Bankruptcy law is a federal law based on the policy of giving honest people a fresh start by eliminating most of their debt or by allowing them to repay their debt over an extended period of time.
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Bankruptcy law is a federal law based on the policy of giving honest people a fresh start by eliminating most of their debt or by allowing them to repay their debt over an extended period of time.
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.
With this bad economy, there are hundreds of thousands of consumers looking for “debt settlement” companies to consolidate their debt. The number of debt settlement companies has tripled in the last few years to 2,000. Most of them seem to be little or no help to consumers.
There was a couple that lived in West Virginia and needed help paying their debt. They had about $25,000 in credit card debt and looked for help on the internet. They found Credit Solutions of America. Credit Solutions of America took almost $4,000 of their money and they are now more in debt than before. The debt settlement companies are supposed to help the consumer and the creditor. They should be negotiating with the creditor so the consumer can start to pay off their debt. However, the creditors are not too happy because they sometimes have to settle for 40 cents on the dollar or less or receive nothing. Also, the consumer ends up paying about 15% of their total debt to the debt settlement company and they do little or nothing for them. The consumer ends up incurring a lot more debt because they are to stop making minimum payments, and since the debt settlement company doesn’t do anything, the credit card companies keep trying to collect. Their fees and interest charges don’t stop and they could file a lawsuit. There has been an increase in complaints to the state attorneys general’s office. In some states, the complaints have doubled, tripled, and even quadrupled since 2006. The couple in West Virginia finally received a full refund from Credit Solutions of America after inquiries from The New York Times. But, now one of their credit cards went from $8,000 to $18,000.
Chrysler had a deadline of April 30, 2009, to form an alliance with Fiat SpA and qualify for further U.S. aid. Fiat said they will form an alliance with Chrysler even if they file bankruptcy. But, no one will say if Chrysler will file. During this last week, Chrysler has almost accomplished a set of goals from the U.S. Treasury, which includes cost-saving labor agreements with its unions and a tentative agreement to eliminate the majority of its bank debt. The CEO said that they are still waiting to see whether the smaller lenders will accept that accord, which would provide $2 billion in cash in exchange for eliminating $6.9 billion in secured debt. The reason Chrysler might still file a bankruptcy is the prospect that some of their 46 lenders will balk at the cash offer. Chrysler, Fiat and the U.S. prefer to avoid bankruptcy. The Treasury loaned Chrysler $4 billion and would lend $6 billion more if they form an alliance with Fiat. General Motors Corp. is also going down the same path that will conclude on June 1. They offered 10% of GM’s ownership in exchange for giving up $27.5 billion in unsecured debt. As for the Chrysler-Fiat alliance, Fiat would take an initial stake of 20% in Chrysler in exchange for giving Chrysler access to their small-car technology. But, the Vice Chairman of Fiat said” Until Thursday, we won’t have many answers. We will have to wait.”
Posted by: Robert MacMillan
Tribune Co keeps the layoffs coming at its newspapers as the media company moves through the bankruptcy court process.
The Sun: Over in Baltimore, we heard from a source that 21 editors — including most of the metro editing staff and two top editorial editors — were herded into offices and told they had to exit the building immediately. Editor & Publisher confirms this report and says more cuts might be coming as soon as today. Perhaps there’s a strategy in there, but it’s hard to tell what it is when most big-city dailies have abandoned their ambitious overseas reporting goals, saying their real value to the community is their local reporting franchise. UPDATE: Looks like at least 40 more people are getting laid off as we speak, according to two sources I just spoke to at 3pm eastern.
Check out the latest video regarding Life After Bankruptcy.
Starting September 12, 2008, the court location for Lake County bankruptcy cases will change. The new address will be:
Park City Branch Court
Courtroom B
301 Greenleaf Avenue
Park City, IL 60085
The hearing times will not change from the schedule set at Lakehurst. As for the Lakekhurst courthouse, we hardly knew you; we will hardly miss you.
In case you didn’t feel it, the numbers will tell the story. The total number of U.S. bankruptcies filed during the first three months of 2008 increased 26.9 percent over the same period in 2007. This figure is provided by the Administrative Office of the U.S. Courts which released the information today. Specifically, the total filings reached 245,695 during the first calendar year quarter of 2008 (Jan. 1-March 31), surpassing the 193,641 new cases filed over the same period in 2007.
Although we are nowhere near the amount of filings pre-reform, the uptick demonstrates that people in America are struggling significantly with debt. The bankruptcy reform laws of October, 2005 were just a speed bump on the road to future bankruptcy filings. If the sub-prime mortgage meltdown wasn’t bad enough, the current economic conditions and supra $4.00 a gallon gas prices have begun to take their toll. I believe that it is only a matter of time before filings propel to near record levels again. It will probably occur during the 2010 fiscal year.
Additional Information At Chapter 7 Bankruptcy