Problem is, should something happen causing injury, OP is still the titled owner and could be dragged into the situation.
He would file a sold notice with the DMV, keeping permanent confirmation and documentation of the notice, and remove and turn in any existing license plates to the DMV.

That could give him a defense to any lawsuits or tickets.

working something out with the lender.
If OP voluntarily offered money and the lender accepted, that would not violate the bankruptcy?