In the bankruptcy case of Hartline, James M. and Heather K.; In re the bankruptcy court ruled against the bankruptcy trustee who wanted to avoid a credit’s lien due to administrative errors.
The details of the bankruptcy case:
The debtor-husband purchased a motor vehicle on Nov. 18, 2006. The purchase was financed by the defendant who applied for a certificate of title noting the debtor as the vehicle’s owner and the defendant as the lienholder on Nov. 29, 2006. On March 13, 2008, the defendant applied for a duplicate title because the original title was lost. The duplicate title was issued the next day.
It referenced the original title; but failed to list the defendant as the lienholder. To correct that error, another duplicate title was issued on March 18, 2008. On May 8, 2008, the debtor and his wife filed for Chapter 7 bankruptcy and the bankruptcy trustee filed an adversary proceeded to avoid the lien saying that the duplicate title (with its changes) was issued within 90 day of the debtor’s bankruptcy filing and was an attempt to perfect the title.
However, the bankruptcy court ruled against the bankruptcy trustee, noting that the title was in fact perfected on November 29, 2006, that the errors were administrative and that the duplicate title was not an attempt to perfect the title after the fact.
Bankruptcy Judge Richard Stair Jr. said:
“What occurred was nothing more than an administrative error which does nothing to affect the integrity of the defendant’s lien.”