Legal Question in Credit and Debt Law in New Jersey

Re: Lienholder will not send title

The right that the creditor thinks it is asserting is called "setoff" and it is lawful in most credit situations unless the lending agreement specifically excludes it. That is one reason why full-service financial organizations are very happy to give you a no-fee checking account at the same time as a loan. It gives them security for a debt without having to reduce the interest rate.

That said, your case is different and the creditor is engaging in what is arguably slander of title. They do not own the auto. They simply hold the title certificate to ensure that you do not transfer title without their interest being considered. If they have not foreclosed the mortgage, they have no reason not to sent the title to the NJ DMV so that a NJ title can be issued and returned to them with their interest shown.

So, you are on the legal high ground. However, to enforce that right, you might spend more than if you just brought the loans current. Some rights are hard to enforce and this is not one where help can be expected from the Attorney General.

That probably doesn't help much, but at least you know.

See also: http://info.corbettlaw.net/lawguru.htm