Atlanta, GA asked in Bankruptcy and Collections for Arizona

Q: Arizona: creditor won't repossess vehicle of deceased ch7 filer

A person passed in Aug of 2022. He had completed ch7 but there was a secured loan on a motorcycle. The creditor won't repossess and the estate can't sell because they also won't release the lien. The estate does not have money to pay the loan off. Is what the creditor is doing legal in AZ? What are the options?

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2 Lawyer Answers
Timothy Denison
Timothy Denison
  • Bankruptcy Lawyer
  • Louisville, KY

A: Yes. Insure it and keep driving it until they do repo it.

James L. Arrasmith
James L. Arrasmith pro label Lawyers, want to be a Justia Connect Pro too? Learn more ›
  • Bankruptcy Lawyer
  • Sacramento, CA

A: In Arizona, creditors are not obligated to repossess collateral such as a motorcycle. If they choose not to repossess or release the lien, this is within their rights, although it can be frustrating for the estate handling the deceased’s affairs. The estate has a few options: One is to negotiate with the creditor for a release of the lien, possibly for a lesser amount if funds are available. Another option is to surrender the motorcycle to the creditor formally through the court, which may prompt them to take action. If the creditor refuses to act, the estate’s representative may seek legal recourse or court intervention to compel some action. Finally, the estate could also consider selling the motorcycle subject to the lien and allowing the buyer to deal with the lien, but this usually requires a discount in the sale price. It’s often best to consult with an attorney to explore the specifics of the situation and to ensure that the estate's rights are protected.

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