Expert: Mark J. Markus- California Bankruptcy Attorney - 8/26/2009

Question
I plan to file a Ch 7 BK and I have a secured debt item which is a 9 year old vehicle in fair/poor condition. The last payment made on this vehicle was almost 2 years ago, and the lender charged it off some time ago. I owe more than $5k while it is worth about $2k. I believe there is now a coll agency handling this account. During this time there was no attempt to repossess or communication regarding their intent. I have not registered or used the auto in 2 years. I understand that a reaffirmation may be an option but has it been delinquent too long for that? I have also heard of paying the car off for it's current value. Is this a option? If the car is not worth repossessing, will the lender allow me to keep it but retain the lien/title? What are the chances that I may be charged with trying to avoid a secured creditor although that was not the case? I don't have money for an attorney and will be filing this Ch 7 pro se. Any advise? Thanks.

Answer
Well, you're going to have a difficult time taking advantage of your options without an attorney, but probably the best thing to do is a redemption for the fair market value of the vehicle, but you have to file a Motion for that. The difficulty in this situation is getting the title, and I don't have any specific recommendations except you need to be proactive in doing so.  That's one reason why doing a redemption is a good idea, because you can put into the Order granting the motion that they must release their lien and provide you title upon receipt of the redemption payment.   You can also do a reaffirmation agreement, but that of course requires the lienholder's consent.

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