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cfortunato, Attorney
Category: Bankruptcy Law
Satisfied Customers: 8023
Experience:  Bankruptcy professor.
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OK, here is my second question, first going to real estate

Customer Question

OK, here is my second question, first going to real estate category. We had to file bankruptcy last year and our discharge date was 9/2012.

They had the vehicles backwards.... first I will explain, we had a 2010 Nissan Sentra with 40,000 miles, pament was $257.00 a month with 14,000 left to pay. Second we had a previously PAID FOR 2003 Ford Ranger with 105,000 miles. We used that truck as collateral for a personal loan to pay for medical expenses. With the interest rate of 24% we owed $24,700 with another 4 years left to pay. That monthly payment was $387.00.

OK, we informed our attorney's assistant that we wanted to keep the car, and release the truck. They put it on the paper backwards, but luckily we got it switched back prior to the bankruptcy. Unfortunately, they refused to allow us to reaffirm the Nissan, and repo'd it.

They said they were going to do a "re-evaluation" of the truck since the loan was so high and the truck's worth is only $6,000. That never happened.

I just know that the loan associated with the truck went through bankruptcy, it has been discharged. We are now always worrying that the company will come and repo this vehicle also. As I called them to get them to release the title as lien holder. They told me that "We don't care what you filed, we are not releasing that title cause you owe us money"

So what do we do now? The loan was discharged, but we can sell or trade in truck with a lien holder?? When I asked my attorney, the assistant basically said, "i don't know"
Submitted: 4 years ago.
Category: Bankruptcy Law
Expert:  cfortunato replied 4 years ago.


Hi - my name is XXXXX XXXXX I'm a Bankruptcy and Consumer Protection attorney here to assist you.


A Bankruptcy can discharge one's obligation to pay a vehicle loan, but cannot remove a lien from from the vehicle. Legally, you can sell a vehicle with a lien on the title, but no one is going to allow a trade in of or purchase a vehicle with a lien if the balance of the loan is more than the value of the vehicle.

Customer :

This does not make any sense. One is entiled to keep one vehicle in bankrupcy. This was not a auto loan. The truck was paid for, yet it and several other things were held as collateral. So now I a releived of my obligation to pay the loan, yet the lein can not be removed? And do we live in daily question as to wheither or not they can come and repo the truck?

Customer :


Customer :

This does not sound correct. How do we go about getting the lien holder off the title?


Sorry! I did not realize the lien was not based on a loan for the vehicle.


However, the same rule applies to any collateral that was pledged for any loan, even it the loan was for medical bills.

Expert:  cfortunato replied 4 years ago.

Pledging the truck as security for the loan made the loan secured instead of unsecured. This means the lender does not have to remove the lien unless the loan is paid - even though the obligation to pay that loan was discharged in your Bankruptcy.