Secured Claim Paid Through the Plan

When you file a bankruptcy, you legally break every contract you have. When you confirm a Chapter 13 plan it replaces the contracts. The car creditor has rights under the contract that have not been discharged yet. If your Chapter 13 is dismissed the car creditor has the right to enforce the pre-petition contract and collect all that is owed or can repossess the vehicle. Although your Chapter 13 trustee has paid the secured portion, probably at a lower interest rate than what you owed under the contract, he has not paid the creditor all they are entitled to under the contract. This means that although the creditor cannot repossess the car or sue you under the contract, they do not have to release the lien on the vehicle until the discharge is issued by the court. Once your Chapter 13 is discharge then the car creditor must release the lien and you can then sell the vehicle.