Question of the Week

Posted: May 27, 2021 | Author: Cornerstone Compliance Team

bankruptcy compliance lending & collections

Question: If we’ve recently repossessed a vehicle, why do we have to give the vehicle back if the member files for bankruptcy?

Answer: Because of the automatic stay.

The automatic stay under 11 USC 362 requires that creditors cease, among other things, “any act to obtain possession of property of the estate or of property from the estate or to exercise control over property of the estate.” This includes the repossession of or attempt to sell a vehicle already repossessed. Failure to do so could result in court action and potential legal damages.

In any event, the automatic stay may be relieved through the court under certain circumstances. To do this, you should contact your preferred counsel to inquire about how to proceed. Do not assume this is an event you can weather without speaking to a bankruptcy attorney.