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  1. #1

    Default Who Owns Car After Bankruptcy if There Was a Car Loan

    My question involves bankruptcy in the state of: FL

    Debtor gives the physical title to his car away and in return gets cash and has a legal obligation to pay off the loan. If the debtor files Chapter 7 in FL and the car is worth $1,000 there is a FL law that allows the debtor to keep said car.....BUT from my understanding this terminology of 'keep your car' is misused and misunderstood. In this title loan situation, I believe the debtor is free of legal obligation to pay back the loan but the title loan company can legally repossess the car. I'm guessing if I owe my neighbor money and file bankrupcty, that is the time I can invoke the $1,000 exemption in FL. I believe there is another wildcat exemption for personal property up to $4,000 if you don't own real estate/homestead exemption, but that doesn't apply for several reasons here.

    1) Can a debtor still have their car repossessed by a title loan company after finishing a Chapter 7 bankruptcy filing?
    2) Who by legal standards owns the car once you secure a title loan and give them your physical title?


  2. #2

    Default Re: Car Title Loan - Who Owns Car After Bankruptcy

    1. Yes or the lender can go to the bankruptcy court and get an order allowing it to repossess it during the bankruptcy. If the debtor elected to reaffirm the debt, with bankruptcy court approval, he could keep the car if he made the payments. The 1000 exemption only applies to unsecured creditors, the title loan company would be a secured creditor.
    2. in my state, you would own the car, subject to their security interest and any interest claimed in the car by the bankruptcy trustee.

  3. #3
    Join Date
    Sep 2010

    Default Re: Car Title Loan - Who Owns Car After Bankruptcy

    Until the car is repo'd it's yours.

    While the bankruptcy is open, the repo of the car is stayed. The lender can ask for the stay to be lifted. The stay is automatically lifted once the bankruptcy is discharged.
    While the bankruptcy may discharge your obligation for the loan, it doen't wipe out the security interest the lender has and the car can be repo'd once the stay is lifted.

    The $1000 has nothing to do with the loan or the lender. It's how much equity in your car that you can hide from the bankruptcy trustee trying to liquidate for other debts.
    Even if the trustee does attach the car, it's junior to the title loan at that point. The lender gets to repo and gets paid first, anything remaining goes to the bankruptcy estate.
    If you manage to reaffirm or otherwise settle the loan (while the bankruptcy is active you need the trustee to approve this), then you can see if you can shelter the $1000 in equity.

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