BANKRUPTCY-DOES A CREDITOR VIOLATE THE AUTOMATIC STAY IN § 362(A)(3) OF THE BANKRUPTCY CODE BY REFUSING TO RETURN THE DEBTOR'S PROPERTY THAT WAS REPOSSESSED PRE-PETITION?

"20 Cowen and his son did as they were told, but three days later, he received a letter demanding that he pay off the loan within ten days.21 On August 6, 2013, which was the due date for the Peterbuilt, and, "within the ten-day [pay-off] period for the Kenworth," Cowen filed a petiti...

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Veröffentlicht in:The American journal of trial advocacy 2017-07, Vol.41 (1), p.433-440
1. Verfasser: Boyd, John Austin
Format: Artikel
Sprache:eng
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Zusammenfassung:"20 Cowen and his son did as they were told, but three days later, he received a letter demanding that he pay off the loan within ten days.21 On August 6, 2013, which was the due date for the Peterbuilt, and, "within the ten-day [pay-off] period for the Kenworth," Cowen filed a petition for Chapter 13 bankruptcy.22 After notifying the creditors of his filing, Cowen requested that his trucks be returned.23 Both creditors refused.24 One said he had transferred the truck's title to his own name, while the other said he sold the truck before the petition was filed.25 After both creditors refused to comply with Cowen's motion to turn over the trucks, Cowen filed a claim asserting that his creditors' actions were done in violation of the stay.26 The bankruptcy court dismissed the underlying bankruptcy case, because Cowen was no longer eligible for Chapter 13 reorganization since he could no longer use his trucks, and, therefore, had no income for repayment under Chapter 13.27 However, with regard to the separate adversarial proceeding, the court concluded that the creditors violated the stay by failing to return the trucks and awarded Cowen actual and punitive damages.28 On appeal, the district court essentially affirmed the bankruptcy court's order.29 Both creditors then appealed to the Tenth Circuit.30 Reversing the district court's ruling, the Tenth Circuit joined the minority view, holding that, "only affirmative acts to gain possession of, or to exercise control over, property of the estate violate 362(a)(3). "40 For federal court decisions consistent with the majority view that the act of passively holding onto an asset and not returning it to the debtor post-petition violates 362(a)(3), See Weber v. SEFCU (In re Weber), 719 F.3d 72, 81 (2d Cir. 2013) ("We . . . conclude that section 362 requires a creditor in possession of property seized as security-but subject to a state-law-based residual equitable interest in the debtor-to deliver that property to the trustee or debtor-in-possession promptly after the debtor has filed a petition in bankruptcy under Chapter 13."); Thompson v. Gen. Motors Acceptance Corp. (In re Thompson), 566 F.3d 699, 707-08 (7th Cir. 2009) ("All in all, the Supreme Court's reasoning in Whiting Pools, a fair reading of the plain language of the relevant Bankruptcy Code provisions, and the other considerations mentioned require us to find that upon the request of a debtor that has filed for bankruptcy, a creditor must first return an a
ISSN:0160-0281