The practical effect of that change, says the National Automobile Dealers Association, is to give a dealership more time to establish its status as a secured creditor in a bankruptcy filing.
Many state laws already impose a 30-day timetable on titling work, says Mike Charapp, a dealership attorney in McLean, Va.
The new law also requires consumers who file for bankruptcy within 30 months of financing a car or truck to pay off the loan in full to keep the vehicle. Current law allows bankruptcy judges to require customers only to pay the lender the vehicle's market value at the time of bankruptcy.
In consumer bankruptcy cases, a vehicle's value is often "significantly less" than the loan balance, Charapp says.
"This has led to losses for creditors and for dealers who hold their own finance paper," he says.
President Bush signed the bankruptcy law last month.
The law is especially important to dealers who own finance companies, lawyers say. It improves the prospects that those companies will be repaid by bankrupt buyers or will be able to repossess vehicles.
If a dealership misses the current 20-day deadline for recording a vehicle lien, and a customer files for bankruptcy within three months of taking delivery of a vehicle, that debt can be treated as though it is not backed by collateral, says Larry Young, a bankruptcy attorney in Houston who represents dealerships.
The customer can stop making payments and still keep the vehicle, Young says. In such a case, the lender typically holds the dealership liable for the loan balance.
Chris Floyd, general counsel of Hall Automotive in Virginia Beach, Va., says the private dealership group "lost a couple of vehicles as a result of" consumer bankruptcy filings last year.