Vehicle Surrender Question (ch. 13 pro se)

[tunskit]

To refresh your memories, my friend and her husband have filed Ch. 13 pro se. They opted to surrender two vehicles securing a title loan, and she received this email today from the manager of the loan company. (My friend had asked about when/where to send the vehicles or arrange pickup). Does anyone know what this means, or how they should proceed? I think they might need to get an attorney, or else revise their plan to keep the vehicles.

I have contacted your Bankruptcy Trustee and was told that we cannot dispose of your
Vehicles until the BK has been discharged (3 years) I am in the process of filing a proof
Of claim with your trustee. Please contact your attorney for further instructions on
Disposing of the vehicles.

Specifically, she wants to know if she has to keep the vehicles for three years, or if she can sell them for junk with no title, since the loan company will be getting paid via the plan for whatever amount they end up claiming.

Thank you.

[justbroke]

First, the debtor cannot sell the property without permission from the court. So she should not just go and sell them.

There is likely an issue with the case if the creditor is confused and the debtor does not know what they are doing; which is typical in a Chapter 13 where the debtor is self-represented (pro se). What really matters is what is in the debtor's Plan of Reorganization. The Plan dictates how a particular debt or collateral is treated. If your friend/debtor did not indicate that they will surrender the vehicle in the plan, and the plan provides for payment (because the friend/debtor misunderstands a plan and listed the vehicle with a payment amount), then it would be true that the friend has a plan which keeps and pays for the vehicle.

On the other hand, the friend/debtor may have done the plan correctly and served it on all the creditors including this vehicle creditor. The friend/debtor may have indicated surrender on the Plan with no payment. The creditor should still file a claim. However, the creditor may be misinformed because the creditor would received absolutely ZERO legal advice from the Trustee's office, so what your friend/debtor forwards from the creditor, is suspicious!

I must say this. Obtaining third hand information when you are a Pro Se Chapter 13 debtor is a sign that you don't understand the confirmation process nor the Plan of Reorganization. Unfortunately, neither the Trustee nor the Court can help the debtor with any legal decisions and the Plan of Reorganization is a legal binding contract, for lack of a better term.

(Note: if their plan clearly lists surrender of the vehicle (without mentioning any payment amount), then they should NOT modify/amend their plan to now keep t he vehicles because the creditor said that they must keep the vehicles! Something is wrong! Perhaps the court in their area has a Pro Bono Clinic or other Debtor Clinic where they can get some legal help.)