title question on Auto cram down

[kellmaestra]

My husband and I kept his 99 Durango (120k) when we filed Chap 13 two years ago. After learning about the new Cash for Clunkers rebate program where the government will give a cash voucher up to 4500.00. One of the conditions is a clear title.

We have already paid off the secured portion but have not received the title. The attorney called the car company and they told him that they were keeping the title until our bankruptcy was discharged. He explained that since the car was a cram down they have the right to do this because if we were dismissed, they could charge interest on the full amount.

The Durango is not worth $4500.00 and this rebate program only lasts about 5 months. I am concerned this is our best chance to get rid of it and we can not take advantage. Can I call the car company and talk to them? Since we still owe the unsecured balance of the loan, is there any value in telling them to come get the car?

thanks
Kelley

[lrprn]

Can I call the car company and talk to them? Since we still owe the unsecured balance of the loan, is there any value in telling them to come get the car?

Kelley, DO NOT contact any of your creditors directly yourself without discussing whether it's ok to do so with your lawyer first. You can really mess up your case this way.

I truly understand your desire to not let this program go by, but please talk with your lawyer first to make sure he/she understands how important this is to you. Then if it makes sense to approach the creditor about the title, then figure out whether it's better for your lawyer to do it or for you to do it.

Good luck - hope this opportunity works out for you. But remember that if it doesn't, something else will likely come along that could be even better than the current program - who knows?

[oldhack]

Even though you "crammed down" your auto loan, the remaining amount not paid became unsecured credit in your bankruptcy. Thus, the lender receives whatever your other unsecured creditors do on that amount. So, they're not going to give you a title till discharge, because they're still collecting whatever your BK's 'dividend' is to unsecured creditors.
Sometimes we just have to realize that bankruptcy keeps us from taking advantage of situations available to others.

[justbroke]

oldhack has basically summed this up well. I'd make a minor correction though. The crammed down portion of the loan did become unsecured, but it's only unsecured if you receive a discharge. Otherwise the lien is still enforceable under State non-bankruptcy laws.

[woeisme]

You do not own the car, free and clear, until either you have paid the total amount owed on the vehicle (not the crammed down amount) or until your BK is discharged. I seriously doubt there is anything you or your lawyer can do to convince them to give you a clean title at this point, sorry! I mean, from their perspective, you already are paying less than originally agreed upon with the "cramdown", and if they give it to you free and clear now, you could dismiss your BK tomorrow and they would be out the $ they could have collected from you. Or even if you don't dismiss, giving you the title might mean they can't continue to collect their percentage as unsecured as they've said that it is now yours free and clear. So I can't see them voluntarily doing this.

[tinfoilhat]

I am concerned this is our best chance to get rid of it and we can not take advantage.

Get rid of it? If you owned it free and clear now, you could not just take it in and walk out with cash.
The cash for clunkers bill is a voucher towards purchasing a new vehicle. You don't just take your car in and get cash for it.

Not only that, you'd have to put the voucher towards something that gets 5 mpg more to get the $4500.
Trucks and SUVs: For light trucks, SUVs and minivans, the new vehicle has to get at least 18 MPG and can offer as little as a 2 MPG improvement over the old one to qualify for $3,500. With a minimum 5 MPG improvement, you can qualify for $4,500.

http://www.cashforclunkersfacts.com/CARS-Law.pdf

http://www.reuters.com/article/earth2Tech/idUS216228605420090619

[kellmaestra]

Get rid of it? If you owned it free and clear now, you could not just take it in and walk out with cash.
The cash for clunkers bill is a voucher towards purchasing a new vehicle. You don't just take your car in and get cash for it.

Not only that, you'd have to put the voucher towards something that gets 5 mpg more to get the $4500.
Trucks and SUVs: For light trucks, SUVs and minivans, the new vehicle has to get at least 18 MPG and can offer as little as a 2 MPG improvement over the old one to qualify for $3,500. With a minimum 5 MPG improvement, you can qualify for $4,500.

http://www.cashforclunkersfacts.com/CARS-Law.pdf

http://www.reuters.com/article/earth...28605420090619

Sorry, I guess it wasn't obivous that we are looking to replace his car. But yes, I did know that the voucher is to be used as a cash trade-in on a new car. What I didn't know was how the car company could keep the title after the secured portion was paid off. Many thanks to those kind folks who answered that question.

Kelley

[tinfoilhat]

Well you did say get rid of it.

I am an automotive enthusiast, and I've seen this cash for clunkers bill pop up here and there for the past 15 years at least. I've seen the petitions to keep it from passing.

It was never written, so no one knew exactly what it was going to mean. People assumed everyone was going to be able to take a rare restorable classic car (and others) to get cash for it and the car gets destroyed.

I assumed you thought the same as far as taking it in and getting cash. I've read too much about it.