|
Assume in a bankruptcy estate I have a perfected security interest in a
car. Assume for the sake of simplicity that relief from stay is not
granted. Say the FMV of the car is $5,000 and the amount of still owed
to me is $10,000 (which is secured). Thus, the trustee is not going to
bother selling this car. So, while this entire *debt* would be
discharged, the *LIEN* would not be, right? But *WHEN* is someone able
to go after the car (assuming relief from stay is not granted and
assuming payments are not being made)? For example, after bankruptcy
has "ended" (btw, when technically does a bankruptcy "end"? When all
the assets that will be sold are sold? Is that it?), can the perfected
party go after the car immediately? I assume the automatic stay,
unless relief is granted, stays throughout the entire bankruptcy
process. Thanks.
|
| |
| |
On Thu, 17 Feb 2005 18:55:25 -0500, xyzer@hotmail.com wrote:
Assume in a bankruptcy estate I have a perfected security interest in a
car. Assume for the sake of simplicity that relief from stay is not
granted. Say the FMV of the car is $5,000 and the amount of still owed
to me is $10,000 (which is secured). Thus, the trustee is not going to
bother selling this car. So, while this entire *debt* would be
discharged, the *LIEN* would not be, right? But *WHEN* is someone able
to go after the car (assuming relief from stay is not granted and
assuming payments are not being made)? For example, after bankruptcy
has "ended" (btw, when technically does a bankruptcy "end"? When all
the assets that will be sold are sold? Is that it?), can the perfected
party go after the car immediately? I assume the automatic stay,
unless relief is granted, stays throughout the entire bankruptcy
process. Thanks.
The debtor generally has the option of forfeiting the collateral or
reaffirming the debt. So in a Chapter 7 bankruptcy, he would have to
turn over the car or continue to make payments after discharge. If
he's $5,000 under water on the car, he would be sensible to stick you
with the car and discharge the $10,000 debt.
But watch out for a Chapter 13 bankruptcy: most secured debt is at
risk of a cramdown. In a cramdown, the secured claim is reduced to
replacement value (in the case of an automobile, typically less than
retail value), and the remainder of the claim becomes unsecured debt.
Details of the plan may specify whether the lien is released once the
crammed-down secured amount is paid or whether he must also pay the
fraction of the unsecured amount set forth in the plan. Say the car is
worth $5,000, and a Chapter 13 plan to pay creditors 10 cents on the
dollar is confirmed. The best you're going to get out of it is $5,500,
less the trustee's commission, which comes out of the unsecured
creditors' share.
Either way, you're not going to get full value or anything close to
it.
--
Not a lawyer,
Chris Green
|
| |
| |
On 17/2/05 11:55 pm, in article kbba11dn209subo4qbrog2tmm7v7njkgvu@4ax.com,
"xyzer@hotmail.com" <xyzer@hotmail.com> wrote:
Say the FMV of the car is $5,000 and the amount of still owed
to me is $10,000 (which is secured). Thus, the trustee is not going to
bother selling this car. So, while this entire *debt* would be
discharged, the *LIEN* would not be, right?
1. You can move for relief from stay if payments are not being made. That
may or may not be granted. But you can also seek "adequate protection" so
that your security is not further eroded.
2. The debtor will doubtless seek to cram down the debt to the actual
present value of the security. (Can't do that for residential real estate
though.)
3. Liens pass through bankruptcy unaffected. But be sure to file a proof of
claim, if it's an asset case.
|
| |
| |
[Assuming default, chapter 7 filing, and no affirmative relief from stay,
when can secured creditor with perfected lien repossess
automobile/collateral?]
11 U.S.C. section 362(c)(2) The stay of any other act under subsection (a)
of this section continues until the earliest of (A) the time the case is
closed; (B) the time the case is dismissed; or (C) if the case is a case
under chapter 7 of this title concerning an individual or a case under
chapter 9, 11, 12, or 13 of this title, the time a discharge is granted or
denied.
|
| |
| |
Assume in a bankruptcy estate I have a perfected security interest in
a car. Assume for the sake of simplicity that relief from stay is not
granted. Say the FMV of the car is $5,000 and the amount of still owed
to me is $10,000 (which is secured).
Thus, the trustee is not going to bother selling this car.>
My guess is that, while you list this lien as an asset, you can leave
it up to the trustee to decide the legalities and means of
repossessing this car . It is not in your possession. But you ask a
very good question. If you owned a house or building in which you had
tenants with leases, binding contracts, could the trustee sell the
building? I would say, yes, of course. But the tenants with leases
might be able to stay on. The building would just change owners. But
how someone can repo a car from a second party not part of the
bankruptcy, who has kept up payments on a binding contract [if that
were the case]--that is a tricky one. Only an experienced bankruptcy
lawyer can answer that here. But what relief from the automatic stay
would have to do with this car in question, I can't understand at all.
Even if you could legally repossess the car, what good would it do to,
say, sell it? The proceeds would still be an asset. And you can't use
that to pay off any of your creditors, anyway.
So, while this entire *debt* would be
discharged, the *LIEN* would not be, right?>
Your debts that are dischargeable would be discharged--but that lien is
not a debt. It's an asset. If you don't have an attorney and are
handling this bankruptcy yourself, why not just leave it up to the
trustee to figure out?
But *WHEN* is someone able to go after the car (assuming relief from
stay is not granted and assuming payments are not being made)?>
Who wants relief from the stay?
For example, after bankruptcy has "ended" (btw, when technically
does a bankruptcy "end"? When all the assets that will be sold are
sold? Is that it?), can the perfected
party go after the car immediately? I assume the automatic stay,
unless relief is granted, stays throughout the entire bankruptcy
process.>
This is not clear. As a party in bankruptcy, the automatic stay is
there for your protection--not anybody else's. Exactly what is it that
you are worried about?
Disclaimer: Not an attorney. This is for discussion purposes only and
is not to be construed as legal advice.
|
| |
| |
|
