I am in month 41 of a 60 month chap 13 plan, because my car (included in plan) needed extensive repairs and I could not afford it I stopped driving it and found alternative ways to work. The trustee has just paid off the car in question so I want to sell it but I am informed by my lawyer that I won't get the title till the 60 months is complete. He says I just have to leave it sit and continue to pay expenses for it? Really?
2 Answers from Attorneys
Your lawyer is probably right. If you paid it off in full under the original contract terms (including all contractual interest and charges), you can get the title now, but if you modified the loan terms in your plan to pay less interest or reduce the secured claim to the value of the car, you need to complete your plan and get your discharge for that to be final.
Ah ha! The perennial problem of "It's mine, dammit....but not really! It actually belongs to the trusty trustee!" See, during a bankruptcy, your assets (say, for instance, that pesky car) are actually controlled by the trustee, who's job it is to ensure everyone get's paid under your plan, and that any "value" in you estate is properly allocated to the creditors that own you until the end of the 5 year period. To wit: the car, while paid off, is still an asset of your estate, which makes it controlled by ye olde trustee. What your lawyer didn't tell you was that he can file a request with the trustee to abandon the asset (i.e. drop it out of that part of the estate that belongs to you) and give it back to you. You'll need to argue that it has limited to no value that the trustee could use to pay other debts with, but if you can do that, you have a chance to convince the trustee to abandon the property. See Rule 6007 which reads:
Rule 6007. Abandonment or Disposition of Property
(a) Notice of Proposed Abandonment or Disposition; Objections; Hearing. Unless otherwise directed by the court, the trustee or debtor in possession shall give notice of a proposed abandonment or disposition of property to the United States trustee, all creditors, indenture trustees, and committees elected pursuant to §705 or appointed pursuant to §1102 of the Code. A party in interest may file and serve an objection within 14 days of the mailing of the notice, or within the time fixed by the court. If a timely objection is made, the court shall set a hearing on notice to the United States trustee and to other entities as the court may direct.
To be far, it is not likely the trustee will go to the effort to do this...but you could ask your lawyer to file a request, and you are certainly entitled to do so.
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