Security Interest/Store Issued Credit Cards

[jaimelopez]

What is the name of your state?NM

I am planning on filing chapter 7 pretty soon but I have a question about "security interest" in property purchased with store issued credit cards. What if my "security interest" TV and speakers that I bought through these stores have been sold, stolen, broken, burned, etc.? What happens in this case when I try to file chapter 7 including these "security interest" creditors?
Jaime

 

[jaimelopez]

Here is what the lawyer responded with for my initial consultation with him:

Based on the information, I can tell you right now you will not lose any property by filing and you will have no difficulty completing a Chapter 7 bankruptcy where you lose all of your debts. I charge $895 for filing, which includes taxes and filing fee.

Regarding your attachments: it was unnecessary to transfer any property. Since you don't own real estate, the federal exemptions allow you to exempt over $10,000 of any property in addition to your standard exemptions for household goods, car, pension, etc. It is not fraud if you claim these as your property in the bankruptcy, which we would do. It is only fraud if you try to hide assets by transferring them within a year of filing and not claiming them as your own, or by disguising the fact you transferred them before you filed.

Best Buy is secured by its credit card agreement,. as is Circuit City. if you want to keep these items, you will need to enter into a reaffirmation agreement. This agreement usually allows you to buy the items at substantially less than what was originally owed. The ebay purchases were probably made with an unsecured credit card and you won't have to pay on them.

In short, I think you could file immediately as long as you disclose the vehicle transfers. You won't lose any property, but if you want to keep the Best Buy and Circuit City stuff, you will have to pay a discounted price for it. Of course, you could give it back without penalty.

However, I did not give him the scenario that is in my original post on this thread. His response doesn't take into consideration the possibility of not possessing the secured property. Please let me know what will happen if I don't have the secured property.

 

[Gomer_P]

This is interesting. It seems like the lawyer you talked to said it was pretty much mandatory in a no-income situation to give the merchandise back. However, I've read on this site that the creditor would have to file a replevin or something to get the property back, IF it was financially worthwhile to them. IOW, it would cost the creditor more than the property is worth to get it back. I'm interested to see what more experienced people on this board have to say about this.

 

[Ladynred]

Yes, some stores, like BestBuy and Circuit City hold a 'security interest' in items you buy. BUT, these things are NEVER worth what you paid for them after a year, certainly not after 2 or more. They do NOT want those items back, they CAN"T re-sell them, they want THE MONEY. You do NOT have to reaffirm piddly items and I certainly would question any lawyer who told me I should !

You list them as personal property that fall under your exemptions and you list the debt to the creditor. The creditor(s) MAY send you a reaffirmation agreement, but you are NOT required to agree to it. What usually happens is the debt is discharged and you keep the property. They may squawk about wanting the stuff back, but the truth is they rarely do anything to actually take it back. Lots of sword-rattling to scare you. In the case where you no longer have those items.. what is there for them to take ?? Nothing... and that's what they get too.

Now, if we're talking about a $25,000 stereo system or hi-def flat screen tv, that's different.. that they'd want back.

 

[jaimelopez]

I think I'm at a crossroads again here. The TV I bought from Circuit City was $3100 new in 2002. I'm not sure what the value of it is now but how much do you think they would have to be able to get for it to try and take it back? It is hi-def ready but technically its not a HD tv because it doesn't have an HD receiver. It also has some problems with the picture quality and it needs to be aligned and adjusted to work properly. So if you take the 2005 used value and deduct what it would cost to get it working correctly again, I bet it'll be worth a lot less than $3100. How much would it probably cost them to file the replevin or whatever it is called to get this thing back? Thanks for the replies,
Jaime

 

[Ladynred]

If it COST you $3100 in 2002, it most certainly is NOT worth anything near that now. New techonology makes older models drop in value pretty fast, and if it needs to be repaired, its worth even less. Go out on ebay or overstock.com or even cruise the classifies to see what they're going for (if you can find one).

Since it really is a secured interest, I don't believe a replevin action is necessary, its like a car - they hold the 'lien' and its theirs unless you pay them for it. If put between a rock and a hard place, I'd say redeem - NOT reaffirm. That means you negotiate to pay them CURRENT market value for the item, and a 3 year old tv, even one like yours, is NOT worth what you PAID for it.. they added in at LEAST a 40% markup (if not more) on their price tag !!

Soo.. get an idea what its worth... subtract what it needs in repairs/maintenance and go from there.

 

[jaimelopez]

Thanks. I found a site called Orion Blue Book, which is located at www.orionbluebook.com but a price quote is $4. I found the TV but I'm not sure if I should spend the $4 or not. I think I might do it just to have the info along with other prices to compare it to. Then I'll show this info to Circuit City and offer it to them instead of reaffirming. Thanks for the help,
Jaime

 

[jetskiscott2]

I bought a 3,000 dollar Toshiba laptop in August 2003 at Circuit City. I filed BK later that same year and Circuit City wanted the laptop back. I returned it, but it unfortionantly had an 'accident' and was slightly damaged. I heard that places like Best Buy and Circuit City will ask for some property back just in spite. After I gave the laptop back I asked my attorney what would happen if I had sold it or it had been stolen. He said 'they' would have to prove you intended to commit fraud and that would be nearly impossible. Just me 2 cents.

 

[Gomer_P]

I bought a 3,000 dollar Toshiba laptop in August 2003 at Circuit City. I filed BK later that same year and Circuit City wanted the laptop back. I returned it, but it unfortionantly had an 'accident' and was slightly damaged. I heard that places like Best Buy and Circuit City will ask for some property back just in spite. After I gave the laptop back I asked my attorney what would happen if I had sold it or it had been stolen. He said 'they' would have to prove you intended to commit fraud and that would be nearly impossible. Just me 2 cents.

That is exactly what I was about to ask. I'm curious as to what Best Buy or Circuit City could legally do to you if you sold the property a while back to help pay off your debts. I think the best bet would be to say that you had to sell the property to pay off debts because if you say it was stolen, I think the creditor would wonder why a police report was not filed.

 

[jetskiscott2]

I think they would have to prove fraud. What could they do if the property was stolen and you had a police report to backup your statement? Nothing to my knowlegde.