The 7^th Circuit Court of Appeals has decided that if a vehicle was repossessed prior to the filing of a Chapter 13 Bankruptcy then the Creditor must return the vehicle to the Debtor once the case has been filed and a request for the return of the vehicle has been made. The case is Thompson vs. GMAC (no cite). This is a small victory for Debtors and Debtor's attorneys. Prior to this decision, if a vehicle was repossessed prior to a Chapter 13, the Debtor would normally be required to provide "adequate protection" to the Creditor prior to having the vehicle returned. Adequate protection would usually require proof of full coverage auto insurance and sometimes require that the Debtor provide some assurance of being able to afford the Chapter 13 payments. Occasionally this would involve more than just negotiations and could result in elongated litigation or court battles.

With this decision, it is a certainty that the vehicle must be returned to the Debtor upon a request of the Debtor to the Creditor after the filing of a Chapter 13. That's it. Or is it? What the decision does not address is the typical requirement of Creditors to have the Debtor pay the repossession costs. Repossession costs could be the actual cost of repossession (the tow truck driver taking the vehicle), lot fees (fees charged by the place the vehicle is taken) and storage fees (daily fee for holding the vehicle). These fees could be anywhere from $200.00 to as much as $750.00 or $1,000.00. It would seem from the decision that these costs cannot stop the return of the vehicle but should be added to the claim of the Creditor.

Beware that this does not prevent the Creditor from filing an emergency motion for relief from the Bankruptcy protections to bring up the lack of adequate protection, ie. lack of insurance or lack of ability to make the payments. However, with the vehicle in the Debtor's possession works better for all, as the Debtor will be able to travel to and from work in order for the Chapter 13 to be successful. That is if the Debtor still has a job in this economy...we leave that for another day.

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