Bank won't give owner car title after bankruptcy


John: Yes, thank you for taking my cal. A question for Jim Monroe is that a year and a half ago, I filed chapter 7, and it was just I got the discharge and everything, and all my debts were wiped out. There's a local bank here in town that I had an automobile through and that was included in the bankruptcy. It was discharged but they won't give me the title. What can I do to get the title back from them?

Attorney Tom Olsen: All right. John, I find that question fascinating but first, let's talk about this, when you file bankruptcy, you can reaffirm certain debts and say, "Look, I'm in bankruptcy but I want to keep on paying my car payment and keep my car." What's happened to John here?

Attorney Jim Monroe: Well, I don't know if he entered into a reaffirmation agreement of course after the bankruptcy was filed, he would still be obligated on that debt. At the end of the time period, they should give him the title. Number two, if he did not, if for some reason there was no reaffirmation agreement entered into as long as he kept payment current on the car, and completed his obligation, they really ought to be giving him his title. One thing that he can do is move to re-open his bankruptcy case and move for sanctions for failure to hand over his title.

Attorney Tom Olsen: Let's go back to John. John, are you still with us?

John: Yes, sir.

Attorney Tom Olsen: John, did you make payments on that car. Do you think you've paid that car in full?

John: No.

Attorney Tom Olsen: All right, so John--

John: No, I know I didn't. I didn't pay it in full. I'd say I owe still like $7000 on it.

Attorney Tom Olsen: John, you are under a misunderstanding I think, right?

Attorney Jim Monroe: Yes. That's correct.

Attorney Tom Olsen: The bottom line John, if you want the title to the car, you got to pay for the car even though you filed bankruptcy.

Attorney Jim Monroe: Yes, here is the misunderstanding. The misunderstanding is that the underlying debt was discharged, but the company still has a lien on the car. Let me give you a quick example of that, you have a house and it's in-- It has a mortgage on it. You don't reaffirm. You go through a bankruptcy. The underlying debt technically was discharged but if you don't keep the payment current, they have a right to foreclose their lien and take the property. Now, all they get is the real estate or the thing which they had the lien on, but, and they don't get to chase you for the deficiency which is the difference between what you owed and the value of the thing, but they still get the thing, the real estate or the car.

Attorney Tom Olsen: Very good. Thank you, Jim.