Here is a recent decision involving a case where a vehicle was repossessed prior to a chapter 13 bankruptcy. With Chapter 13 filings, the creditor must return vehicle to debtor, otherwise it is a violation of the automatic stay provisions. Now, a bankruptcy must be filed within 21 days of the repossession or the vehicle is sold at auction, and then it would be too late. But here, the Court, on appeal, ordered that the debtor’s motion for sanctions should be granted for failure to give the vehicle back timely.
7th Circuit Cases
Civil – Bankruptcy
Thompson v. General Motors Acceptance Corp., LLC, No. 08-2077 (5/27/09). Appeal, N.D. Ill., E. Div. Reversed and remanded.
Bankruptcy Ct. erred in denying debtor’s motion for sanctions based on creditor’s retention of debtor’s vehicle, which had been seized prior to debtor’s filing Chapter 13 bankruptcy petition. Debtor had equity interest in seized vehicle, and creditor’s refusal to return seized vehicle prior to debtor establishing ability to provide adequate protection of creditor’s interest in said vehicle violated Bankruptcy Code’s stay put provisions. As such, creditor was required to immediately return seized vehicle to debtor’s estate upon debtor filing Chapter 13 bankruptcy petition and then seek protection from Bankruptcy Court.