the car purchase took place. If the purchase was prior to the bankruptcy filing then you violated the Automatic Stay court order when you proceeded with repossession without an Order for relief from the bankruptcy court. It sounds as though you need to consult with and retain counsel who can offer you specific legal advice for your situation.
Answered on Sep 13th, 2013 at 2:45 PM
If you repossessed the car after the debtor filed for bankruptcy, you will either have to go in and try to get relief from stay, nunc pro tunc, which means allowing something after the fact. That is a step hill to climb. Technically you may have been in violation of the automatic stay if you repossessed the vehicle after the bankruptcy.
Answered on Sep 13th, 2013 at 2:41 PM
If you repoed the vehicle less than 10 days after the bankruptcy took place, then you must return it. Whether or not the debtor will be able to reaffirm the debt will depend on whether the lender agrees to a reaffirmation or not. Most lenders will not allow a reaffirmation if the debtor is delinquent in making payments. if you are not the lender, then this isn't really your problem, is it! Your client, the lender, is responsible for your repo fees.
Answered on Sep 13th, 2013 at 12:51 PM
Unless you got the stay lifted prior to the repossession, you just violated the bankruptcy code by picking up the car. But, that is probably a separate issue from the reaffirmation issue. Reaffirmation is voluntary and you do not have to agree at all. But, before you make further mistakes, you may want to hire a bankruptcy attorney that you can go to with these kinds of problems.
Answered on Sep 13th, 2013 at 12:37 PM
Bankruptcy Attorney serving Walnut Creek, CA
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Alan E. Ramos Law Offices
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From the facts that you presented, it appears that you violated the automatic stay (if you did not have notice, the violation should not be considered willful, but a violation nonetheless). If you do not cooperate with the debtor in attempts to reaffirm, the violation could be considered willful and could subject you to sanctions. You should seek counsel to assist you in resolving this matter. This answer was provided as a public service to a question posed on the Law Q & A website. The answer is based on the information provided and is limited to those facts. Furthermore, the answer is based on California law and their application to bankruptcy law in California. Additional information could change the context of the question and materially change the answer.
Answered on Sep 13th, 2013 at 11:45 AM