Chicago Bankruptcy Lawyers & Attorneys

Thompson v. GMAC 08-2077
Seventh Circuit Court of Appeals
Decided May 27, 2009

Once a debtor files for bankruptcy and requests his repossessed auto be returned, the auto creditor must first return the vehicle.  Afterward, the creditor can seek adequate protection and bring a motion to modify the stay.

No longer is the burden on the debtor to prove adequate protection prior to the creditor unilaterally deciding what adequate protection is.  No longer will the debtor have to file an adversarial complaint to recover the vehicle.

Prior to this ruling, in the Northern District of Illinois, it was the accepted standard procedure for a creditor to subjectively determine that the debtor had shown that it could provide adequate protection.  If there was a dispute, it was the debtor’s obligation to litigate the issue.

In the sixth, eighth, ninth and tenth districts, the procedure was just the opposite.  Thus, our circuit is now on board.  The vehicle belongs to the debtor and must be returned.  If not, sanctions can be awarded for violation of the automatic stay pursuant to 11 U.S.C. Sec. 362(k).

Side Note:

For as long as I have been practicing bankruptcy law, I could never understand why a debtor would have to file an adversary to recover his own property which was not yet sold at auction.  The Judges would state and I quote Judge Wedoff, “counsel, you have to bring an adversary for that.”  Well no longer, thanks to Thompson v. GMAC.  In fact, we can now seek sanctions when applicable.