This is what happened: The car lender received notification of the bankruptcy and you listed in the bankruptcy paperwork that you wanted to surrender the car. The catch: The lender does not want the vehicle back. The lender still has legal ownership of the vehicle since you never paid the car off, but the lender refuses to take possession.
What happens when a lender refuses to take your car back?
The facts of that case are an example of what happens when the lender won’t accept the car back. The debtors surrendered their car in their bankruptcy to the lender. The car was worthless, but the lender refused to release its lien unless its claim was paid in full.
Can a lien be removed on a car after bankruptcy?
Generally, the only way to remove a lien against property is to pay the lien off. If you want to keep your car that has a secured debt attached to it, you must keep up with your monthly payments and pay the car lender back after bankruptcy.
Can a Bank refuse to repossess a car in Chapter 13?
No, the lender cannot repossess your car during Chapter 13. In case the lender bank refuses to repossess car for which you defaulted on the loan, you have plenty of options open to you. However, threatening legal action against the lender for violation of the court’s order is an often used option by the debtor.
What to do if a lender refuses to take your car back?
In bankruptcy lingo, that’s a “redemption”. Since the lender has not repossessed the vehicle, you may argue that they consider it worthless, and therefore they should accept $1.00 in return for the release of the lien on the car.
What to do if lien holder won’t take car back?
In a case where the lender is refusing to take back the vehicle they are essentially admitting that the vehicle is worthless. So a motion to redeem with the appropriate attorney and client declarations might be granted by the court with an order to pay $1.00 in exchange for the lender’s release of the lien.
