Bankruptcy's Fresh Start Jeopardized By Creditor's Failure To Pick Up Surrendered Car?

Surrendered Car in Bankruptcy But the Bank Won’t Pick it Up

We knew it was bad; but we had no idea it was coming to the point where creditors are passively refusing to pick up vehicles which have been surrendered in bankruptcy. What’s happening? Post-bankruptcy debtors are finding that cars, motorcycles, ATVs, Jet Skis and recreational vehicles which they have surrendered in bankruptcy are not being taking back by lenders in a timely fashion. Why? They don’t want them.

These vehicles are flooding the market, thus reducing their value because so consumers are unable to pay their loans. Because of the reduced value, many lenders don’t  find it profitable to complete the repossession on these vehicles even if they were surrendered in bankruptcy. Well that must be a good thing right? Not exactly. While in theory getting a “free” car may benefit the post-bankruptcy debtor, in reality, even if the lender never picks up the car, they are not required to give the debtor title.

But what the debtor is stuck with is the responsibility of maintaining and paying insurance for the vehicle.  They are also at risk for incurring costs from accidents involving the vehicles. Will the post-bankruptcy debtor be responsible for repairing a car which has been damaged while sitting on the street? How about parking tickets and other expenses attached to owning a vehicle? Yes, the post-bankruptcy debtor is at risk of incurring new debt associated with the car and there is no way to legally force the creditor to come and pick up the car.

So how can a post-bankruptcy debtor take some actions to protect themselves? One way is to make sure you contact the creditor in writing and over the phone, consistently and persistently until they pick up the car. If that fails, the debtor can leave the car in a secure location which can be easily accessed by the creditor and then mail them the keys via insured, certified mail. The risk with the last option is that if the car is damaged, towed or stolen, the debtor could be held liable.