722 redemption

[jdawg83]

What is the name of your state (only U.S. law)? Virginia

if a person files for bankruptcy and has a vehicle, the law says that its a right that the debtor can claim a 722 redemption and pay the fair market value of the car.

I owed 8800 on a car that blue books at 3900, but the fair market value of it (minus repairs and devaluation from being in 7 car accidents) is 1500...the bank says they want 3900 (which is the market/blue book value) but i disagree. If the law says fair market value who is right?

 

[Zigner]

What is the name of your state (only U.S. law)? Virginia

if a person files for bankruptcy and has a vehicle, the law says that its a right that the debtor can claim a 722 redemption and pay the fair market value of the car.

I owed 8800 on a car that blue books at 3900, but the fair market value of it (minus repairs and devaluation from being in 7 car accidents) is 1500...the bank says they want 3900 (which is the market/blue book value) but i disagree. If the law says fair market value who is right?

Did you collect any compensation from those 7 accidents (insurance or payment from the other party?)

 

[bigun]

If you can't come to an agreement, file a motion and the judge assigned to your case decide.

 

[jdawg83]

personal compensation no, the insurance company repaired the vehicle as it has always had a lien on it from the credit union...of the 7 car accidents, 4 were major 3 were minor.

The dispute between the bank is that on top of the car they lost a lot on unsecured debt which i know they are trying to recoup as much as they can, which i don't blame them for but its against the law.

IRS publication 561 specifically says fair market value is not the same as blue book value, and devaluation must be made for car repairs and other than a clear vehicle report.

I've been talking to the vice president of lending, she said that she would have her lawyer call me tomorrow to see if we can come to terms, if not my last resort would be filing a motion to reopen the case and have the judge decide on the amount. I know if I do that they might actually end up getting less than the 1500 i offered them plus they would have to hire an attorney in virginia to represent them (the bank is based in texas).

$2400 is how much my mechanic will fix everything for, if i took it to the dealership and got quotes on dealer parts and labor it would cost almost twice as much to fix it. The damages are not damages that should have been fixed with insurance money, its normal wear and tear. the catalytic converter went out so it wont pass emissions, that is a known issue with my car after 100k miles and wasnt a result of any accidents. the dealer charges 1564 p & l, my guy only charges 900, and there are a couple of other wear and tear issues like the a/c needs to be totally replaced that my mechanic was going to do them all for 2400, a dealer is way more expensive, and if i have to go to court im going to use dealership quotes and not homey hook up quotes

Also insurance websites and websites about devaluation states that one accident can devalue a car up to 18% even if it is repaired to like new condition, this car has been in 7. On top of that 3900 is how much my car sells for in "average condition" with a clear title with little cosmetic damage...this car has 19 entries on car fax...there is no logical way they can justify selling me my car for the same price as another car that is in average running conditions with no major mechanical problems and working a/c and has never been in an accident

722 is a right not an option so they have no choice but to sell me the car at FMV if i want to keep it

 

[OHRoadwarrior]

Sounds like you are working very hard to try and get the car cheaply. I think the bank is correct in making redemption hard.

 

[jdawg83]

im not trying to get the car for cheap...im trying to get the car for fair market value, which is the maximum amount they are allowed to take a lump sum payment for.

If fair market value is defined as blue book (market) value minus the cost of repairs (as defined by the IRS) to bring the car up to an average rating (as defined by edmunds), how is it wrong for me to ask for what is allotted to me under bankruptcy law. (this amount also does not reflect the fact that it has devalued due to the accidents that it has been in)

There is a 7 year back story to the car situation, so its premature to judge outside of the facts without knowing the circumstances.

There is a big difference between getting it for "cheap" and getting it for "fair market value"...if they end up being one in the same then it is what it is.

 

[OHRoadwarrior]

So go to Ebay and see what that car, with that mileage, on average, has been selling for. That will be fair market value. Trying to argue specific diminished value is not reasonable. If the car has damage, it will factor into the selling prices. Obviously you felt the car was worth much more than $1500 or you would not have ended up owing $8800.

 

[jdawg83]

i didn't owe 8800, my father did...when i went off to college my father gave me his car at the time (2001 Nissan Maxima) and he brought a new one (2003 Nissan Maxima), I paid the car off while in grad school but i left it in his name because it was cheaper to have the car registered in texas then in arizona.

He refinanced the car to pull out the equity without telling me a few years back, basically starting the loan all over again, and the bank gave him a loan for $12000 without seeing the car and they probably assumed it was in excellent condition. I didn't know he refinanced it because he was making payments, which i didn't know until he filed for bk in march after falling ill and behind on all of his bills and they sent someone out to repo the car...his bankruptcy is discharged tomorrow, but because he used my car (albeit in his name) to refinance the loan, the bank wants it back...but im not paying off a car that i have already paid off once, if they are unhappy with it its their fault for lending him so much money in unsecured debt, if they want to remedy the situation don't lend him any more money, but don't try and recoup some of your losses by trying to charge him more than the car is worth

 

[jdawg83]

they are adamant about using NADA which says the car is worth in good condition with a clean title $4075 and they claim that they should use the dealer price but they are doing me a "favor" not charging me $5400, which they are not because the IRS specifically says fair market value is determined based off of a private buyer

I used KBB which says it was worth $3675 and Edmunds says its worth $3555

but all of those are in average condition with a clear title, this car is not in average condition with a clear title and im not going to pay that amount just because