Has anyone sold a car that was included in their plan? Advice needed.

[cspa522]

Now that we've realized that our broken down car is part of our plan (we were both sure it wasn't, oops), we have to get permission from the court and the creditor to sell the car.

Wondering if anyone has experience with this. Does it take forever? Is there a good chance we'll be denied?

Background: We own an 8 year old car that was fine when we filed for BK 2.5 years ago, but last week we found out that it's shot and needs an entirely new engine. Confirmed by several mechanics. Cost is $7000. Car is worth maybe $4500 without a blown engine. It's not driveable. We have some cash saved up and off a good friend bought a used vehicle to replace it. The title to the broken down car has a lien on it, so I have contacted my attorney to get the process started to sell the car on craigslist. Of course, attorney's gone all this week and won't be back until Monday. So if I'm lucky she'll process it next week, but we'll see. She hasn't even answered me if I've given her everything she needs to get started.

Anyway, I'm assuming it's not a quick process. She'll need to file the petition, it has to be approved by the trustee, then by the creditor, and a release has to be given to us. I'm also assuming we'd need to get a new title, without the lien on it, because I'd want that if I was buying a car from someone. At best I'm thinking a month before we know anything.

Any ideas? Stories? Tips?

Thanks!

[andy158]

I am going to monitor this post because we are in the same boat! Our 2004 car that was included in our bk nearly four years ago and is on its last leg. It is being crammed down in our payment and has nearly 200k on it now. Started our with 48k on it once our bk started and has been wife's primary car for traveling for her job. She puts about 38k on it each year. Put a used transmission in it last year for $1800. The a/c quit last year and is over $800 to repair! When the engine goes it is going to the junkyard.

[justbroke]

There are ways to do this cleanly, but I'm not familiar with them. You can't just sell the car that has the lien on it because you can't sell property without permission. What you may be able to do is surrender the car and allow the creditor to take the car (via repossession). They would end amend their claim as an unsecured claim with the "deficiency" amount listed in the amended claim. If you are in a 100% plan, that means you'd end up paying the entire deficiency over the life of the plan. If you are not in a 100% plan, then you will pay pennies on the dollar or maybe even nothing (if you're in a 0% plan). (Oh... you already bought the new car.)

Never mind me... just work with your attorney. I think surrendering would be easiest!

I may be missing something, but I don't understand the selling the car when you may be able to just surrender it. There are also other techniques where you could transfer the lien to the new car... Substitution of Collateral... but I've only read about this in cases where a car was totaled in an accident. (I think Des is good at the Substitution of Collateral motions...)

[LadyInTheRed]

I agree with justbroke. Surrending the car sounds simplest. But, JB's comment applies to me too: Never mind me... just work with your attorney.

Please keep us updated. Your experience will help others.

[lillymarlene]

I am definitely going to watch this. My 13 year old "paid for" car needs a lot of expensive repairs and unfortunately is considered to be part of my chapter 13 bankruptcy estate. I would love to be able to sell it "as is" and get the proceeds, but am afraid I can't just go out and do that.

[LadyInTheRed]

I am definitely going to watch this. My 13 year old "paid for" car needs a lot of expensive repairs and unfortunately is considered to be part of my chapter 13 bankruptcy estate. I would love to be able to sell it "as is" and get the proceeds, but am afraid I can't just go out and do that.

Actually, because it is paid for, you very well may be able to sell it. Even if you need permission from your trustee, it is a much easier situation than the OP's. Ask your attorney.

[lillymarlene]

Actually, because it is paid for, you very well may be able to sell it. Even if you need permission from your trustee, it is a much easier situation than the OP's. Ask your attorney.

O.K. I'll call my attorney next week. (Hope that he doesn't charge for a question and/or not much if he has to do anything.)I also have been using another vehicle, which the people who would have been my inlaws may sell me for $1.00. They had been holding off on transfering this to me, because they know I'm afraid of complications with my bk.

[LadyInTheRed]

O.K. I'll call my attorney next week. (Hope that he doesn't charge for a question and/or not much if he has to do anything.)I also have been using another vehicle, which the people who would have been my inlaws may sell me for $1.00. They had been holding off on transfering this to me, because they know I'm afraid of complications with my bk.

They can give you a car. It won't create any problems. But, don't take my word for it. Ask your attorney that question too.

If your attorney is decent, he won't charge you for quick questions like these. He may charge you if he has to contact the trustee for authorization to sell a car. If it's not clear from your fee agreement what is included, just ask.

[cspa522]

Just popping on to say that I still don't have any new information but now that I know a lot of people are watching this I'll keep you updated. My attorney was out of the office all last week, so I gave her today to try to catch up. Tomorrow I start getting annoying with calls and emails wanting to know more about this. I want this car out of my garage so we can either surrender it or sell it, but either way, we can park both working cars in the garage!!