Car transfer problem

[utahbkquest]

Hi,

I'm in the pre planning stages of bankruptcy. I'm 28, just got out done with school so it's a no asset bankruptcy. I have about 40,000 in credit card debt. My one big concern is, about 2 years ago my roommate was struck behind in a big auto accident and it crushed his back so when he got a new car a truck that was more indestructible he paid cash for it $12,000 and to insure the car monthly would have been $450 a month, so I put it on my policy because he was in litigation over the lawsuit he signed the title over to me, and when I got it I signed it right back. That was last August. He never re titled the car, because it was signed over and done with. I don't want my good friend who's still stuck with a broken back to loose his car in my bankruptcy. I figured if I was honest and showed there was no money transferred when he signed the car over to me, and no money transferred when I signed the car back that would be okay. But some of the things I've read have somewhat scared me, does anyone have any experience with, or advice for a situation like this?

Thanks

UtahBK

[justbroke]

When did you transfer the car back to your friend, August 2014? Your friend is an insider and this would be an insider transfer. As to whether the Trustee will poke at this issue, I can not tell you. You are going to need a qualified and experienced BK attorney practicing in your District/State. Just thinking off the top of my head, and it really depends on State non-bankruptcy "title" law, the fact that the title was not "perfected" means that the vehicle is still your vehicle.

Now your friend may have issues because he transferred the title to hinder, delay and/or defraud a creditor by transferring it to you so as to protect the asset from any litigation. However, I don't think that dog will hunt (meaning no one is probably looking for his assets anyhow).

I would be forthcoming with my attorney and see what you need to do. You may need to disclose the "un-perfected" title (perfected, though, in your name) and exempt the property since it is legally yours. If you are still in possession of the title, that could make it even more the case that it is your vehicle. Additionally, you do not want to go changing titles now... especially if you're filing soon (by soon I mean in the next 2 years).

[utahbkquest]

Thank you I really don't know anyone well that's gone through chapter 7, so I'm not sure I'm interviewing attorneys now and one of the attorney's on my list is also one of the 3 bankruptcy trustee's for the county, but I can't allow my friend to loose his car for a honest transaction. The title at least by the statet's concern is in my name, but I signed it over and dated it the day I got it. Which was back in August. It seems like you know bankruptcy fairly well. Most all my debt is credit card debt so when am I forced to stop using my cards. I'm only delinquent by a month or two on one or two of my cards. The rest are in good standing and some have a fair amount of credit left on them.

[despritfreya]

about 2 years ago my roommate. . . got a new car a truck. . . paid cash for it $12,000 and to insure the car . . . (put the car in my name and) I put it on my policy. . .

While not likely to raise its ugly head (unless there is a claim against the policy), your insurance carrier could have a claim against you for the misrepresentation of a material fact to which it reasonably relied upon in issuing the policy - namely that the vehicle belongs to someone else. This would allow the insurance company to meet the first two elements in attempting to prove that you committed some act of fraud against it. Did you at least list your friend as the intended driver of the vehicle when the policy was issued?

[W]hen I got it I signed it right back. . . He never [registered the car in his name but has possession of both the car and the title].

Technically there was a transfer. Your friend's failure to take steps to register the vehicle does not change that. The transfer needs to be disclosed on question 10 of the Statement of Financial Affairs with an explanation that you never had an equitable interest in the vehicle and the vehicle was placed in your name for the purpose of acquiring affordable insurance for your friend. The problem is that by telling the truth you play right into the previous problem I mentioned.

As JB wrote, you really need to sit down with a good bk attny. If you walked into my office I would have to really think about how to handle this, give you various options (and there are several) and go from there.

Edt to add: Don't know much about insurance policies, but doesn't transferring the car void the insurance policy OP acquired since the policy was written to OP as the owner? Food for thought - JB - any comment????

Most all my debt is credit card debt so when am I forced to stop using my cards. I'm only delinquent by a month or two on one or two of my cards

You are not "forced" to do anything. If you use the credit cards knowing you are contemplating a bk you are using them theoretically with the intent to not pay. That could be an issue. Typically I want to see no real credit card use within the 6 months prior to filing unless the use is for some legitimate emergency.

Des.

[justbroke]

As for insurance, I typically keep mine until I know the title is transferred at the DMV because, in Florida, title doesn't pass (is perfected) until the physical title has been updated at the DMV.

[W]hen I got it I signed it right back. . . He never [registered the car in his name but has possession of both the car and the title].

Technically there was a transfer. Your friend's failure to take steps to register the vehicle does not change that. The transfer needs to be disclosed on question 10 of the Statement of Financial Affairs with an explanation that you never had an equitable interest in the vehicle and the vehicle was placed in your name for the purpose of acquiring affordable insurance for your friend. The problem is that by telling the truth you play right into the previous problem I mentioned.

Maybe this is a double whammy, but I didn't read where he turned over possession of the title back to his friend. I don't think that -- signing and surrendering the title back to the friend -- matters because you're right Des. There was an intent to transfer the title, as noted on the Title, and this still needs to be disclosed. So many issues, including whether utahbkquest allowed the friend to keep the same plates! utahbkquest should have taken possession of the license plates and surrendered them to the DMV.

The things we do for friends...