Secured loan and chapter 7 - need help

[darkpprdoll]

I filed chapter 7 last month and I have not had my first court date yet. I have a secured loan that is secured by someone else's assets that I cannot afford to pay. My attorney said I need to try and bring the account current as soon as possible because all that will happen is that the bank will charge me more fees that I will be liable for and/or they just take the other person's property but I honestly have no money and no way to pay this. I contacted the bank and they don't want to work any sort of payment arrangement out now that I've filed bankruptcy and they don't even want to really talk to me at all due to the automatic stay. Is there any way possible to refinance this debt or lower the payments somehow so that I can maybe catch up in a few months or does this have to be reaffirmed as-is? Is there anything at all I can do? Thanks for your help

[justbroke]

How in the world did you pledge someone's property, that you don't own, as security for a loan? Is this one of those installment loan companies, like CitiFinancial, Beneficial, Equity One, or some other legal loan shark company? It would be tough to refinance, and there seems to only be "redemption" loans for automobiles (and not other personal property).

I still have to go back to... how do you pledge someone's property when the property is not yours? What is this property? If you pledged my property, then first, I would never allow the bank to repossess since you have no title to it and should not have pledged it. Second, you and I would sit down and have a nice chat about just what you were thinking. What is this property?

If this really is an issue, you could try to redeem it for it's current market value, if that's lower than what you owe.

Just for keeping this thread helpful to others, virtually all liens pass through bankruptcy untouched. Bankruptcy does not affect the creditors position and ability to foreclose or repossess based upon the consensually granted rights in the security instrument (Installment Agreement, Security Agreement, Mortgage, Deed of Trust, etc). The only way to get rid of the lien is to avoid it in the Bankruptcy... or pay it off or redeem it.

[darkpprdoll]

Umm yeah, it is actually their savings account that was put up for collateral at a local bank. My credit was too bad for a loan and so I could not get credit on my own, so someone was nice enough to help me secure a personal loan so I could get a car. I really want to pay but I am flat broke and I have literally nothing. I am behind on everything and stuff is getting shut off, and I don't know when or if I would have enough to make one payment, let alone the late fees that they have already assessed.

[justbroke]

Umm yeah, it is actually their savings account that was put up for collateral at a local bank. My credit was too bad for a loan and so I could not get credit on my own, so someone was nice enough to help me secure a personal loan so I could get a car. I really want to pay but I am flat broke and I have literally nothing. I am behind on everything and stuff is getting shut off, and I don't know when or if I would have enough to make one payment, let alone the late fees that they have already assessed.

I still don't understand. Did they co-sign the loan? If so, then what would happen is that the loan would be discharged, as to you, and then they would be responsible for the loan.

You may not be able to reaffirm the debt since it may be found that it's a hardship.

If you own the car outright (paid cash), then you'll need to exempt the car anyhow. Unfortunately, for Ohio, the vehicle exemption is piddly ($1,000). I'm assuming that the car is worth more than $1,000.

Your attorney will probably tell you not to reaffirm since it is obvious that you can't afford to pay the personal loan. I hope that you have had a heart-to-heart with this friend.

I know this is hindsight, but your friend should have already (don't even dream about doing it now), put a lien on the vehicle to protect his interests. That way, he'd remain a creditor. In this case, he's now a co-debtor (Schedule H - Co-debtor). It was probably better for the friend to have personally (and solely) obtained the personal loan, and then loaned you the "purchase" money for the car, and filed a lien on the car.

You really need to be talking to your friend.

[darkpprdoll]

Yes, there is no cosigner on the actual loan, just their account as collateral, so I am guessing that I am probably in trouble

[justbroke]

Yes, there is no cosigner on the actual loan, just their account as collateral, so I am guessing that I am probably in trouble

I still don't see how you can actually do that. So, you either committed fraud, by pledging the account, or the bank did not do its due diligence to know that the account was not yours to begin with. If it's the latter, then your friend would have standing to challenge any move by the bank to touch the collateral.

However, if your friend added you to that other account, so that you could pledge it as collateral... that's a different story and I will retract any mention of fraud.

[despritfreya]

JB,

I have had cases where someone else’s property was pledged as collateral without that person co-signing. Usually a close family member or friend situation and, usually the collateral is $$ sitting in a long term CD or similar type of account.

OP, if you do not pay the debt the creditor will simply swipe the bank account. Assuming you did not commit fraud in using someone else’s property as collateral, you will then need to make it right with your friend/family member. I assume you listed this person as a potential creditor in your bk. If not, you need to amend Schedule F just in case you cannot "make it right".

If you fraudulently used the asset then you have big problems. 1)If the person is not on Schedule F and/or has no knowledge about the bk, the time to file a 523 complaint for fraud will never run. 2)If the person is properly listed and fails to file a timely 523 complaint the civil obligation to that person will be discharged however, 3)if you committed a crime, the criminal aspect is not part of the bk.

Des.