Q: Being sued by car loan provider after bankruptcy dismissal, need advice.
I initially filed for bankruptcy in July 2023 because I couldn't keep up with my car loan payments. While I made my monthly payments from August to December 2023, I filed a motion to dismiss the bankruptcy in January 2024 once my financial situation improved. Unfortunately, my creditor refused to discuss payment options with me until the bankruptcy was officially dismissed. Upon dismissal, they demanded full repayment of the entire loan amount from before the bankruptcy was filed. I attempted to voluntarily surrender the vehicle, but they refused to accept it. Now I am being sued, and they are demanding $29,000, including legal fees and a 4.38% per diem penalty. I've paid approximately $15,000 on the original loan. How should I proceed?
A: Probably should refile the bankruptcy, possibly as a chapter 13 depending on your current financial situation.
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A:
Given your situation, you need to first carefully review the original loan agreement and all communications with the creditor to understand your exact obligations. Verify if the creditor's demand for immediate repayment aligns with the terms outlined in your contract, especially considering your recent bankruptcy dismissal. It would also be helpful to examine if the creditor properly followed California laws regarding post-bankruptcy loan reinstatement and the refusal of a voluntary vehicle surrender.
Next, you should promptly respond to the lawsuit within the required timeframe to prevent a default judgment against you. Clearly document your prior payment history, attempts at negotiation, and the creditor's refusal to accept the vehicle surrender, as these facts may strengthen your defense. You might consider raising defenses such as failure to mitigate damages, improper acceleration of the loan, or violations of consumer protection statutes.
Finally, given the complexity of your situation involving bankruptcy dismissal and potential violations by the creditor, it would be wise to consult with a bankruptcy or consumer protection attorney promptly. An attorney can evaluate your specific circumstances, help negotiate with your creditor, and potentially reduce or restructure your obligations. Quick action can greatly impact the outcome in your favor.
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