Complicated Boat Scenario

[lotsoquest]

You have a boat on a loan purchased in Jan 07. You file bk chapter 7 and it was discharged in middle of 09 and of course loan is included. You want to keep your boat so you contact bank and just keep paying for another 1.5+ years (they allow this and you've been paying on time).

You did NOT reaffirm so they basically have been "nice" enough to allow you to continue to make normal payments and it helps them because as you might also assume, the boat is worth a lot less than the payoff today.

Your payment history has always been good even during a bk and post bk. Now, you're just less than 90 days late cause work got really bad. However, you have a plan and you are ready to catch the loan up in less than 3 weeks max.

You thought since it's winter and the rv markets are real bad that you might have a few additional weeks before they actually want to come get it. Keeping in mind your payment history is steller except for last 2.5 months.

They take the boat. You offer to pay current with a reasonable excuse. Never rude. Always respond to inquires and correspondence. You tell them you would like to get it back and that you just hit a financial bump. Mind you, the bk is almost 2 years old. The loan is from Jan 07 and it's now Jan 11.

Since you filed bk, you are ONLY allowed to speak to the bk dept and the bank themselves won't talk to you. You want your property back and they dont wanna play anymore.

Questions:

1. Do you have any leg to stand on regarding due process?

2. What if a shop has delayed on filing their mechanics lien but then they file it right after they discover that you suffered repo 3 days ago? Would their lien be any good to them while the boat is in "limbo"? Boat is in repo yard but has not been auctioned and absolutely NO paperwork has been received by the debtor since the repo was very recent.

[despritfreya]

Your first error is stating that you want "your" property back. The boat does not belong to you. It belongs to the lender until you finish paying for it.

Your "due process" rights were not violated. You failed to make payments and regardless of your past payment history or how far behind you are, if you did not service the lien which survived the bk, in a timely fashion, the lender had the right to regain possession.

Your ability to get the boat back will depend upon State law. Usually there is a notice requirement before the boat is sold at auction, however, bringing payments current may not be enough. You may have to pay off the balance of the lien.

I doubt that a mechanics lien, no matter when filed, will trump a properly perfected senior lien but that, again, would depend upon State law. Regardless, that issue is between the lender and the service provider.

You should be glad you did not reaffirm. The lender gets its property back and you get to move one without the threat of a suit to collect the deficiency.

Des.

[lotsoquest]

Your first error is stating that you want "your" property back. The boat does not belong to you. It belongs to the lender until you finish paying for it.

Your "due process" rights were not violated. You failed to make payments and regardless of your past payment history or how far behind you are, if you did not service the lien which survived the bk, in a timely fashion, the lender had the right to regain possession.

Your ability to get the boat back will depend upon State law. Usually there is a notice requirement before the boat is sold at auction, however, bringing payments current may not be enough. You may have to pay off the balance of the lien.

I doubt that a mechanics lien, no matter when filed, will trump a properly perfected senior lien but that, again, would depend upon State law. Regardless, that issue is between the lender and the service provider.

You should be glad you did not reaffirm. The lender gets its property back and you get to move one without the threat of a suit to collect the deficiency.

Des.

Of course the bank owns it. Respectfully, I think the reading comprehension is lacking a bit here..

This is slightly different in that we want it rather than to walk away from it. I am certainly smart enough to know that the lenders lien will be 1st place over the mechanics lien. What I'm wondering is if the mechanics lien would still be paid or delt with at or post auction if it is filed now.

When I asked about "due process"... It's being asked in the context of whether or not I have ANY rights left at all with regards to being offered another chance to regain possession. It's not as if I'm thinking they broke the law because I failed to pay.

What I'm really after here is whether or not they are even required to send any notice since there was no reaffirmation etc...

Further, there is some equipment on the boat that belongs to other people. Things that have serial numbers and those numbers are NOT listed or secured by the lender as collateral.

I will be sued if I can not return these items at some point. Not to mention it's the right thing to do.

That's part of the reason for trying to get it back.

[despritfreya]

You are entitled to take possession of the personal property. Call the lender to find out where the boat is, if you do not know.

As stated, the lender's right to dispose of the property (notice and any right you may have to regain possession) is controlled by State law - hence your due process concerns. I do not know your State's laws and failure to sign a Reaffirmation Agreement should not play into it.

Excess proceeds from an auction:

1. Highly unlikely unless there was a ton of equity in the boat.
2. Disbursement is based upon State law. I would have to assume that anyone with a potential claim to the proceeds (mechanic lien) would be notified and the funds would be interpled to the State Court for further distribution if more than one person claimed rights to the $$$.

Des.

[lotsoquest]

Thank you for response and clarification! You wound up being entirely correct in post number 4.

However, for everyone's sake, I'll share something I learned.

In the instance above in post number 1, there is one thing that was a game changer for me. The fact that we never reaffirmed the loan caused the bank to be looking at this account "closer" than normal.

Instead of finding out any further intentions of the debtor, they simply assumed it would "stay" bad and that they preferred to show the loss in 2010 instead of 2011. This one minor detail killed me.