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WALLSTREETESQ
WALLSTREETESQ, Attorney
Category: Bankruptcy Law
Satisfied Customers: 17080
Experience:  14 years exp., CH 7 AND 13 Bankruptcy cases, AFL-CIO UNION PLUS, UFT NYSID AND ALL MAJOR UNIONS
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A friend of mine who is a resident of Florida is intending

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A friend of mine who is a resident of Florida is intending to purchase a new vehicle with a significant loan so there will not be much equity if any for a long period of time. I have agreed to sign as a guarantor on the loan so that she will qualify.

The question is that there is a possibility that she will have to file for bankruptcy sometime within the first year of the loan. Does the vehicle then become part of her assets subject to liquidation, even though their is a lien holder on the vehicle. Will the vehicle be liquidated in the bankruptcy and I would be subject to paying the lienholder for not being satisfied on the balance of the loan. Or would the bankruptcy court not force the car to be liquidated if there is not equity auto.

Or even worse could the creditors force liquidation of the vehicle and leave me to pay off the lienholder of the car since I signed on the loan.

Tom

WALLSTREETESQ :

Hello I am a licensed attorney here to help you with your question, please review my response and do not hesitate to ask for clarificati ON

WALLSTREETESQ :

This is a common issue,

WALLSTREETESQ :

Your friend has several options,

Customer:

Okay, let me see your response and I will go from there

WALLSTREETESQ :

If their is little equity, the court will not force her to give up the car, she would have the right to pay the loan on the car and file bankruptcy, she would have to reaffirm the debt. If she cannot afford the payment, than the car would be given back to the lender, and the lender can come after you for the payment. You should be very careful and discuss this with her,

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The creditors could not force a liquidation, however the trustee could state that she cannot afford the car payment, and force her to give up the car to the lender, where you would then be liable.

Also, even if she agrees to reaffirm the vehicle payments, the lender is not obligated to allow it, but in 95% of the cases, the lender would allow her to make payments and keep the car.
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Customer: replied 5 years ago.

One more question.

 

I wrote last time could you confirm my comment.

 

My friend keeps saying that the lienholder owns the vehicle. I keep telling her that She owns the vehicle subject to the loan and the car is collateral on the loan and if she defaults the lienholder has collateral rights over anyone to repossess the car. Could you please confirm.

She owns the car and the lienholder has a security interest on the vehicle, which gives it priority over any other creditor, as you stated.

The title is on her name, and the lender will be listed as the lienholder.

If this was a lease it would be different.
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