Credit Union has car title

[bobsalas]

What is the name of your state? OR
Filed for Ch7 in Sept 05 but it was converted to a Ch 13 in March 06.
My problem is that we decided to keep ou two cars which had loans from our credit union.
In May of this year one of the cars' engine blew and needs about $3000 worth of repairs which we can not afford.
I spoke to our attorney and he suggest we let the credit union repossess it. If they try to sue to collect the balance, they will have to wait in line with the rest of our creditors.
We tried this and the credit union has never even sent us a late notice. The car sits in front of our home collecting dust.
In the mean time, we paid off our second car loan. When we asked for the title tehy told us they would give it to us when the BK has been discharged assuming we do not owe them any money.
I see what they are doing. But does this mean at the end of the BK they will sue me for any money owed and I will then have a new law suit to contend with?

 

[FlyingRon]

In the mean time, we paid off our second car loan. When we asked for the title tehy told us they would give it to us when the BK has been discharged assuming we do not owe them any money.
I see what they are doing. But does this mean at the end of the BK they will sue me for any money owed and I will then have a new law suit to contend with?

Presumably both car loans were listed in the bk. They can't come after you if they are discharged. Yes, keeping the title while the loan is still listed is probably prudent on their part.

 

[bobsalas]

Credit union

The loans are probably listed as debts but were not being paid out of our monthly payment.
Coudl they still sue us for balances due at the end of our CH 13?
That is what I am most afraid of.

 

[Who's Liable?]

When we asked for the title tehy told us they would give it to us when the BK has been discharged assuming we do not owe them any money.
I see what they are doing. But does this mean at the end of the BK they will sue me for any money owed and I will then have a new law suit to contend with?

They cannot attempt to collect on an owed debt while you are in BK proceedings. In this case since your BK13 is a plan, they cannot attempt to do anything UNTIL a discharge is given. They cannot even send you a monthly bill.
If your BK is approved, they cannot attempt to collect on your owed debts, if they attempt to, you can sue them. Additionally, since you did not pay on your previous debt, they are under NO legal obligation to give you a title for the vehicles. Your best option at that point would be to return the vehicles to the bank.

 

[panzertanker]

Presumably both car loans were listed in the bk. They can't come after you if they are discharged. Yes, keeping the title while the loan is still listed is probably prudent on their part.

How can they keep the title if the loan is paid off?

 

[FlyingRon]

How can they keep the title if the loan is paid off?

Because the trustee has control over it if it is listed in the BK.

 

[BoredAtty]

I haven't seen the documents, so this is just a guess, but the paid off vehicle may be collateral for the other loan.

Credit Unions are known for having cross-collateral clauses in their loan documents. In a nutshell, the loan document states that the collateral for a particular loan also secures any other loan with the credit union. It's quite common.

 

[bobsalas]

The Bored Guy is Right

The loans are all cross-collateralized. So I guess I can understand it.
My question is this: if after the BK13 is discharged, can they attempt to collect on money owed (the defaulted auto loan) that was not part of the BK payment plan?
I tried to take the one car back but they would not accept it in its present condition.

 

[Who's Liable?]

The loans are all cross-collateralized. So I guess I can understand it.

must be a credit union... They do sneaky stuff like cross collaterization...

My question is this: if after the BK13 is discharged, can they attempt to collect on money owed (the defaulted auto loan) that was not part of the BK payment plan?

If the car was part of the BK, than NO, they cannot attempt to collect on it. If the car was NOT a part of the BK, than YES, they can try to collect. Since you MUST include ALL debts in a BK, the loan would've been included in the BK. Your BK attorney will be able to verify if the loans were included in the BK.

I tried to take the one car back but they would not accept it in its present condition.

Tell them to pound sand. They may not want to take it back, but you are relieved of all financial responsibility once the BK is discharged. Simply set a meeting with the branch manager or head loan officer, bring in the car and hand them the keys than go home.

 

[bobsalas]

checked my paperwork

The 2 loans along with our mortgage are listed in the docs as secured loans.
But the wording does not provide any protection post petition.
That is it sounds like once the BK is done they can come after us like the pit bulls.

 

[Accountable]

Modification of plan

Consult your bankruptcy attorney about filing a motion to modify your Ch 13 plan to (1)reflect your surrender of the nonworking vehicle to the credit union; (2) include the deficiency on the loan for the surrendered vehicle as UNSECURED debt in your modified plan and (3) order that the Credit Union release the title to the vehicle on the paid loan. The court may well grant #1 and #2, but maybe not #3....but it's worth a shot.

 

[bobsalas]

modification of plan

i will ask my attorney about that option
sounds good to me.