Ch 13 and possible boat repo

[greenthinker]

Hi All,

We have retained an attorney, and are preparing to file for Ch 13. We have a boat that we are planning on surrendering to Bank of America as part of the bankruptcy. We have missed two payments already, and after Oct. 11th it will be three payments.

I don't want to make a payment on it since we are going to lose it anyway, but I don't want it to get repossessed before the bankruptcy. We won't actually get to file until mid-November, and the concern that I have is that Bank of America will repossess the boat before then. Our attorney advised us to stop making payments inform our creditors that we are planning on filing for Ch 13 and have retained an attorney, and to provide his name and phone number. Will telling B of A that we are filing for BK speed up the repossession or stall it?

Any advice would be appreciated...thanks!

P.S. We live in Washington State, and the boat is in a slip at the marina...if those details matter.

[rjmwx81]

If you're planning on losing it in the BK anyway, does it really make a difference whether they repo before you file? I mean, obviously if they repo and sell it there's going to be a deficiency balance but that's going to be included in your BK, right?

[greenthinker]

Well, as I understand it, if we surrender it as part of the BK, then we are not responsible for any deficiency. But, if they repossess it before the BK filing, then we will have to repay the deficiency through the plan. That's why I don't want them to repossess it before we file. Otherwise, you're correct...it makes no difference to us.

[jmac]

Wish i would of done that. My deal was a little different due to circumstances but BofA sold my 100K+ boat for 27k. I was doing chapter 7 so i didn't care, but now that it is a 13 it does make a difference. They would of never found my boat i called and told them were it was at.

[greenthinker]

Just to clarify, I am trying to find out what will happen if the bank repossesses our boat before we file for Ch 13. Would we be responsible for the deficiency? Also, if we advise the bank that we have retained an attorney to file Ch 13, would they try to rush and repossess the boat before we can file?

[jrippon]

This is my understanding - I'm no lawyer so take it for what it's worth. If you surrender the boat in a Ch 13, the remaining debt is unsecured and will be paid according to your plan. If the boat is repossessed before the bankruptcy, the deficiency balance will be unsecured debt in your bankruptcy and paid according to your plan. Assuming the boat is valued the same in each case, a repo deficiency would likely be higher due to extra cost of repossession. Because the bank is paying those costs, they don't stand to gain anything by repossessing early. Your attorney's advice makes sense, let BofA know you have filed and they will most likely wait to collect the property and payment from the trustee.

[jmac]

First question yes...I could of short sold my boat for 50k easily but did not because i was doing a 7. Turned over the boat they sold it for nothing i ended up forced to do a 13 and im on the hook for 66k. They can try and rush all they want to repo the boat, can only happen if you want it to.

[jmac]

One other thing i told bofa i was filing but had only retained an attorney went 3-5 months before they even started looking for boat, i could of probably used the boat all summer if i didnt turn it in.

[despritfreya]

1. If you file ANY bk before the repo, the lender is secured and will have to obtain stay relief to regain possession and dispose of the collateral. Once disposed of, the lender has a deficiency claim and becomes an unsecured creditor.

2. If you file ANY bk after the repo, the lender, now having possession of the property, is an unsecured creditor for the deficiency amount as it will dispose of the property.

The secured v. unsecured status of a creditor ONLY matters in a 13 if you are close to the debt limits.

Once the creditor is unsecured (either before or after filing) the creditor is treated just like any other unsecured creditor and will share in whatever pie is set up in the 13. Therefore, whether you allow the repo before or after filing should have absolutely no effect (unless there is a 109 debt limit issue).

I leave it up to my clients but warn them that as long as they have possession of the vehicle or boat they need to keep insurance on it.

Des.

[car67]

Let them take it. You will be fine.

[greenthinker]

Thank you all for your advice. Bottom line is that the lender could take it back at any time, and no one can predict when. So, I am just going to make sure that all of our stuff is out of it, and when it happens it happens. Now that I think about it, I'd rather that it goes sooner rather than later so that I don't have to keep storing it and anticipating it being taken.

I am expecting that there will be a deficiency judgment because I doubt that they will be able to sell it for what I owe on it, although it may not be too far off. Does anyone have any experience with deficiency judgments from B of A?

Thanks again for your help!

[Limitman]

I had my boat repoed by B of A. I filed in September last year and it took them until February of this year to repo it. Obviously they had to file a relief of stay and all that. I didn't know much about the process at the time so I was paranoid about them reposessing it so I took all my stuff out of it and it sat for a few months when I could have used it. What happend in my case is the bank called me said they will be coming to take the boat and asked me where it was. I told them and a few days later a repo company came to get it. Funny thing is, is I had to help them hook it up to their truck. I then got a letter from B of A stating there would be an auction of the boat and place and time with an invite to come bid on it. They have 60 days after the sale to file a claim. I owed $26000 with a few repair costs thrown in and it sold for $10000. They did send a letter letting me know of the balance BUT they never claimed it in my bankruptcy so they lost it. They did however claim all the rest of the credit cards I had with them. Not sure why they didn't claim it other than they just missed it.

[greenthinker]

So, here is an update. Late last week I called B of A, and told them that I intended to surrender the boat (at that point 3 payments past due). I pulled the boat out of the marina and got all of our stuff out of it on Sunday, and it was picked up on Monday (yesterday). Sigh...I don't like to see it gone, but it was better to have some control over the situation, and have it picked up at an agreed-to time.

Thanks again everyone for your feedback.

[Reddrocket07]

When you inform a lender that you have filed bankruptcy, all attempts to collect the debt are suspended once you get the process started. I would assume that would expand to repossession, but Im not entirely sure.

If worse comes to worse, can you hide and secure it? I dont think repossesors are legally allowed to break into personal property if its locked, but if you leave it sitting out, its fair game.