My lender refuses to repossess my car

By Justin Harelik • Bankrate.com

Dear Bankruptcy Adviser,
I was forced to file Chapter 7 bankruptcy. I agreed to surrender my vehicle. After my Chapter 7 was discharged, I naturally expected my car to be picked up by the lender. It has now been three months. Is there a required amount of time in which they have to pick it up? I have made many calls about this to my lender. Not one call has been returned. Isn't there something in the law that states they have a time limit to pick up the car, or else release the title to me?
-- Jim

Dear Jim,
This is a problem I am seeing more and more frequently. I have some suggestions for you, but I would love to hear from readers whether other alternatives exist.

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 vehicle. The catch: The lender does not want the car back. The lender still has legal ownership of the vehicle since you never paid the car off, but the lender refuses to take possession.

This is also happening more often with motorcycles, ATVs, Jet Skis and recreational vehicles. So many people are surrendering them that the resale value is often very low. It's so low, in fact, that the lender doesn't want to waste resources to repossess, refurbish and resell.

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http://www.bankrate.com/finance/debt/my-lender-refuses-to-repossess-my-car.aspx

How can a drivable car not be worth repo'ing?

:shrug:

If you are stuck holding the vehicle for a long period of time because no one will buy it makes the cost go up and the price come down.

If they're going to pay for the repossession and then have a vehicle they have to sell for a loss on the loan, it may look better on their books for them to put it off as long as possible. Like until the next quarter. Sometimes it just isn't worth the expense on their part at all if it's a real junker. This is actually pretty common on inflated priced vehicles (like at some used car dealers) with high interest rates. What they get down is very often what they paid for the vehicle. If the person had the vehicle long enough that its resale has dropped through the floor and they've already made their money why lose money on a repossession? If they can sell the note to someone who could go ofter the person and put a judgment on them, they'll repossess pretty quick. In this case they can't since the car is being returned via a bankruptcy. At least that's how it works in my state.

legally at what point, if any, does the car's ownership default to Jim? Can it be eventually declared abandoned?

I'd keep it and drive the wheels off of it since they don't want it back ;)

Interesting.
Is the dealer who now owns the car responsible to keep up the insurance payments?

Better yet, is this problem being seen with houses?????

It's just as much "his car" as it ever was. As long as he keeps the legally required insurance on it he's good to go.

The property owner woudl have to go through hoops of trying to notify the rightful owner, but eventually they would be able to get title. Salvage title? Don't know. State laws would cover this, I believe.

The author in the story might not be liable, as they are in bankruptcy; but perhaps the lender has an insurance policy that pays off better for late payments than a default. :shrug:

property that is out there then you realize how much it would cost the banks/lenders to even just pay someone to pick it up let alone store it until they can get a buyer. They are stuck with loans for property that is of no use to them. I suspect this is true of some of the older houses they have gotten back also - sold as is and now needing a lot of work.

I must admit I do not feel sorry for the lenders - they created this mess.

... the car has a lien on it from the lender. The lender is 3 states away. The car is on the property of the registered owner's boyfriend.

I just wonder if ti would be possible to get some sort of abandoned title claim done on the car. I would not care if it was a salvage title or anything.

A deal deal. Maybe the guy's a Republican.

Could be the lender might make a deal to sell, at a discount, the car to the lessee. Car goes off the books, no repo fees, no auction, no storage fees. Point being, limbo is no solution.