BK13 and In Plan Autos - Who Gets the Title?

[Anonymous]

Hello Everyone!

I'm 4 years and 4 months into my 5 year BK13 payback plan.

I started my credit rebuild in Nov 2017 with FICOS in the 400s

and 500s. My scores are now in the high 500s and low 600s,

so progress is definitely being made.

My question: With my Jun 2018 trustee payment, both of my

cars are now completely paid off. I own them free and clear.

But is it customary for the auto titles to be sent to the trustee

until my BK13 is discharged, or will the previous lienholders

(BB&T and Hyundai Finance) send both titles to me?

If you've had a previous BK13 with "in plan" autos you had to repay,

please take a moment to share your experience with me. Thanks so much!

[Anonymous]

On second thought, I may have just discovered the answer.

I read thru the Bankruptcy FAQs (I know. I should've done this first)

and it says that items like a house and car that are exempted are

property of the court at the time of filing. So if I'm reading this correctly,

I won't receive clear auto title until my BK13 is formally discharged.

If this isn't correct, please feel free to chime in and let me know. Thanks again!

[despritfreya]

When you say "completely paid off" do you mean completely paid in full with contract rate of interest or do you mean paid pursuant to the terms of the Chapter 13 Plan which may not be in full with contract rate of interest?

Unless you completely paid the contract balance owed with the contract rate of interest you are not getting the title until you obtain a Chapter 13 discharge.  At that point it will take the lender up to 90 days to send it to you.

If you did pay of everything in full, including contract rate of interest, you should get the title in about 90 days.  If you do not, contact your attny.  Please note that even this may be off since, even if you were paying contract rate of interest there may still be a small amount owed on the account, usually less than $200, due to the accrual of interest during the gap between when the case is filed and when the Trustee starts paying claims.  If there is a small amount owed and you really want the title early, then get a payoff from the lender and pay it.

Des.

[Anonymous]

I am glad I saw this post, because I am currently in a chapter 13 and I'm currently paying on my Altima. I was curious what would happen once I paid off my car while still in the 13. Thank you all for the question AND the answer! :-)

[Anonymous]

@despritfreya

I'm in the latter category. I paid off my cars based on the BK13 terms,

not the contract rate of interest. So I'll be happy to wait until my BK13

is discharged before receiving clear title to my autos. Thanks so much

for your very clear explanation. I really appreciate it!

[WD2005]

Interesting because my car is being paid in my plan. It was 21% through Cap One but the plan payment knocked it down to 4%. My Trustee disburses the same amount each month and it appears that its set up to be paid off in schedule with my plan. Originally it would have been paid off as of this month but I'm 54 payments in so I'll be paying an extra 6 months. The only debts that have been completely paid off in my plan are the Attorney and the unsecured debts paid at 1%.

[Anonymous]

@WD2005

How right you are. I learned that same lesson as well.

My attorneys made sure they got paid in full right up front.

Everyone else had their debts compressed to a fraction of

the contracted interest rate in order to match my ability

to repay. Do I feel bad about that? Yes and No. Yes, because

I'm not repaying my debts 100 cents on the dollar. No, because

it's the best I can do at the moment. The last thing BK filers need

to do is beat ourselves up more than we already have. But like you,

I was curious about what happens to in plan autos. Now we know...

[sarge12]

---

@Anonymous wrote:

On second thought, I may have just discovered the answer.

I read thru the Bankruptcy FAQs (I know. I should've done this first)

and it says that items like a house and car that are exempted are

property of the court at the time of filing. So if I'm reading this correctly,

I won't receive clear auto title until my BK13 is formally discharged.

If this isn't correct, please feel free to chime in and let me know. Thanks again!

---

Unless it has changed since I filed ch13, the house and car are not exempt. A house is usually just paid outside of BK, but any payments that you are behind will be caught up in the ch13 payments or moved to the end of the contract. Autos are a secured creditor and will usually be paid in full at an interest rate fixed by the BK court. Debts included in the ch13 repayments(house is not) are usually prioritized as follows. Lawyer fees, Trustee, and IRS are the first priority. Secured creditors are next, and usually are PIF at BK fixed rate. If there is enough left in the 3-5 years the plan runs, this is split eqitably among creditors, with the remainder discharged. You should recieve the Title within 90 days of the date the car loan is paid off by the trustee.

[Anonymous]

@sarge12

Your input is incredibly helpful. Thank you so much!

The debt priorities as you listed them are still the same.

In my case, I have noticed that my original car payments

are still the same, but the BK court compressed the % rate

to match my ability to repay. So I guess I'll find out for sure

after I make my last payment in Feb 2019 and am discharged

shortly thereafter. Thanks again!

[sarge12]

---

@Anonymous wrote:

@sarge12

Your input is incredibly helpful. Thank you so much!

The debt priorities as you listed them are still the same.

In my case, I have noticed that my original car payments

are still the same, but the BK court compressed the % rate

to match my ability to repay. So I guess I'll find out for sure

after I make my last payment in Feb 2019 and am discharged

shortly thereafter. Thanks again!

---

I want to add that some confusion exists and it is important to read the rules for the right BK filing. If it is a ch7, then it is true that the court technichally owns all personal property until discharge. It is a straight up liquidation, and all but certain amount of exempt property is surrendered. A chapter 13 on the other hand is a debt repayment plan, and you normally do not surrender any property to the court. It is specifically for this reason it is often used. It allows you to retain ownership of a house, even if there is a lot of equity there. If ch.7 was filed and the equity in the house were over the exemption limits, it could be sold to pay the creditors. In a ch13 there is not this exemption limit and you can keep the house if you can make the payments, and the ch.13 payments consider the house payment as an expense when setting the amount of your ch.13 payments. In a ch.13 the court does not become owners of your assets. This is all due to my understanding. The fact that the IRS, and secured creditors are paid first, has led some to do what many call a chapter 20...which is rightfully frowned on. That is where the filer converts a ch.13 to a chapter 7 after the secured debtors are paid to stop the ch.13 payments. The BK courts have been cracking down on this abuse of the laws lately from what I hear. Edit...the bold highlighted part is wrong...the ch.20 is where ch.7 is used first, followed by ch.13 afterwards to handle non-dischargable debts. This can lead to bad faith objections.