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Litton Loan Servicing, L.P. v. Dennis Schubert

Summarizing by Amir Shachmurove

In re Joy Denby Peterson

Case Type:
Case Status:
18-3562 (3rd Circuit, Oct 28,2019) Published
A secured creditor's refusal to return collateral repossessed pre-petition immediately upon notice of the debtor's bankruptcy filing does not constitute a violation of the automatic stay because failure to return the collateral does not constitute "an [ ] act ... to exercise control over property of the estate," as required under Section 362.
Procedural context:
Circuit Court affirmed the District Court's and Bankruptcy Court's decision that there had been no violation of the automatic stay.
Debtor financed the purchase of a 2008 Corvette through a retail installment contract with Pine Valley Motors, which then assigned the contract to an affiliate company. The Debtor defaulted under the contract, and the secured creditor repossessed the car. After the repossession of the car, the Debtor filed a Chapter 13 bankruptcy. The Debtor's counsel notified the secured creditor of the filing of the bankruptcy case and demanded that the Corvette be returned to the Debtor, warning that failure to do so would result in a violation of the automatic stay. The secured creditor did not comply with the demand and retained possession of the car. The Debtor filed a motion in the bankruptcy court for (1)turnover of the car and (2) sanctions against the secured creditor for violation of the automatic stay. The bankruptcy court granted the turnover relief, but denied the request for sanctions since there had been no violation of the stay.
McKee, Shwartz, and Fuentes

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