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  1. #1
    Join Date
    Sep 2010

    Default Debtors Rights to Secured Debt

    My question involves bankruptcy in the state of: Georgia

    I filed for a chapter 13 about 3 years ago. When I filed for bankruptcy I did NOT reaffirm a vehicle loan. I was a co-debtor (main debtor on the loan) on this loan. The vehicle was not in my possession and as such it took them about 2.5 years to reposes the vehicle. I received a letter offering me an opportunity to purchase the vehicle or the loan back. Since I was not going to either I ignored the letter. Today I received a letter asking my trustee to pay a deficiency on an unsecured debt to the loan company. I reviewed my documents and there was an amendment that I found stating that they were allowed to go after the co-debtor but not the debtor which my lawyer assured was standard and they were no allowed to go after me. The amendment referenced, title 11 1301, which I have read and seems to agree with what my lawyer stated to me. So that is out of the way is the loan company allowed to try and come after me? I assume the deficiency is the difference between the loan value and the vehicle sale amount but if I did not reaffirm the debt I hold no obligations to the loan company correct?

  2. #2
    Join Date
    Jan 2006

    Default Re: Debtors Rights to Secured Debt

    have you informed them you filed BK on the car debt? You might have to send them proof.

  3. #3
    Join Date
    Sep 2010

    Default Re: Debtors Rights to Secured Debt

    The creditor has the absolute right to file a deficiency claim UNLESS the Order Confirming your Plan states that you are surrendering IN FULL SATISFACTION of the debt.

    1301 is the co-signer provision, NOT a provision that protects you, the debtor in bk. It allows a creditor to pursue the non-filing co-signer under the following circumstance:

    1. The debt is not a consumer debt.
    2. The case is closed, dismissed or converted
    3. Presentment of a negotiable instrument OR
    4. The co-debtor stay is lifted - which is what happened in your case.

    In addition, 1301 protects the co-signer if the Plan pays the "consumer" obligation in full.

    1301 does not protect you. There is nothing in the Code that precludes a previously secured creditor from filing an unsecured claim (or amending the secured claim, which is what I suspect has happened) once it repossesses the vehicle from the co-signer and disposes of its collateral. My guess is that you misunderstood what your attorney told you.

    Lastly, unless your Plan is paying 100% of all claims you should not care if a general unsecured claim is filed by this previously secured creditor. You are paying "x" dollars no matter what. You should not care how those dollars are distributed.

  4. #4

    Default Re: Debtors Rights to Secured Debt

    have you informed them you filed BK on the car debt? You might have to send them proof.

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