Expert: Mark J. Markus- California Bankruptcy Attorney - 12/25/2009

Question
QUESTION: Recently listed an auto loan in Ch7 bankruptcy that was discharged in AZ.  The back contacted me saying they saw that I listed I wanted to keep vehicle but didnt say if reaffirming loan or not. I wanted to keep car and filled out the reaffirmation agreement and the judge denied it, I did not appear in court because I moved to a different state.  I now turned the vehicle over to the bank since it was denied and I am out of work.  The bank sent me something in the mail saying they are selling it at an auction and what they don't collect I have to pay.  I thought this would be included in CH 7 and they could not ask for money.  What do I do and am I on the hook to pay even though it was denied?

ANSWER: Absolutely not.  If you received your discharge and your reaffirmation agreement was denied, then you have no further obligation on the vehicle loan.  If they try to sue you to recover any deficiency amount after they sell the car, you can go back to the bankruptcy court and seek an order for contempt against them for violation of the post discharge injunction of 11 USC 524.

http://www.bklaw.com/

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

QUESTION: Thank you for a quick response.  Should I wait then for a letter of suit or call the bank trying to explain so they report this correctly and stop with the letters?  Also, if I go back to the court to file an order for contempt do I need a lawyer ( I filed pro se) and can I file that living in North Carolina now and not in Arizona through the mail or do I have to make a trip back to AZ?

Answer
I would send them a letter clearly stating that you believe the debt to be discharged and that you will pursue all available remedies against them in the United States Bankruptcy Court should they take any further attempts to collect on the debt.   Yes, you would need an attorney to prosecute the contempt action unless you are experienced in such things.

Be sure you have read the letter they sent you carefully though.  Usually there is language that says they are specifically not trying to collect on a debt discharged in a bankruptcy case.