Haven't found an answer yet.

[moses]

First, let me say that I know this was a very bad choice on my part.

I'm strongly looking into Chapter 7 but have one question that hopefully someone would know the answer to. About three years ago the company that I was financing my motorcyle through sent me the title by mistake. The next year I needed to move and sold the motorcyle to a private party, supplying them with the title. My intention was to send the money to the finance company and close it out. Being the idiot that I am though I used the proceeds from the sale to cover an emergency that occurred after the bike sale. Over the last year I have been making the monthly payments that I would normally have when I owned the bike.

Here is the question....if I file for Chapter 7 I don't know how to include this, or even if I can. It was / is a secure loan but the colateral they used was sold with the original title.

This is what keeps me up at night. Any help would be appreciated. Thanks.

[BobMango]

You have to list the debt no matter what.

As to the secured status, when they gave you the title did they sign the lien release? If so you could legally sell it. If on the other hand you simply had the title but the lein release was not signed then title cannot legally be transferred without getting the lien released. If someone other than the lien holder signed the lien release then you have a fraudulent transfer.

The worst case scenario is that the debt would not be dischargeable if there was fraud involved in the title transfer. In that case you would simply continue to owe the balance until it's paid off. Not the end of the world and with the money you won't have to pay to other creditors you can probably get it resolved fairly quickly.

Talk to your attorney if you have one, or schedule a free consult with a bk attorney and see what they say.

[moses]

Thanks BobMango. All I received from the finance company was the signed title which I assume is different from the lien release (never sold anything that was financed before). Since the title was transfered into my name and then into the buyers name it sounds like it was a fraudulent transfer (man that sounds bad & criminal). Any ideas how they decide what the monthly payments would be?

Once I find an attorney I'll bring it up with them and see that they say. Thanks again!

[OhioFiler]

The bank really has no recourse if they released the title to you. Don't worry about it. They converted the secured debt to unsecured by their actions.

[Snax]

Research the motor vehicle code for your state on 'perfecting' title. Some states require that the lender perfect their lien on the title before it is issued. If they failed to do so, they may have little to no remedy to secure a lien on it going forward unless one is silly enough to put them back on it of their own accord (which of course you can't), and you likely had the legal right to convey the title - regardless of whether the finance company intended to have their lien on it or not.

But I'm not an attorney and could be totally wrong. Presumably I will find out myself soon however, as we are in a similar situation with a boat that we sold two years ago.

[momisery]

In Missouri they return the title to you, but the lien holder appears on the title. They have to sign off and the tag office that did the transer should know that. If the bank signed off, then the lien was released, not our problem.