Legal Question in Bankruptcy in North Carolina

Selling collateral out of trust, which is what is shown, in not a criminal event. I think if the creditor threatens criminal action, where there is no statute that allows it, it is a violation of the debt collection practices act. The creditor still has a lien on the property and could go pick it up, if they knew where it was. The creditor could file an adversary proceeding, at great costs and time, to seek to have its debt held not discharged. If the court ruled that the debt was such the creditor could take judgment and try to collect the judgment just like any other unsecured debt if no bankruptcy was filed. The most that they could take as judgment is the fair market value of the collateral at the time of filing. Your lawyer should advise what action to take, if any, and when to take the action. You could offer to reaffirm for the FMV, (make post bankruptcy payments) you could redeem for the FMV (pay lump sum).