If a customer declares bankruptcy within 90 days after vehicle delivery, when must the lien be recorded to avoid becoming an unsecured creditor?

Recording the lien within 30 days after the vehicle delivery is crucial in ensuring that the creditor retains secured status in the event of the customer's bankruptcy. This timeframe is established to provide the dealer with adequate opportunity to formalize their claim on the asset before any potential bankruptcy filing that could prioritize other obligations.

When a lien is recorded within this 30-day window, the creditor's interest in the vehicle is protected, allowing them to potentially recover the vehicle or its value through the bankruptcy process. Failing to record the lien in this period could lead to the creditor being treated as an unsecured creditor, which significantly reduces the likelihood of recovering the owed amount in bankruptcy proceedings.

Delaying the recording beyond this 30-day period may expose the creditor to greater risk, as the bankruptcy laws generally prioritize secured creditors over unsecured ones, emphasizing the importance of timely action in these situations.