Bankruptcy and fraud

Chances are, your grandmother did not understand what she was saying when she told you the vehicle would not be in the bankruptcy. She is required to list all property that is in her name, so it is listed in the bankruptcy. With that said, if the car payments are not current, the lender is going to want to repossess the vehicle. In any event, you might benefit from consulting with an attorney to see what the situation is, and maybe help you negotiate something with the lender. The bankruptcy court isn't going to just take your word for it that the car isn't hers, when it is in her name. But, it sounds to me like there is a misunderstanding of what happens to the car and the loan due to the bankruptcy, and you would benefit from consulting with an attorney that could help you with this nor at least try to negotiate with the lender.

All debts and liabilities have to be listed in a bankruptcy petition so you cannot just leave out a vehicle that is financed in your name. Your grandmother may have had the opportunity to sign a reaffirmation agreement on the vehicle, which is a promise to the lender that you are keeping the debt outside the bankruptcy and will continue to make the payments on time. However, a judge has to approve the reaffirmation agreement. It is unlikely that a judge would approve a reaffirmation agreement on a debt for someone else. Some lenders will take the car if a reaffirmation agreement is not ordered even if you are current on the payments. It may be that your grandmother did everything she could to try to keep the car outside the bankruptcy but the judge didn't approve the reaffirmation agreement.