QUESTION
Would title pass to the debtor knowing that the loan balance was not fulfilled but vehicle covered under exemption?
Asked on Jun 01st, 2017 on Bankruptcy - New Jersey
More details to this question:
Bankruptcy was filed with intention to reaffirm the only (1) vehicle currently in possession with loan payments all current. This vehicle is exempt and covered by federal exemptions. If you do not reaffirm an agreement for paying off the balance of the loan, is it expected that the bankruptcy court will discharge the debt? Does that mean that the loan does not have to be paid nor would the bank be able to repossess?
8 ANSWERS
Commercial & Bankruptcy Law Attorney serving Powell, OH
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Ronald K. Nims
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Discharging a debt in bankruptcy means that you're no longer personally liable on it but the lien on the collateral isn't released. So, the creditor can still repossess the vehicle.
Answered on Aug 19th, 2017 at 8:21 PM
Bankruptcy Attorney serving Seattle, WA
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The Law Office of Marc S. Stern
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There is both in rem and in personal liability. That is there is a lien on the car. It can be foreclosed. Liens pass through bankruptcy unaffected unless some separate order is entered. That is the in rem liability. In personal liability means that they creditor can collect it from you. In personal liability is discharged in bankruptcy.
Answered on Aug 18th, 2017 at 9:17 PM
Your question is not very clear but if you are current on a car loan and do not reaffirm it in a Chapter 7 bankruptcy, the lender CAN still repossess it unless you enter into a reaffirmation agreement. The exemptions are irrelevant to keeping the vehicle from being repossessed by the lender after a Chapter 7 bankruptcy.
Answered on Aug 18th, 2017 at 9:17 PM
Bankruptcy Attorney serving Cleveland, OH
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Benson Law Firm
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First of all, federal exemptions do not apply in Ohio. But the exemption regime applies only to protect certain assets from the reach of the trustee, not secured creditors. Personal obligations on secured assets are discharged without reaffirmation. However, the secured interest in the property remains. Therefore, the creditor holding the secured interest may seek payment from the asset (by repossession) if the regular monthly payments are not made according to the terms of the note. In sum, you'll have to continue the payments if you want to keep the vehicle but you will have no additional obligation should the vehicle be seized by the repo agent.
Answered on Aug 18th, 2017 at 9:17 PM
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I am sorry to be blunt, but this is a stupid question. No, you do not get a car for free just by filing a bankruptcy. If you want to keep the car, you must keep paying on the car. While the debt is eliminated in the bankruptcy, the lien is not eliminated and you have to pay off the lien to get the title.
Answered on Aug 18th, 2017 at 9:16 PM
You do not need to reaffirm a secure debt in your vehicle. However it will not be discharged in bankruptcy. The creditor/lender will repossess. You also do not need to reaffirm the debt but continued to be current on your payments and you can keep the vehicle. However, once you stop being current on your debt the vehicle can be repossessed.
Answered on Aug 18th, 2017 at 9:16 PM
While the debt is discharged by operation of law, the lien remains on the title which means the bank can still repossess the vehicle. Your only other alternative besides reaffirmation is a process known as redemption, by which you can pay the fair market value of the vehicle rather than the full debt. Redemption may or may not be possible depending on the value and your ability to pay it off all at once. Financing is difficult to find for these situations, but sometimes it is possible.
Answered on Aug 18th, 2017 at 9:16 PM
Bankruptcy Law Attorney serving Livingston, NJ
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Law Office of Stuart M. Nachbar, P.C.
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Incorrect. Even if exempted out, and there is still a balance, they may repossess if you do not reaffirm. That loophole has been tried and failed.
Answered on Aug 18th, 2017 at 9:30 AM