Void Lienholder - 341 Meeting

[KMC4]

Hi,

I just came back from my continued 341 meeting where I was supposed to furnish the trustee with a copy of the registration for a new car that we purchased right before we filed at the end of August. The registration never came in the mail so I had to go to the DMV this morning to request a copy. I expected the continued 341 meeting to go smoothly once I gave the trustee the registration but that did not happen. Instead, the trustee looked at the registration and said that the lienholder didn't do what they were supposed to do and then went on to say that the lien was void and that my lawyer would explain what that means in more detail. Apparently, the dealership didn't file the DMV paperwork in time. She's going to appoint someone to come and look at the car soon and told me to keep the car insured. What does all of this mean? I planned on reaffirming the debt and keeping the car. HELP.

[HHM]

Basically, the trustee is looking seize your car.

If the lien is void (although that may be questionable), then odds are, the value of the care exceeds your state's exemption and the trustee is going to take your car, sell it, and use that money to pay creditors.

In most states, the trustee is required to give you the value of your exemption from the sale proceeds.

[ready2puke]

If thats the case and the dealer was at fault, is there any legal recourse for KMC or is he SOL? KMC you can have your attorney fight the issue with your trustee...it would cost you some money but it maybe worth it. This really sucks, sorry

[keepmine]

Your lender is required to perfect the lein by filing a UCC-1.
A mod here {Minnymouth} had that happen with her home. Do a search and you'll find her saga.
I think we need to start reminding people who bought cars shortly before filing to be certain there attorney checks public records and all required filings have been made by the lein holder.

[HHM]

If thats the case and the dealer was at fault, is there any legal recourse for KMC or is he SOL? KMC you can have your attorney fight the issue with your trustee...it would cost you some money but it maybe worth it. This really sucks, sorry

I am not aware of any legal recourse short of fighting the issue directly.

But on this forum, as was mentioned, this saga played out on a members home and she lost.

[KMC4]

Thank you for the responses. So if the worst case scenario happens and the car is taken away, are we no longer liable for the loan? Would it then be considered as IIB?

This would be a major headache as I use the car for work everyday and to transport my kids around. What are the chances of me being able to get another car loan now or after the bankruptcy is dischared? I was advised by my attorney to buy a new car before filing as it would be easier to finance than after filing.

[HHM]

As to your first question, yes, the loan would be taken care of in the BK. If the lien was not perfected, the loan is basically an unsecured debt as to you.

Yes, you will be able to get a car...you may not like the interest rate, but you can get financed.

[KMC4]

Well, the APR on the new car is 24.99% so I guess it can't get too much worse than that . I'll just be glad to be able to get another car.

[ready2puke]

You may just be able to get another car for a lesser interest rate...would that be a kicker? After all you've gone thru.. Im keeping my pinkies crossed for you...

[ssdsco]

And here's to hoping you have a large BK exemption(s) you can apply toward the car. Seems odd you could walk away with a cash windfall. Hopefully you didn't put much down on the car being seized.

[KMC4]

Unfortunatley, we had to put a down payment of $2500 which looks like we basically just threw out of the window.

I'm wishing now that we never even purchased the car. The only reason we did was b/c our lawyer advised us to give up our other car which we were upside down on by $18k.

[Dollar Bill]

Are you saying you bought a new car, and the dealership screwed up by not placing the bank (ie B of a ) on title as lienholder?

How long after the purchase did you file bk?

[KMC4]

I just got off the phone with my attorney and the way he explained it is that the lienholder did not perfect the lien....they didn't file the DMV paperwork within the required timeframe after the purchase. I'm not even sure how the Trustee knew that.

The dealership did place the lienholder on the title b/c I spoke to the DMV and they have them listed as the lienolder...plus they're also listed on my registration.

We filed for BK on 8/29/08, bought the car on 8/28/08 but had to go back into the dealership on 9/12/08 to amend the car purchase to take off the exteneded warranty that we initially didn't want. So the "real" purchase date wasn't until 9/12/08 b/c that's when the loan docs were sent to the lienholder.

[HHM]

I just got off the phone with my attorney and the way he explained it is that the lienholder did not perfect the lien....they didn't file the DMV paperwork within the required timeframe after the purchase. I'm not even sure how the Trustee knew that.

The dealership did place the lienholder on the title b/c I spoke to the DMV and they have them listed as the lienolder...plus they're also listed on my registration.

We filed for BK on 8/29/08, bought the car on 8/28/08 but had to go back into the dealership on 9/12/08 to amend the car purchase to take off the exteneded warranty that we initially didn't want. So the "real" purchase date wasn't until 9/12/08 b/c that's when the loan docs were sent to the lienholder.

Given those facts, you may be able to fight this one. The key is the financing contract and making sure it relates back to the purchase date.