How Do I Get Montana Capital to Remove My Title Lien After a 1099-C?

Question:

Dear Steve,

I took out a title loan from Montana Capital (Simple Cash Loans) in 2016. Unfortunately, I lost my job and couldn’t continue making the payments.

Tax records downloaded from the IRS website show the entire debt was canceled in 2019. I still have possession of the car, but Montana Capital is still listed as a lienholder on my title.

Can I get the title loan company removed from my car title and a clear title issued in California if the loan company canceled the debt almost three years ago and didn’t possess the vehicle?

Tiffani

Answer:

Dear Tiffani,

It is easy to confuse these two issues. While Montana Capital issued a 1099-C regarding the status of your debt, that is a tax reporting function. It has little to do with the underlying debt. Creditors must report a 1099-C to the IRS and must be filed by “Any organization whose significant trade or business is the lending of money, such as a finance company or credit card company (whether or not affiliated with a financial institution). The lending of money is a significant trade or business if money is lent on a regular and continuing basis.” – Source

The lien remains against your vehicle and can only be removed by court order or the creditor indicating the lien was satisfied.

Given the image you sent me regarding the information you received and forwarded to me, I am not confident the 1099-C has all the information required.

How Do I Get Montana Capital to Remove My Title Lien?

It appears to be missing an appropriate event code. But I do not believe this changes the situation.

The allowed identifiable event codes are:

Code A—Bankruptcy. Code A is used to identify cancellation of debt as a result of a title 11 bankruptcy case. See Bankruptcy, later.

Code B—Other judicial debt relief. Code B is used to identify cancellation of debt as a result of a receivership, foreclosure, or similar federal or state court proceeding other than bankruptcy.

Code C—Statute of limitations or expiration of deficiency period. Code C is used to identify cancellation of debt either when the statute of limitations for collecting the debt expires or when the statutory period for filing a claim or beginning a deficiency judgment proceeding expires. In the case of the expiration of a statute of limitations, an identifiable event occurs only if and when your affirmative defense of the statute of limitations is upheld in a final judgment or decision in a judicial proceeding, and the period for appealing the judgment or decision has expired.

Code D—Foreclosure election. Code D is used to identify cancellation of debt when the creditor elects foreclosure remedies that statutorily end or bar the creditor’s right to pursue collection of the debt. This event applies to a mortgage lender or holder who is barred from pursuing debt collection after a power of sale in the mortgage or deed of trust is exercised.

Code E—Debt relief from probate or similar proceeding. Code E is used to identify cancellation of debt as a result of a probate court or similar legal proceeding.

Code F—By agreement. Code F is used to identify cancellation of debt as a result of an agreement between the creditor and the debtor to cancel the debt at less than full consideration.

Code G—Decision or policy to discontinue collection. Code G is used to identify cancellation of debt as a result of a decision or a defined policy of the creditor to discontinue collection activity and cancel the debt. For purposes of this identifiable event, a defined policy includes both a written policy and the creditor’s established business practice.

Code H—Other actual discharge before identifiable event. Code H is used to identify an actual cancellation of debt that occurs before any of the identifiable events described in codes A through G. – Source

I think there is an ongoing risk of the title lender sending this to a collection agent or even attempting to repo the car.

I would strongly suggest you consult with an attorney experienced in auto issues in California, where you said you lived. One place to look for such an attorney is to click here.

Sincerly,

You are not alone. I’m here to help. There is no need to suffer in silence. We can get through this. Tomorrow can be better than today. Don’t give up.

Damon Day - Pro Debt Coach