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Man in hot water during consumer bankruptcy case

On Behalf of | May 13, 2016 | Chapter 7 |

Having the guidance of a trusted legal professional is essential during any type of legal proceeding. Bankruptcy law, in particular, is a complex and every-shifting matter, and individuals in Maryland and other states who are unfamiliar with the rules regarding bankruptcy can find themselves in a great deal of trouble if they break those rules. An example is found in a man who has been forced to turn his motorcycle over to a trustee as part of his consumer bankruptcy case.

The man initially filed for Chapter 13 bankruptcy, but because he was unable to confirm a bankruptcy plan, the filing was converted to Chapter 7. Records show that the man purchased a motorcycle shortly before filing. He paid cash for the bike and did not file for a new title until eight months after filing for bankruptcy. When the title was issued, the man was listed as the only registered owner of the motorcycle.

When asked about the purchase, the man claimed that he was not the true owner of the motorcycle because he had acted as an agent for his father in purchasing the bike. He claims that his father did not find the motorcycle to be suitable, so the man then decided to keep it. The debtor asserted that he obtained title to the bike so that he could have it insured, but he never possessed the authority to sell or transfer title to the vehicle.

A court did not agree and ordered the man to turn the motorcycle over to the trustee who is assigned to handle the case. Even though the debtor was not the registered owner of the motorcycle at the time the bankruptcy case was initiated, the court ruled that the man was the effective owner of the bike, having paid cash for it and taken possession of a title signed by the seller. As this case demonstrates, it is easy to make an error with a Chapter 7 bankruptcy case that can lead to the seizure of property. Anyone in Maryland who is planning to file for consumer bankruptcy protection would be well advised to do so under the guidance of a bankruptcy attorney.

Source: Bloomberg BNA, “Debtor Must Turn Over Motorcycle to Ch. 7 Trustee”, May 11, 2016

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