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Terry L.
Terry L., Attorney
Category: Bankruptcy Law
Satisfied Customers: 2900
Experience:  Better Business Bureau. 18yrs bankruptcy experience. Chicago Bar Assoc. American Bankruptcy Institute member.
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This is a chapter 13 question...the debtor has a title loan

Resolved Question:

This is a chapter 13 question...the debtor has a title loan on vehicle which was obtained less than 1 year ago...She did not borrow money from the title loan company to purchase the vehicle...Can the debtor treat the debt as an unsecured debt and if so what has to be done to avoid the lien?
Submitted: 4 years ago.
Category: Bankruptcy Law
Expert:  Terry L. replied 4 years ago.

Terry L. :

Hi, thanks for your question. You should hire a lawyer for specific legal advice. No attorney client relationship is created here. If the title loan company has the title, it's a secured debt. So you can pay the creditor the fair market value with some interest, usually prime, and pay the remainder as unsecured. Absent value objection by the creditor, the court should allow it

Terry L. :

Unfortunately, you cannot force the creditor to give the title back. They can retain that until the discharge or note is paid in full, whichever comes first.

Terry L. :

there is no way to avoid the lien, sorry

Terry L. :

usually the values are really low, it's rare I ever even hear from a title loan company..they just want something

Terry L. :

any other questions?

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Customer: replied 4 years ago.

I guess then you are saying that it needs to be listed as a secured debt. Is that correct?

Customer: replied 4 years ago.

Thank you very much...Sorry for one more question, but it seems you are telling me that I can do a "cramdown" on the vehicle...Is that correct? I thought that you had to have borrowed the money more than 910 days earlier or something like that.

Expert:  Terry L. replied 4 years ago.
yes, it is a secured debt, a NPMSI, not a PMSI as you stated. Since they hold the title, they are entitled to Fair market value, and the rest can be paid at an unsecured rate. It's fine to bifurcate the debt this way.
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