Wrongful Reposession
About two days ago we had a Chapter 13 Debtor attend his meeting of creditors at the Chapter 13 trustee’s office. While he was at attendance of his meeting, his car creditor decided they would pick up his vehicle. It seems that since they thought it would be a sure thing him being at the Chapter 13 trustee’s office for this hearing, they would just go and pick it up. The problem with this is that it was wrong. When you are in an active Chapter 13 case, any creditor that holds collateral must obtain permission from the bankruptcy court prior to them picking up your or foreclosing on your items. What this creditor did was a violation of the bankruptcy protection that this debtor has obtained from the federal courts. The bankruptcy attorney had to file a motion to turnover the property because they did take the property without permission of the bankruptcy courts.
The proper process of a creditor to seek possession their collateral would be to file a motion to lift stay with the courts. Once the motion is filed the debtor’s attorney files a response to the motion letting the courts know if they plan on keep the collateral or letting the creditor have it back. Once the response is filed, most times an agreement is reached between the parties to keep the stay in place with exceptions, which the debtor must follow in order to keep their vehicle. If the debtor fails to follow these exceptions, the creditor can come and take their collateral without further notice after sufficient notification has been given to both the debtor and their attorney. If an agreement is not reached, then there will be a hearing before the Judge to have him make a decision or pass it out to another hearing for both parties to get the issue resolved.
If you have anything happen where a creditor takes your collateral and you question whether they are right or not, talk to your bankruptcy attorney and they will be able to assist you and help you understand if they did take the collateral wrongfully.
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