Chapter 7 and Car Repossession

[trailblazer]

My chapter 7 was discharged almost 2.5 years ago. When we filed, we said we would surrender our car because we owed more on it than we could afford and more than it was worth. However, the lender never came after the car. Until now. The past three days they have shown up to try to take the car. I haven't been home with it, but my husband called and told me. so my questions are as follows:

1. To my knowledge, the lender never petitioned the court during the automatic stay to repossess, which means we were never given the option to redeem it at the current market value. Now they are telling us that they want the car (2.5 years later) and that we would have to pay $10, 000 to redeem it, which is several thousand dollars more than we owed on it at the time of filing. Can they add more money onto it after that time? That is so far above market value it's crazy. The car is 13 years old with well over 100,000 miles on it.

2. Do we have any remedy for this other than just giving it back at this time?

3. Is it considered harassment when they show up at the house several times a day, including 10 PM?

Thanks for any help you can offer.

[justbroke]

1. To my knowledge, the lender never petitioned the court during the automatic stay to repossess, which means we were never given the option to redeem it at the current market value. Now they are telling us that they want the car (2.5 years later) and that we would have to pay $10, 000 to redeem it, which is several thousand dollars more than we owed on it at the time of filing. Can they add more money onto it after that time? That is so far above market value it's crazy. The car is 13 years old with well over 100,000 miles on it.

As far as the automatic stay, it automatically ended upon the discharge of your case, the Trustee abandoning the property, the case being dismissed, or the case closing, whichever came first. There is no automatic stay. They can come after the collateral. You technically can't "redeem" it because the period for a 11 USC 722 Redemption has expired (that's the part of the bankruptcy law covering redemptions). Technically, they can add money and continue to accrue interest because it is "secured" property. What they can't do is "personally" use process to collect money from you. They can repossess the vehicle.

2. Do we have any remedy for this other than just giving it back at this time?

No, you have no remedy other than paying for the vehicle.

3. Is it considered harassment when they show up at the house several times a day, including 10 PM?

It depends on what your State's "non-bankruptcy" law for repossessions. I do not believe that an entity attempting to repossess a vehicle has to do so within any certain hours. In general, the only thing they can't do is breach the peace (enter your property illegally, use force, threats, color of authority, etc).

Why would you fight this anyhow? It appears that you understood since your bankruptcy 2.5 years ago, that the vehicle was subject to repossession and that you did not redeem it during the bankruptcy and did not continue payments after discharge.

As far as redemption is concerned, it is up to the Debtor to seek redemption. Redemption is a petition to the court under 11 USC 722 to pay the fair market value (FMV) of the vehicle in lieu or surrender or reaffirmation. If you were represented by an attorney, the attorney would have told you that your choice was redemption, surrender or reaffirmation. The Court would decide the FMV and then you would need to come up with financing (typically 722 Redemption via US Bank), or pay cash form exempt funds.

There really is nothing you can do unless there are protections under your State's non-bankruptcy (repossession) laws. I doubt that there is anything that you can do. Think of it this way. You were able to use the car for 2.5 years without paying for it or making any payments. Hopefully, you saved some money and are able to replace the vehicle.

[justbroke]

Wondering how your situation turned out. We got our discharge 2.5 years ago and the lender never came to get the car - until now. All of a sudden they want it. Now that it has 135,000 miles on it and isn't worth much of anything. Why now? Who knows? I haven't been home due to a trip, but they keep showing up at the house several times a day, even at 10PM. My husband and son told them I'd be back in a few days, but they said they didn't believe them. Oh, well. They will just have to wait.

(This is from the other old thread that you posted today.)

In posting http://www.bkforum.com/showthread.ph...l=1#post593391, hmsmith indicated that the vehicle was repossessed within 3 weeks of the discharge. They worked with the bank to have the bank repossess the vehicle.

[trailblazer]

I'm not trying to fight it. I just don't understand why they waited so long and then now they are acting rude about it. If they had petitioned the court during the automatic stay, we would have been given the option of redeeming it at current market value, which was less than what was owed. However, they never did that. Now, 2.5 years later, they are trying to tell us that in order to redeem it we would have to pay $10,000, which is more than we owed in the beginning of the note. We already paid $5,000. That's the part that upset me. I would be happy to settle with them for a reasonable amount and keep it, but they want nothing to do with that. So yes, they can have the car.

[justbroke]

I'm not trying to fight it. I just don't understand why they waited so long and then now they are acting rude about it. If they had petitioned the court during the automatic stay, we would have been given the option of redeeming it at current market value, which was less than what was owed.

Redemption has nothing to do with the automatic stay and nothing to do with repossession. Redemption is the debtor's option to pursue. If you are going to redeem, you do it immediately by filing a Motion to Redeem as soon as you file your bankruptcy. Your bankruptcy Statement of Intentions would have also been marked as "Redeem" rather than Surrender or Reaffirm (or Other... such as "Retain and Pay").

However, they never did that. Now, 2.5 years later, they are trying to tell us that in order to redeem it we would have to pay $10,000, which is more than we owed in the beginning of the note. We already paid $5,000. That's the part that upset me. I would be happy to settle with them for a reasonable amount and keep it, but they want nothing to do with that. So yes, they can have the car.

It's not a redemption, it's what you owe on the note as of now. If they do not want to settle, then they just do not want to settle. The time to settle was during the pendancy of the bankruptcy by (you) submitting a Motion to Redeem and providing evidence of the current market value. The Judge would have made a ruling as to the value and would have allowed the creditor to dispute that amount at that time. Since the bankruptcy and the debt is discharged, the talk about redemption (under 11 USC 722) and reaffirmation is moot since the time has passed. What did you have listed on your Statement of Intentions? Redeem, Reaffirm, Surrender or "Other"?

I think that unfortunately you did not pursue redemption under the Bankruptcy code which was your right. That the lender does not want to negotiate on price is their right outside the bankruptcy. What they couldn't do is refuse to repossess a "worthless" vehicle. They actually want their collateral, and if I were you I would just give it to them. They are not going to get $10,000 for a 100,000+ miles, 13+ year old vehicle unless it's some sort of classic or high-end vehicle.

[trailblazer]

I think we just were not given enough information by our attorney at that time. No, it is just a 2001 Saturn. That was my whole point. They waited so long and now the car will not net them anything. It would benefit me more than them, but they don't want to settle, so it is really their loss. I will gladly give it to them. I am not trying to keep it from them. I've driven it openly. They just need to be patient until tomorrow when I'm back in town. My husband and son both tried to tell them I was out of town and would be back in a few days. But they keep showing up at the house several times a day. There's no need for them to be like that. I've already called them and told them myself that I would be back and would call again on Monday. (today)

[justbroke]

Repossession companies do not (typically) trust the word of anyone except the person that hired them (typically the lender). You would, or maybe you would, not believe how many lies are told the lender and/or the repossession company. The repo man is probably stalking your job location, your husbands job location, any relatives, local shopping centers, and even streets that are within 1 mile of your home. They will even check your Facebook, if they can.

If you did call them today and set up an scheduled time to surrender the vehicle, I'm sure they'd like that rather than wasting time to keep coming back.