I am a secured creditor (I am a car dealer). Customer filed ch 7 and was discharged in 2013.He also filed 13 4 different times between 2006 and 2014 and cases were dismissed each time. He bought a car from me after his last 13 filing was dismissed in 2014. Now he has filed again and I have been following the case via public record and he failed to appear for a show cause hearing and the judge deemed him ineligible for a 13 discharge in this case due to his failure to appear and the dates of his last filing of bankruptcy. Can I repossess the car? Or, even though his debt will NOT be discharged in this case, is he still protected by stay?
There are only two ways you can repossess the car. You can file a motion to lift stay for a variety of reasons such as failure to provide adequate protection. If the court grants you motion and the automatic stay is lifted, then you can proceed to repossess the car in a manner that Michigan law permits.. The other way is to wait to the chapter 13 case is dismissed. Based on your reading of the docket entries that should be fairly soon. The debtor seems to one of those rare filers that abuse the system. Once the court dismisses the case you can repossess the car in a manner that Michigan law permits.
If the judges order ruled that the debtor was not eligible for a chapter 13 and dismissed the case, then the debtor is not protected by the automatic stay. However, if the judges order did not dismiss the case, then the stay is probably still in place. Without seeing the order, it is impossible for an attorney to give you a definitive answer.
If you are a car dealer that does "tote the note" or "buy here pay here" financing of the autos you sell, then you really should have a creditor's bankruptcy attorney on retainer. Normally, the people that buy and finance their vehicle with the lot that sells the auto are doing that because their credit score is very low. Generally a low credit score buyer is a poor credit risk and is much more likely to file a chapter 13 to lower the interest rate and restructure the auto loan. Thus, having counsel to help you make sure you exercise all of your rights, but not step over the line, seems to be a necessary part of business for you.
Answers and comments provided are for general discussion only. My comments are not to be considered legal advice and they do not create an attorney-client relationship.
The question of whether a stay applies depends on whether he had a prior case dismissed within the past year. If he had no dismissal, then the stay applies until the case is dismissed or discharged. If he had one dismissal, then he only has a 30 day stay from the date of filing, unless he files a motion to extend the stay. If he had two prior dismissals within the past year, then he has no stay and he would have to motion to the court to impose the stay. The dates of his filings and dismissals are important to know before proceeding with any repossession. Be careful before you proceed with a repossession. A motion to lift stay is best if you are unsure if the stay is in place. I encourage you to consult a bankruptcy attorney before you proceed as violations of stay can come with major sanctions.
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