When secured creditors don't reclaim asset

[ndryden]

I have had a handful of Chapter 7 cases where a debtor has indicated his intent not to keep a secured asset, like a car; but, the creditor does not reclaim the asset. The debtor doesn't know what to do with it? Can he drive the car or use the boat? If not, what can I do as his attorney to get the creditor to remove the asset from his property? I have never been able to find a good answer for the question. Any advice?

[Nicollette]

I have had a handful of Chapter 7 cases where a debtor has indicated his intent not to keep a secured asset, like a car; but, the creditor does not reclaim the asset. The debtor doesn't know what to do with it? Can he drive the car or use the boat? If not, what can I do as his attorney to get the creditor to remove the asset from his property? I have never been able to find a good answer for the question. Any advice?

Not really sure, but if its a car and the debtor does not want it, can they possibly drop the car off at the financing company, if they are local, and just hand them the keys?

[AngelinaCatHub]

I have had a handful of Chapter 7 cases where a debtor has indicated his intent not to keep a secured asset, like a car; but, the creditor does not reclaim the asset. The debtor doesn't know what to do with it? Can he drive the car or use the boat? If not, what can I do as his attorney to get the creditor to remove the asset from his property? I have never been able to find a good answer for the question. Any advice?

Hey man, you're the lawyer. LOL. But here is what I would do: Write a certified letter to either pick it up, or it will be driven or pulled to a metal recycle company for cash owed for storage. Many car crushers (in FL) need no title for an old car.

Another thought is to bill for storage, give them a month and apply for a storage auction. Take it at auction and get a Sheriff Title.

We had two cars that were chattel and one blew an engine. I gave it for the charges at the mechanic. The other burned, and I gave it to a neighbor who scrapped it at a junk yard. Never had a problem. 'Hub

[Bell30656]

I had a Ford Conversion Van in my chapter 7. Initially I asked repeatedly for FMC to come get it. They finally told me that they would not come get it but if I wanted I could drop it off at their office in Atlanta. When I later asked about the title they told me I couldn't have the title unless the lien was satisfied.

Well, I still have the van. I drive it sometimes and I figure since I can't sell it, I'll just drive it until the wheels fall off. It makes a great spare vehicle. For the first few months I kept the fuel close to empty (Hey that stuff is expensive) and always kept the van empty.

[despritfreya]

Suggestion so that client does not have any issues down the road: File a Motion to Redeem for some minor amount. Properly notice it out. Obtain Court Order with language that directs lender to release lien upon payment. Get client to supply payment. Send payment and copy of Order to lender and demand the lien release/return of the title. 9 times out of 10 your client will have the lien clearance within 60 days. Once the client has the lien release he/she can dispose of the vehicle.


Des.

[justbroke]

I had a Ford Conversion Van in my chapter 7. Initially I asked repeatedly for FMC to come get it. They finally told me that they would not come get it but if I wanted I could drop it off at their office in Atlanta. When I later asked about the title they told me I couldn't have the title unless the lien was satisfied.

That is actually a letter perfect example of a violation of the discharge injunction. FMC should know better because GMC and FMC have been spanked before -- from the U.S. Bankruptcy Court -- under the same exact circumstances. You might think about filing a complaint on a discharge injunction (stay) violation.

I would look at In Re Pratt on the GMAC issue. These lenders telling you that they are not coming to get it and not releasing title unless you pay, is nothing short of coercion and an attempt to collect the debt.

As for the original question, try to quiet the title and see what happens. You need to force the creditor's hands, and if you're lucky, they will violate the stay.

[olivies]

This is my exact situation right now. We are not reaffirming or redeeming the vehicle, but the credit union does not want to come get it. I am curious to see if we make it through to discharge if they'll take the vehicle at all. In the meantime, I would not be surprised if the value of the vehicle is even lower than it was when we first had it appraised back in June when deciding what to do with the vehicle. The driver's window is now off track, in the down position, and the window motor is shot. Kind of wish I could change my mind and redeem it for the current value (I am willing to bet they get $6-7K for it at auction, tops).

[Bell30656]

I talked to my lawyer about it and he said that I could sue but all that would guarantee is they come pick up the vehicle. Of course, my lawyer was an awesome filing the paperwork, shmoozing the trustee, etc... but actually suing someone. I think not. Besides I've loved having it to drive whenever I needed it. My daughter and I use it for our Walt Disney World vacations. If I get tired on the way, I can have a nice nap. She can watch television with her friends in the back while I drive. It's great. I consider it to be FMC's loss.

[justbroke]

I like Des' idea and forgot that strategy. If you do the Motion to Redeem, the court will set the value. If you can do this on negative noticing and they don't respond... perfect.