What happens when you scrape a car with a lien on it?

Asked about 2 years ago - Saint Joseph, MI

I have a car that has a lien for about $900 on it. The loan hasn't been paid on for almost 3 years. The car blew its engine 3 years ago and I couldn't afford to replace it. About a year ago I sold it to a junk yard for about $300. I am now in the situation where I will be filing for bankruptcy. Will the bank want the car? If I don't have it what will happen?

Attorney answers (4)

  1. Eric Charles Lewis

    Contributor Level 17

    3

    Lawyers agree

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    Answered . Worst case scenario is that the court finds that you did not preserve the collateral for potential repossession and you could be responsible for the debt. More likely that the bank will not pursue the lien and you would otherwise get a discharge of your personal liability to pay back the installment note.

    Advice on this forum is for informational purposes only and should never be mistaken as a substitute for legal... more
  2. Kevin Kennedy Gipson

    Contributor Level 12

    3

    Lawyers agree

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    Answered . The debt for the car will be discharged in a bankruptcy.

    It is unlikely that the creditor will go to the time and cost of trying to recover a vehicle with a blown engine, but if they did, they might get some relief from the bankruptcy court because you sold the collateral that secured the loan.

    It would seem, however, that it would cost them more than they could get from you for the salvage value of the vehicle, but be prepared to produce the documentation from the sale to the junk yard to establish that the vehicle was sold as scrap.

    "Do It Yourself" bankruptcy filing is a really bad idea, so you should seek the advise of an experienced... more
  3. Kathryn Ursula Tokarska

    Contributor Level 16

    1

    Lawyer agrees

    Answered . The fact that you haven't paid for 3 years and the bank never attempted to recover the collateral is a very strong indication of their interest in the vehicle. Don't worry.

  4. Walter C Oney Jr

    Contributor Level 17

    1

    Lawyer agrees

    Answered . If you scrape a car with a lien you will leave a scratch, just the same as if you scrape it with a key :-)

    In my state, destroying or selling personal property that is subject to a security interest without permission from the lender is a misdemeanor. I just sent a potential client off to consult with a criminal lawyer so that he doesn't have to take the Fifth Amendment when asked about something similar.

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