I took over mom's car pre-filing...help

[bethgould]

In January my mom's financed car became so delinquent that they filed a repo order. I decided to pay it up to date and drive it as my own. Today I sold it to someone, and am overnighting payoff to the bank. I never drew a legal note up explaining that I took over paying & possessing the car back in January, because we didn't think it was necessary. I netted a profit from the sale, and my mom is not receiving any of it since if it wasn't for me taking it in January, it would have already gone to auction and she would probably have been sued for the remaining balance on the loan.

My mom is soon filing a ch. 7 BK pro-se, and I want to make sure she fills out all the proper forms in the correct way, so her BK goes through without a hitch.

Any suggestions?

FYI, I filed my own ch.7 BK in late Feb, and it was discharged in early June. I surrendered my own financed vehicle to the bank right before filing BK, so she can't just fill out the exact same forms that I used. I've been helping her do this herself, but I'm at a loss with this development.

[SMinGA]

She should consult with attys on this, even if she ultimately files on her own...

Was there equity in the car when you took it over? If so, since you did not pay her for that equity I believe this will be a problem. She gave you that equity without compensation, so it is a transfer of assets. But if the value was about even with what she owed at the time, the only issue may be that there was no paperwork on the transfer.

Something like this could turn into a real problem - especially since you just sold the car to a 3rd party - where the trustee voids the transactions and takes the vehicle. Meaning you could be on the hook to your buyer.

[SMinGA]

One other thought - if the paperwork for today's sale is in your name/buyers name - it might not be valid since you don't own the car. If its your mom's name/buyer's name that could be a good thing. On paper, she would be selling the asset and getting fair market value for it I assume.

[bethgould]

One other thought - if the paperwork for today's sale is in your name/buyers name - it might not be valid since you don't own the car. If its your mom's name/buyer's name that could be a good thing. On paper, she would be selling the asset and getting fair market value for it I assume.

I made the bill of sale as Seller: (my name), acting for (mom's name). I did it that way because the car has been unofficially mine financially since I took it over in January. I met the buyer, a college girl, at her bank next to my office today. We sat down with her banker, she withdrew the $6,500 selling price, and he printed a cashier's check for the payoff amount ($5,521.79, and I have the portion for record keeping that shows it was paid to the finance company), and gave the rest to me in cash. I'm overnighting the cashier's check to the finance company for them to receive it on Monday, and then as soon as they send my mom back the title, my mom will sign it over to the girl at my mom's bank (Ohio auto titles require notarization, and her bank doesn't charge).

The blue book private seller value is $7200 (fair condition), and it sold for $6,500. The net after payoff is $978.21. I have the net, my mom does not.

Should my mom fill whatever form needs to filled for documenting sale of property within so many months of filing BK, as if she sold it and netted the profit, even though she didn't?

She cannot consult a lawyer. She now lives off her $740 social security income and can't afford it. I was hoping to get ideas and maybe direction as to what form to fill out for her. She really wants to get this filed soon.

[SMinGA]

Almost all bk attorneys give free initial consults. While she should probably not tell them that she is intending to file pro se, it would not hurt to discuss her case and get a legal opinion.

Officially your mom sold the car. You did not have ownership, she was on the title. That is why your mom has to sign it over... Its not important what she did with the money, unless she gives it to you. (Which indirectly she has done...) I don't think the trustee could take issue with the sell price of the car - especially since the sell was to an unknown 3rd party. But the trustee could treat the $978 as an insider payment, I believe.

As to which form, in the bankruptcy petition there should be one that asks about payments to family/friends in the prior 12 months. Unfortunately the $978 would go there at which point the trustee sees dollar signs...