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Imagine this

  1. I gave someone a car and want it back (they refuse)

  2. I use a shell company to buy my own debt

  3. My shell company sues me for conveying the car to conceal it from creditors

  4. I settle

  5. The shell company now gets a court order to seize the car

  6. The shell seizes the car

  7. Now I have the car back

Does this work?

  • 1
    Could you be more precise about what happened at step 1? Did you (a) sell or gift the car so that it is no longer your property? Or did you (b) lend your car? And in step 2, what specific debts are you buying from whom? – amon Mar 26 at 8:30
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    Inline with amon's comment, there are too many gaps in the situation you describe. But overall, the scheme sounds fraudulent. Hence the importance of adding details that will enable us to identify what exactly you need to know. – Iñaki Viggers Mar 26 at 10:14
  • A ............. – user30672 Mar 26 at 18:04
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The main problems:

I use a shell company to buy my own debt

The only way this could ever happen is if you sold the car subject to a debt owed to a third party and the third party (usually a bank or finance company) agrees to sell you the debt, which is unlikely.

My shell company sues me for conveying the car to conceal it from creditors

This would fail because you had notice of the sale and the knowledge you had is inputed to the entity owned by you. Therefore, it wouldn't constitute concealment.

Also, you would have to join the new owner of the car as a necessary party to the lawsuit and the new owner would have the defense that the new owner is the person in title to the car and had either assumed the loan, or that you had a duty to pay off the car loan upon the transfer and failed to do so, causing the debt to be owed by you and any debt owed by the new buyer to be setoff against it.

Because the new owner is a necessary party, you can't just settle the case. If the new owner isn't a party, then an order to seize the car isn't effective against the new owner because the court didn't have jurisdiction over the new owner and hence doesn't have jurisdiction over the car.

If the new owner was a bona fide purchaser for value and the debt wasn't shown on the car title, then the lender can't sue the new owner.

The shell company now gets a court order to seize the car

This is only possible if the creditor has a right to seize the car because the debt is in default because the new owner didn't comply with the loan terms. If the car loan had a due on sales clause, then the creditor would have had a right to foreclose, but you would probably be barred from doing so.

Even then, it is pretty much impossible to see how you would prevail in the lawsuit under defenses such as "unclean hands".

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Of course it doesn't work. You haven't discovered an end-around to property ownership

I gave someone a car and want it back (they refuse)

You no longer own this car. It is now titled in their name. Your interest in the car is now exactly zero whether or not they paid for it.

I use a shell company to buy my own debt

  1. Okay. This has nothing to do with the car. You're now out of the cash it took you to set up this new entity.

  2. How are you doing this? I assume it means paying off your creditors with money you already have. You will also have to come up with some type of bogus documents that explain to the future court why this was even done. If you have the money, why do you have debt?

My shell company sues me for conveying the car to conceal it from creditors

Um, Ok. Now you're also out filing fees. Let's assume you know how to do this without paying an attorney to do it for you.

I settle

Makes sense, since you're suing yourself.

The shell company now gets a court order to seize the car

Seize the car how? This is a stretch. A judgement would be against you for the value of the car. You can't settle a lawsuit using assets you do not own. A court won't order something repossessed because of an unrelated squirrelly lawsuit. An exception would be a bankruptcy court that rules the item was sold or disposed of outside the court's orders. I would expect an astute court to hit you with contempt or sanctions for trying to use it to further your interests with some sort of end-around to property ownership. Expect more fees for this use of the court's time.

The shell seizes the car

No.

Now I have the car back

No.

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  • So then what is conveyance if you can't sue for it? – user30672 Mar 26 at 17:58
  • Conveyance is the transfer of ownership or possession of property. It's not a legal cause of action in itself, so suing for it suggests either you've used entirely the wrong word or that you've misunderstood how causes of action and lawsuits work. – Nij Mar 26 at 20:40
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  1. I gave someone a car and want it back (they refuse)

You surrendered interest/ownership in the car. Whether this was done for money or as a gift makes no difference. It's unclear though how you could even do this if somebody (a creditor) had a lien on the vehicle. If the vehicle is still titled in your name, you still own it. You can go through (legal) repossession proceedings at that point.

  1. I use a shell company to buy my own debt

You do not "own" your debt, so nobody can buy it from you (including shell companies). The only way for somebody to buy debt is to buy it from the creditor, not the debtor, so your plan falls apart (again) at step 2. Debt can be transferred, but this would have to be at the agreement of the creditor, and if you originally committed a fraud to conceal the vehicle from the creditor, this won't end well to ask.

  1. My shell company sues me for conveying the car to conceal it from creditors

Depending on how your "shell" company is set up, this may or may not work just from a procedural standpoint. Either way what you are attempting to do (and prove) is that you committed fraud. If that is your goal, just go to the DA and tell them that you've committed a crime, it will save a lot of money.

  1. The shell company now gets a court order to seize the car

This would only work if you were the legal owner of the vehicle. If the title was transferred to the new owner, the court would have no jurisdiction to order the return of the vehicle to the winner of the case. The only thing that would end up is a judgement for the value of the debt, so you are right back where you started.

  1. The shell seizes the car / 7. Now I have the car back

No, again, the court cannot order (nor can a lawful repossession occur) for something that the person is not entitled to. If the title was transferred with the lien to the new owner, the only entity that would have recourse is the original creditor (lien holder).

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  • So then what is conveyance? – user30672 Mar 26 at 18:04

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