Finance/Repo Advice Needed.

[sailorchic34]

I'm always amazed that some states have only a $5000 homestead exemption. California of course has two sets of exemptions so you get to pick which one works better. Most states are somewhere in the middle.

I've not had to file bankruptcy yet, though mainly because I'm insolvent.

[nimblemotors]

As a secured loan, they can repo the boat if defaulted, filing bankruptcy isn't going to stop a repo just as a bankruptcy isn't going to stop a foreclosure as far as I know.
Exempt assets are ASSETS, an underwater secured loan is NOT AN ASSET.

Banks give no sympathy, they deserve none in return, but we all have to live by the laws until they can be changed. Remember when banks applied payments to the lowest interest rate balances? MFr's did it because they can, but now they can't because the law changed.

Your debt does not just go away because you ignore it, it just gets worse for you.
Our friend needs to find ways to keep his loan current if at all possible, earn some money somehow. Or sell the boat and get out any equity and move on.

I recall a similiar situation on a home repair show, a renter turned a house into a pot growing factory, and completely destroyed it, and not only did she lose everything, she had to pay a lawyer to get her off from prosecution she was involved.
Financially destroyed by simple bad luck.
Gotta just deal with it, can't pretend it didn't happen, or hope things will work out and run and hide.

[sailorchic34]

Originally Posted by nimblemotors

As a secured loan, they can repo the boat if defaulted, filing bankruptcy isn't going to stop a repo just as a bankruptcy isn't going to stop a foreclosure as far as I know.
Exempt assets are ASSETS, an underwater secured loan is NOT AN ASSET.

That is true up to a point. But if the amount owned is less then the exempt amount then it can be barred from forfeiture. Say for example you own a car in California say you purchased for $6000 and is now only worth $3000 with an outstanding loan balance of $1500. That car under civil code in california is exempt from collections. If you don't fight it in court, they can repo it. But fight it and it can be exempt (in some states) Thats what the exemptions in bankruptcy and states civil exemptions are all about.

If you have a house in california that has less then $150,000 in outstanding loan balance and your married then that too is exempt from collections.

That's how the civil exemptions work. You can't be left pennyless in any state. Though some states get pretty close

[Nomadgurl]

how unrealistic is it that you both go back to work temporarily to be able to afford payments etc until things get settled?

[sailorchic34]

Originally Posted by sailorchic34

If you have a house in california that has less then $150,000 in outstanding loan balance and your married then that too is exempt from collections.

Oops I was not quite correct. The property is exempt from forfeiture up to the civil exemption amount. So a house, Mobile home, motorhome or boat that is used as a persons residency is exempt from forfeiture if it is worth less then the exempt amount.

That's for fire sale price, sold under duress, not the maximum amount it could be sold for. In some states its $5k in other states its $75k or $500k. In some states the homestead is exempt from forfeiture for an unlimited amount.

A $75k or $150k exemption is not much for a house in California, but its pretty sweet for a boat or RV, etc. Well a good used one anyway. So the OP may not be quite as bad off as he seems, depending on his home state. BTW if the repo guy gets to it first your done. It needs to be settled in court before a judge for you to keep the property.

The burden is generally on the owner of the property to show its exempt. But a filed homestead exemption puts the burden of proof on the collections / bank.

Not all states count a boat as a homestead, but many do.

[Kiwi303]

If there is a lawsuit most things are froze at the status quo so if you have the boat at the filing of the lawsuit you keep the boat until the judge says who gets the boat as that is a major asset and was financed from income arising from the other asset now under suit. Different countries, different states, different laws, get advice from your lawyer. He should be able to add a injunction to the filed suit blocking the fiance company from taking the boat or doing more than just adding up defaulted payments and charging penalty interest as part of the insurance filing.

[nimblemotors]

hmm, Secured Debts in Chapter 7 Bankruptcy: An Overview | Nolo.com

indicates the boat is going back to the lender unless you pay it off or keep current.

Here is another quote:

Q. What are secured debts and can they be discharged?
A. A secured debt is a debt that is collateralized by a tangible object such as a car or mortgage on a house. These debts cannot be discharged because the court's position is that it would create a windfall for debtor, if that debtor were allowed in bankruptcy to get a discharge and be able to keep those items.

I agree if filing bankruptcy the boat can't be repo'd until the case is settled,
so I suppose in this case it might help the OP to delay until the insurance claim is settled, but again not sure how the insurance claim would effect.
It seems certainly complicated enough that one must determine the details and a lawyers assistance seems appropriate, and not rely on anonymous internet advice.

[hellosailor]

Personal bankruptcies are usually a state matter. Discussing bankruptcies is futile unless you can put that in reference to WHICH STATE LAWS will apply.

Does the OP have a state of residency? If the OPs boat is their residence and it is out of the country...yeah, what state laws might apply? That should be an easy one for a maritime attorney but baffling to anyone else.

First things first. Fifty states, eleven insular possessions, and the District of Columbia. That's 62 different bankruptcy codes in the US, isn't it?

[sailorchic34]

Originally Posted by nimblemotors

hmm, Secured Debts in Chapter 7 Bankruptcy: An Overview | Nolo.com

indicates the boat is going back to the lender unless you pay it off or keep current.

Here is another quote:

Q. What are secured debts and can they be discharged?
A. A secured debt is a debt that is collateralized by a tangible object such as a car or mortgage on a house. These debts cannot be discharged because the court's position is that it would create a windfall for debtor, if that debtor were allowed in bankruptcy to get a discharge and be able to keep those items.

I agree if filing bankruptcy the boat can't be repo'd until the case is settled,
so I suppose in this case it might help the OP to delay until the insurance claim is settled, but again not sure how the insurance claim would effect.
It seems certainly complicated enough that one must determine the details and a lawyers assistance seems appropriate, and not rely on anonymous internet advice.

Ah I was off a bit.. Darn Blond moments . If the OP had financed the 4plex and paid off the boat, the boat would be protected or mostly protected from collections by the homestead exemptions, Assuming that is their only home.

The OP has said he's going to make it right. But banks are notoriously unforgiving when it comes to personal hardships.

[teejayevans]

1.I would make sure my property was re-access so your property taxes won't be based on the old value of the property.
2.Finance companies always start out playing hard ball, during the housing crisis banks would refuse to negotiate, then word got out to just stop playing your mortgage and they would come to you.
3.Do not pull $ out of your retirement accounts, they are protected even in bankruptcy.
Good luck...

[The Smokester]

OP,
My impression is you are letting your lawyer manage much of this for you. In my experience, you need to set a strategy or plan (realistic and legal) yourself. Then get lawyers involved whose job is to execute their part of the plan.

Lawyers are like sail makers...You tell 'em what sail you want and they sew it for you. And if you don't know what sail you want then you sure won't get it.

[Wavewacker]

Originally Posted by Gemini_Jim

Hey Folks,

I find myself in a very difficult and embarrassing situation and could use some serious advice.

Last year my wife and I sold everything we own, except a fourplex rental, bought our Gemini and paid off the rental unit. We set out to live our cruising dream while living frugally off of the income provided by the rental property.

In January there was a fire caused by illegal activity in one of the units. The building was a total loss. Our insurance company is refusing to pay the claim. We have an attorney fighting with the insurance company and he has given us hope that we will prevail.......Eventually.....

Today I sit here wondering why I paid off the rental property and financed the boat. I have reached the point that I am unable to keep up my boat payments. I am currently in CentralAmerica and wondering how to proceed.

Do I sail immediately back to the US and turn my only home over to the bank?

Can I avoid repossession until I settle with the insurance company and can come current or pay off the boat loan?

I spoke with the loan company and they are not willing to work with me.

What are the realities of a US loan company repossessing a boat that is located in another country?

Please understand, I am not trying to screw the bank. I just need time to rectify the situation.

Any advice would be appreciated.

Thanks

Mo

Honestly, I didn't go through 46 posts and I see this was about 10 days ago. Your attorney is filing suit against the Insurance company, usually they have a statutory period to settle or in your case, you're going to court, all well and good. A fire policy will be paying if you had no knowledge of the illegal activity or were not a party to it.

Your attorney needs to file against the finance company for a stay in the repo as you will have the means to pay it in full, best way to buy time is see if you can sue in order to pay the debt as agreed. Technically, you're in default and they can proceed to secure the collateral, what you're saying is that, if your boat is worth much more than what is owing, they will be stripping you of your equitable interest in the collateral and prudent reasoning should prevail to repay the amount owed.

Next, you may look to RE investors to purchase the property in its as is state, salvaged. You will still be entitled to the insurance proceeds.

There are "hard money" lenders who make short term loans on RE, rates are higher, but they look to the RE value, not so much the ability to pay or credit. There could be some money there depending on value.

Lastly, if your attorney is on it, I'd take a cruise. If you're at sea, they will track you, but a truck isn't pulling up, in the mean time your attorney can work on it and when the dust settles pay them off, they will have to accept payment plus costs of collection. Have your attorney review the costs of collection to ensure they are reasonable and that services were actually performed.

IMO!

[Gemini_Jim]

Originally Posted by Capt Phil

Not sure where anyone got the idea that Gemini was talking about not paying... I got the impression that he was reluctant to give up his home for pennies on the dollar but wanted to pay off the debt as soon as he got on his feet which might be sooner than later if his attorney can help him collect from the insurance company that is trying to stiff him on paying off his fire insurance claim on his duplex. It would be funny if the carrier of his fire insurance policy was somehow hooked up with the lender on the note for his boat! Just sayin'... Phil

You are right on the money!! I fully intend to fulfill my obligations to the finance company.

Unfortunately the folks we have had contact with so far sound as if they are reading the same script. No independant thought going on.

I fear that, if I attempt to return to the US and get a job so I can continue the payments, they may get ahold of the boat before I can find a job & place to stay and get them money.

I have in years past purchased cars and boats that were bank repo's. I now have a new perspective on that........ I have purchased vehicles for 25-60% of fair market value. I know that if I allow them to get ahold of the boat I will lose.

Thank you all for taking the time to offer assistance.

The bright side....... I was out of the country when the !(insert multiple explitives)! burned down my building with his meth lab so I couldn't break his bloody neck!!

Spoke with my attorney again. He is writing another letter to the finance company asking for reduced payments for 12 months. We'll see how they react to this one. He also told me that the insurance company (Travelers) is notorious for stringing claimants along until they have run out of time to sue. He said that they will likely drag it out to the last moment but will probably not let it go to trial.

[Rob Harv]

Keep in mind G-J that in some states a lien can be attached to any insurance procedes to settle a debt.

[Gemini_Jim]

Originally Posted by Rob Harv

Keep in mind G-J that in some states a lien can be attached to any insurance procedes to settle a debt.

That could throw a small wrench in the works. It would pay off the boat but make rebuilding difficult.


Thank you to all who have offered advice. Two common suggestions made have been:

1) Make small payments until all is resolved and I am able to resume full payments. We have asked the finance company if they will work with this solution on several occasions and been repeatedly told no. No argument so far has budged them.

2) Sell the land and pay the boat off. Could work but vacant lot sales there are VERY slow. There is a very nice double lot across the street that is reasonably price and been on the market for two years. Also, our financial plan relies on the rent income from the property. If we pursue this we will have to seriously revise our retirement. We will have to go back to work which likely means finding a land home.

Question: If I continue to make token payments and dodge the repo man can the boat be considered "stolen"?

I have never gotten the impression that there was any kind of check for loan status while clearing in/out of the countries we have visited. I would think that if the boat docs match my passport that would be enough.

As I sit here today we have filed the lawsuit against the insurance company and are waiting to have a court date set. My attorney seems quite confident that they will continue to jerk us around until just before the court date in hopes that they can wiggle out of paying or get me to take a greatly reduced settlement. He doesn't think they will let it go to court. No idea how long that will take. Also, he has written a second letter to the finance company.

Anyone know of a good job opening for a retired electrician within walking distance of a cheap marina in Central America?

Thanks again everyone for your help.

Mo