Hi Everyone, I need a little advice... I was planning on filing for bankruptcy in December of this year. I spoke to a lawyer and they advised me that that would be the best time in which to do so. Now, in December of 2010, I took out a personal loan and used my car as collateral (my car was paid in full). The original loan amount was $5800 (I had some unforeseen emergency expenses come up) and at the time of signing the loan agreement I also had to sign a Notice of Lien to make the financial company the lien holder of my car. Anyhow I was making on time steady payments on the loan and was still in financial difficulty so in July of 2011 when the lending institution called me and asked me if I were in need of any more money, I went in and got more. They told me they would have to treat the second loan as a new loan. So the money I originally borrowed was add on (included) in the difference of the new loan making the first loan paid in full (the new loan was for an additional $3000 so the grand total was now $8800).
The financial company gave me my paid in full letters from the first December 2010 loan and I received my new loan paper work for the second July 2011 loan. The new loan was not considered a refinance I had two separate account numbers and had to go through the whole loan process all over again since technically I was only prequalified for these additional funds. Basically there was no mention of me using my car as collateral for this second July 2011 loan and I didn't sign any notice of lien paperwork this second time around. So once everything was said and done, I was still in a financial crunch and was thinking of selling my car so I sent the DMV a copy of my paid paperwork from the original December 2010 loan so I can have a lien free clean title (I was looking to sell my car to a used car dealership and not go private party) I assumed this new loan was approved based on improved credit and / or account history (since I made timely payments for those 7 months since I took out the first loan) and my car wasn't worth $9000.
Anyhow now here we are in October 2012 and I still have the second loan and at the advise of my lawyer I stopped paying the loan as of September in anticipation of filing for bankruptcy. Today I received a letter via UPS from the financial institution stating that they are starting the process of repossession on my car claiming that I used it as collateral but I didn't. That was the terms and agreement under the first loan not the second. My question is do I now have to retain a lawyer to fight this or just continue with my plans for a December bankruptcy.
I have both the original loan paperwork from December 2010 and the paperwork from the July 2011 loan. I just reread over all my paperwork and I noticed (for the first time, I must have overlooked it) that on one of the papers from the second July 2011 paperwork there is a 1 line mention of my car (just the make and model) but again I never signed any lien holder information for this second loan since it was treated as a new loan all together. How can they take the terms from one loan and apply it to another without the necessary paperwork?
My question is do they have any claim on my car? I do intend to speak with my lawyer tomorrow but I am a little anxious to know. If the second loan from July 2011 required me to use my car as collateral why wasn't I given a notice of lien to sign and since the original loan was considered paid in full doesnt that mean that the agreement and all the terms are now invalid. And why would the DMV issue me a clean title if they had a financial interest in the car?