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Question: “If I file for bankruptcy, can a court order be given to return a car that was repossessed yesterday?”
Answer: Generally speaking, the answer is yes because of the Bankruptcy Code’s automatic stay in §362. But you will need to be sure that you have insured the vehicle since a creditor does no have to return collateral that was lawfully seized and is not adequately protected.
Once you file for bankruptcy, you should contact the creditor and explain that you have filed for bankruptcy. If the creditor does not voluntarily return the vehicle, then you will need to file a motion with the bankruptcy court to order the lender to return the vehicle.
The specific Bankruptcy Code sections I was referring to state in part:
§ 541. Property of the estate
(a) The commencement of a case under section 301, 302, or 303 of this title creates an estate. Such estate is comprised of all the following property, wherever located and by whomever held:
(1) Except as provided in subsections (b) and (c)(2) of this section, all legal or equitable interests of the debtor in property as of the commencement of the case.
§ 362. Automatic stay
(a) Except as provided in subsection (b) of this section, a petition filed under section 301, 302, or 303 of this title, or an application filed under section 5(a)(3) of the Securities Investor Protection Act of 1970, operates as a stay, applicable to all entities, of—
(3) any act to obtain possession of property of the estate or of property from the estate or to exercise control over property of the estate;
As you can see, when a bankruptcy is filed, an estate is created. The estate is comprised of all of the debtor’s property (even property not held by the debtor). Therefore, your car is part of the bankruptcy estate. The Bankruptcy Code further provides that the bankruptcy petition is a stay that prevents any party (including a creditor) from exercising control over the property of the bankruptcy estate. Thus, it is generally unlawful for a creditor to hold collateral.
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