March 24, 2016

Situation:

  • Debtor filed for Chapter 7 Bankruptcy.Capture
  • Lender got relief from the stay and an order to allow them to repossess the car from Debtor.
  • Lender filed a 2-page motion asking the Court to approve their motion to have the Debtor physically return the car to the Lender.

Outcome:

  • Court denied the motion.
  • The Court stated that there is nothing in the bankruptcy code requiring a debtor to surrender collateral to a creditor.
  • When the Lender received stay relief and rights to regain the car, the car was no longer property of the estate (bankruptcy).
  • Lender can take whatever action as to such property as is permitted by applicable non-bankruptcy law.

Basically, the lender has to go out and get the vehicle and debtor is not required to bring the car to them.