Expert: Terry Leeders - 4/26/2010

Question
QUESTION: I have a vehicle that I tried on several occasions to work out a reformation deal with the lender on but to no avail prior to my Chapter 7 discharging. They are wanting the original amount of the loan even though they were paid prior to my filing Chapter 13 and during the Chapter 13. It is the only vehicle I have and now they are trying to repossess it. My ex-husband was on the loan with me but he had his portion dismissed. Mine discharged almost 3 months ago. Can they still repossess my vehicle even though the lender themselves discharged the debt? Also, if I am in possession of the vehicle, can they come and repossess it from me knowing that the debt was discharged on my end?

ANSWER: Yes, they still hold a valid lien, and can repossess until the lien is satisfied. Since the case is over, the debt is discharged.  If you want to keep the vehicle, you need to pay the balance to get the title.  If not, you can surrender the car and walk away.  Cosigner is still liable for any balance though, so talk to your bankruptcy attorney about your ex's liability or let them know if you are surrendering the car.   

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QUESTION: The problem with paying the balance owing is that the finance company wants the amount that the vehicle was financed for originally. They had been paid prior to the bankruptcy and during the Chapter 13 that I converted to a chapter 7. The vehicle is 10 years old with well over 100,000 miles on it. Do I have to pay them what they are saying they want? Also, they will not accept any offer on this vehicle that is not worth what they want. I have tried to offer to pay it off for a lesser amount than what they are asking and they will not accept payments. They want lump sum which I do not have coming out of a bankruptcy. If I had the money to pay them what they are wanting, I will have paid over $20,000 for a vehicle that was financed for around $14,600 7 years ago which is well above the fair market value of the vehicle. I bought it used to begin with. Do I have to pay them what they are wanting for it?

Answer
You would need to review the payment history with the lender, show all payments you made, all payments the trustee made, any late fees etc. and would need to pay the difference.  If you still disagree after that, your only options are to surrender the car, to pay the balance they request, or to sue them in state court to pay off the correct balance. Unfortunately, that's it.