Legal Question in Bankruptcy in New York

Re: bankruptcy and reposession

You are very likely to lose the car itself whether or not you reopen your bankruptcy case.

The creditor who loaned you the money for the car had what is called a "purchase money security interest" in the car. This means that the lender provided money for you to purchase a particular thing -- in this case, a car, and that loan was collateralized by the car.

Since you did not keep up with the payments, the lender has the right to reclaim the collateral that secured the debt. This would be true even if you had listed the car loan in your bankruptcy petition; it would simply have taken an extra step on the part of the creditor.

The advantage to you of reopening your case is that, because you did not originally list the car debt in your bankruptcy petition, the creditor can now come after you for the difference between the sale price they got for the car and the amount you owed on the car at the time of repossession; you don't want them to do that, and reopening the case to list the debt would prevent them from being able to do that. However, bankruptcy law requires that ALL debts be listed in the petition, and not listing one that is as blatant as a car loan can, depending on the circumstances, be construed as fraud on your other creditors and even as fraud on the court. Bankruptcy judges in general take a very dim view of anything that even remotely smacks of fraud.

You need to bite the bullet and hire a lawyer to help you out of this one.

Good luck.

THE INFORMATION PRESENTED HERE IS GENERAL IN NATURE AND IS NOT INTENDED, NOR SHOULD IT BE CONSTRUED, AS LEGAL ADVICE. THIS POSTING DOES NOT CREATE ANY ATTORNEY-CLIENT RELATIONSHIP BETWEEN US. FOR SPECIFIC ADVICE ABOUT YOUR PARTICULAR SITUATION, CONSULT YOUR ATTORNEY.