The Third Circuit joined the Tenth and D.C Circuits to hold that, “upon notice of the debtor’s bankruptcy, a secured creditor’s failure to return collateral that was repossessed pre-bankruptcy petition is [not] a violation of the automatic stay,” because it is not an act “to exercise control over property of the estate.” In re Denby-Peterson, No. 18-3562 (3rd Cir. Oct. 28, 2019).
After Joy Denby-Peterson paid $9,200 over approximately eighteen months toward her used Chevy Corvette, the holder of the loan repossessed the vehicle due to her failure to pay the $2,491 down payment that the purchase agreement required. Ms. Denby-Peterson filed for Chapter 13 bankruptcy. She notified the creditor of the petition and demanded the return of the vehicle. When the creditor failed to return the vehicle, the bankruptcy court granted Ms. Denby-Peterson’s motion for turnover under section 542(a), but, finding that the creditor’s retention of the vehicle did not violate the automatic stay, denied her demand for sanctions. The district court affirmed. [Read more…] about No Stay Violation When Creditor Retains Vehicle Repossessed Pre-Petition