Auto Lender Objects to Discharge in Bankruptcy — Unsuccessful

Ohio consumers who decide to file for personal bankruptcy do so for multiple different reasons. Some may have overwhelming credit card debt while others may have committed to loans or purchases that they cannot afford to pay back. An insurance salesman in another state started driving for Uber on a part-time basis in Oct. 2014. His intentions were to enhance his income, but he ultimately sought bankruptcy protection.

Although he had a functioning car that was fully paid, he followed Uber’s advice to purchase an SUV that could carry more passengers and luggage on trips to the airport. The monthly instalment was $550, and he soon found that this was unaffordable. He filed for Chapter 7 bankruptcy within a month. The holder of the auto loan protested and argued that the debtor must be held accountable for the loan.

It also claimed that the man provided false information when he applied for the loan by stating his monthly salary was higher than what he actually earned. The SUV was repossessed and sold to another person. The loan provider sought repayment of the nearly  $10,000 difference between the sales price and the balance due on the loan. The judge, however, interpreted the issue differently and ruled in the debtor’s favor, finding that there was a lack of clear evidence presented in court by the creditor. Uber actually referred the man to the auto dealer, and the judge was convinced that the debtor intended to use the SUV as a means to earn more money.

Although there is a presumption that a vehicle loan is not dischargeable, the judge found that the man successfully rebutted it by establishing that he was not contemplating a discharge in bankruptcy when he purchased the vehicle. When a consumer in Ohio is unsure of how to proceed concerning unmanageable debt, the most appropriate step may be to consult with an experienced bankruptcy attorney. A lawyer can assess the client’s circumstances and explain the available options. Taking the right steps at this critical time may result in a fresh financial start.

Source: abajournal.com, “Uber driver who bought $40K vehicle just before bankruptcy gets $10K loan shortfall discharged“, Martha Neil, March 22, 2016