Expert: Mark J. Markus- California Bankruptcy Attorney - 7/19/2008

Question
QUESTION: When a loan for a motorcycle is discharged through a BK, but the lien survives, how can the lien be removed? The loan holder in our case is being very stubborn. The bank does not want possession of the motorcycle and will not release the lien unless the debt is paid in full. Does this sound right to you? Any other suggestions? The bike is basically worthless now.

ANSWER: The best suggestion I've had on this is to do a Motion to Redeem the motorcycle for $1.00 in the bankruptcy case.  They won't oppose, and you'll then own the bike for $1.00 and you can sell it or dispose of it.  If the bike is worthless, why do you care if they remove the lien or not?  I'm not sure what else to suggest if they won't take possession.  Maybe just take it to a salvage yard and leave it there, but be sure to give notice to the bank that you're going to do that if they don't pick it up with a specified period of time.

---------- FOLLOW-UP ----------

QUESTION: Thank you for taking the time to answer!

I do have a follow up to clarify, if you would be so kind. If that's taking advantage, I understand you have to say no. I've already gotten some good free guidance.

We have been trying to return the bike since the BK happened 10 years ago. The loan was originally from a dealer who sold it to Household Bank. The dealer has never wanted to take the bike back and neither has Household. This has been going on since 1998.

Without Household releasing the lien, we cannot sell or salvage the bike, right?  That's the real issue. Is there a way to legally dispose of this bike that we no longer want or are we stuck with it until we die?  

I understand you believe it would be legal to salvage the bike if we provide written notice to Houshold first. Is that correct? I believe the junk yard won't take it without clear title, but we could try that again.

About the motion to redeem. I am concerned that the loan was sold to Household by the dealer. Does that still qualify it as a consumer loan eligible for the redemption in your opinion?  

Answer
I totally understand your issue, but unfortunately I don't have a better answer than what I gave you.  Maybe you can gift the bike to someone and then go to the DMV and just enter a change of ownership (or registered owner) so you're no longer on the hook for whatever happens with it.

As for the redemption, yes you qualify.  The issue is whether it can be done after the bankruptcy case is closed (in other words, can the case be reopened for that purpose).  I would have to research that.