How do I get a lien release for my car when the dealership committed fraud and filed for bankruptcy protection?

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How do I get a lien release for my car when the dealership committed fraud and filed for bankruptcy protection?

I purchased a car from a dealership, financed through a credit union, only to find out that the dealership committed fraud by not paying off the first lien-holder then filing for bankruptcy. That lienholder is now coming after me to pay $13K the dealership owed them, and there are now 2 liens on the car. How can I get the primary lien released? I believe my only option is to file a claim to have a judge order a lien release, which will cost me $322 plus a stack of paperwork. Are there other options? Is it worth threatening the lienholder with legal action if they don’t release?

Asked on May 24, 2011 under General Practice, Minnesota

Answers:

MD, Member, California Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

You can file a complaint with the entity who regulates your first lienholder and the entity who regulates the car dealership. It would your department of financial institutions and if it is a federal credit union, the NCUA. As to the other options, you can contact the named trustee in the bankruptcy and see if a motion to the court needs to be filed by you to a) have the bankruptcy dismissed because of fraud and b) if your claim can be considered a priority. Further, contacting the department of financial institutions may be able to help you because you can file a complaint (no cost) and if the agency can obtain a solution for you somehow, you may not need to go through the bankruptcy court. Also, simultaneously contact the office of the attorney general.


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