In general, when a person satisfies the total amount that must be paid on auto financing, the finance company must transfer the title to the borrower. The same general law applies to auto financing, in connection with a bankruptcy debtor.
A debtor may make monthly finance payments directly to the finance company. At the time the auto finance company has received full payment, satisfying the debt, the finance company must transfer title to the debtor, even though the bankruptcy case is not completed.
The debtor may pay the prefiling arrears through the chapter 13 bankruptcy plan, while paying the future regular monthly payments directly to the finance company. The finance company must deliver the title, after the trustee has paid the total arrears, and the debtor has satisfied the balance that is due on the financing.
The debtor may pay the auto company, by way of a cram down. This means that the finance company is paid only the value of the auto, plus a fair rate of interest, through the bankruptcy plan. The difference that is owed, between the value of the auto and the total balance due, is discharged. Under this scenario, the entire amount is not paid to the finance company. Therefore, the finance company need not transfer title until the chapter 13 case is completed and discharged.
If the total balance due to the finance company is paid through the chapter 13 bankruptcy case, the finance company must transfer title, after the trustee has paid the total amount that is due to the finance company, even though the plan has not yet been completed.
New Jersey Bankruptcy Lawyer, Robert Manchel, can be contacted at 1 (866) 503-5655, to discuss your bankruptcy questions.