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Ellen
Ellen, Attorney
Category: Bankruptcy Law
Satisfied Customers: 36714
Experience:  Bankruptcy Lawyer. Experienced.
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Hello,i took over payment on a car from a friend.To help her

Customer Question

Hello,i took over payment on a car from a friend.To help her out.I have made the payments for over two years.My name was put on the title,but thelone stayed in her name.Now she has filed bankruptcy and they want to take my car in it.WHAT CAN I DO.
Submitted: 6 years ago.
Category: Bankruptcy Law
Expert:  Ellen replied 6 years ago.
Hello,

So sorry to hear of your dilemna. I will strive to provide you with legal information to assist you.

I am a lawyer with 25 years experience. Although I am not your attorney, I hope that I can give you helpful legal information on this open and nonconfidential forum.

Do you know what the basis for the trustee's claim is? Is the trustee claiming your friend's half interest in the car or the entire value of the car?
Customer: replied 6 years ago.
The whole interest of the car.The payments are $515 a month.Ive paid over$14000 and think no one should just take my car in her bankruptcy.
Expert:  Ellen replied 6 years ago.

I agree with you but I still need more information. When did your friend transfer the car into both names? When did you start making payments on the loan?
Customer: replied 6 years ago.
April 2008
Expert:  Ellen replied 6 years ago.

Hello,

I do not agree with the trustee that your interest in the car is an asset of the bankruptcy estate. There are 2 arguments that the trustee can raise but based upon the information in your post neither argument would prevail. Here the possible positions that the trustee may raise:

1. Fraudulent conveyance.

A quitclaim or transfer of a debtor’s assets to a third party, for less than a reasonably equivalent value in exchange for such transfer, is considered to be a “fraudulent conveyance”. Bankruptcy Code §548 provides for the avoidance of fraudulent transfers within two years before the bankruptcy filing date.

The trustee would not prevail since the transfer was made more than 2 years before the bankruptcy filing date AND by making the payments on the vehicle you gave a reasonably equivalent value in exchange.

2. Avoidable preference

A transfer of the debtor’s assets to a creditor that results in a creditor receiving more than the creditor would have in a Chapter 7 bankruptcy, is typically considered a “preference". Bankruptcy Code §547 provides for the avoidance of preferential transfers within 90 days before the bankruptcy filing date for third parties.

The trustee would not prevail since the transfer was made more than 90 days ago

I hope that this helps.


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