Legal Question in Bankruptcy in Florida

I filed a Chapter 7 with only having a truck that is paid off as an asset. I have a loan through a friend using the truck as collateral. Knowing that I was filing BK, he was advised to file a UCC with the state to guarantee he would be able to reposses the truck and get his money back.

The chapter 7 trustee said that because he was not on title, he was not legally able to repossess the truck and had no rights to the truck or monies from it. I was then advised by my atty to convert to a chapter 13. By doing that he would be entitled to receive payments as if he was a secure and litigate creditor.

My questions and concerns are:

How he is legally able to receive payments through a chapter 13 if he is not on title?

What damage would be done if he put his name on title now, with me being in bk?

If he did put his name on title and I should default on my Chapter 13 payments, would he be able to repossess the truck with no issues from the trustee? Or, if he put his name on title and I were to convert back to a Chapter 7, would he then be able to reposse the truck because he is now on title?


Asked on 3/03/10, 4:17 pm

1 Answer from Attorneys
Robert Wilcox Wilcox Law Firm

Thses are all issues you should discuss with your lawyer. He or she knows the fact and can advise you.

The first issue is whether recording the UCC "perfects" your friend's lien. The Trustee is saying that it does not. Your friend would need to research Florida law on that point. See FS � 319.27.

As a general principle, I don't see how converting to 13 helps your friend. If he's not a secured creditor (lienholder) in Chapter 7 then he's not a secured creditor in Chapter 13 either. You are right about that.

The Trustee is asserting that you own the truck free and clear, and that may put you over the exemption limites and give the trustee an interest in the truck. For you to retain that interest you may have to "buy it back" by paying the Trustee.

The possible advantage to being in 13 is that, in effect, you can amke that "buy back" over the length of the plan, as opposed to some shorter period imposed by the Trustee.

Realistically, your friend cannot record his lien now for a variety of reasons.

As I said, your attorney should explain all this to you.

Robert Wilcox

(904) 281-0700

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Answered on 3/09/10, 6:29 am


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