Surrendering a car in a Chapter 7

[Nicollette]

Hi everyone! I'm posting this question for my cousin who is probably gonna be filing in about a month or so? If she surrenders her vehicle in the ch 7, will they pick it up immediately, or will it be after the 341 meeting, or after discharge?

[Cavedog]

Hi Nicollette,

I could be wrong, but once your cousin file the automatic stay goes into effect until 45 days after the 341 meeting, unless the creditor tries to lift the emergency stay which is rare. Your cousin could always make arrangements to turn it in early.

[sh9730]

Im sure it varies by lender...I have 2 cars...1 surrender and one Im going to see if I can keep....on the one I wanted to surrender, my lender wouldnt take it til after the 341, even when I tried! But there are plenty of thers posted here who have surrendered before the 341. On the one where I said I wanted to keep it...not a peep out of them yet....no attempt to lift the stay or anything yet. I will contact them after my 341 and see where it goes.

Tell your friend to remember that if they think there is any chance they might want to keep the car (work out a deal with their bank) they can file the paperwork saying they intend to keep the car (reaffirm), but then they are not legally bound to that if all parties cannot come to agreement. Then as Cavedog says, they must file paperwork to lift the stay if they dont want to wait until 45 days after the 341. From what I hear, few CAR lenders bother.....mortgage lenders, different story....and at least in my case they havent done a thing yet almost 6 weeks since I filed.

[debee]

I agree with what the others have said. It also depends on the creditor and whether or not the lien has been perfected and also whether or not there is any equity in it.

If the lender didn't perfect the lien, the trustee will be able to take the car, sell it, keep her cut and distribute the rest. If there is equity above what your cousin can exempt, the trustee may sell the car, pay off the creditor & your cousin, and keep the rest.

Once she files, the car becomes property of the estate. The creditor has to file to lift the stay or wait until the 45th day, unless your cousin reaffirms the debt.

If your cousin elects to surrender the car, she is required to do so within 30 days of the 341. That doesn't mean she has to return it to them, just that she needs to make it available to them if sought. (And they still have to file to lift the stay)

If your friend doesn't want the car hanging around and is anxious to get rid of it, she could surrender it before filing. This is only a good idea if she has no equity in it.

[sh9730]

Sorry to hijack this thread a bit, but it is related to the topic Debee just brought up.

Debee,

You have finally made me see the light why the lender on my car to be surrendered wont take it. They told me something about their legal department or something last I talked to them.....but now I get it. They are not confident the LIEN is perfected! I just did a quick search, and in AZ especially, there is a problem with dealers promptly getting paperwork titled to DMV where the lien is recorded (within 20 days)...and if this has not occurred in accordance with AZ law, the BK trustees are TAKING the car for the estate, and then selling it and I (assuming anyway), just put the lender in the unsecured category with everyone else.

This makes sense in my case as I bought two cars on the same day on 12/28/10....(dont ask...I ve posted elsewhere how I was AMAZED that this occurred)...one of the cars got titled and I rec'd the registration quickly, but on the other one (the one that is now being surrendered), they took close to 5 weeks if I recall to get me the title...I had to call them daily to get things going before my temporary registration expired.

SO, that is likely what is going on in my case.

Debee, if this is so, this really doesnt affect me personally except that if the trustee does do this (and my trustee did ask if I had purchased any vehicles in the last 6 months...) it changes me to an asset case, correct?

[debee]

Yes, I think that's correct. Your discharge won't be delayed by the situation with the car, but closing tends to take longer.

Sounds like your case is going to be interesting. Hopefully not TOO interesting.