If your car is repossessed before you file a chapter 13 bankruptcy case, you want it back. You want a chance to make your payments. In most of the country, if the car is repossessed before chapter 13 bankruptcy, the lender has to give it back so you can have your chance to keep your car in bankruptcy.
That wasn’t the way it worked in Chicago, however. In Chicago – the city of big shoulders – repo man would take your car before bankruptcy and you’d have a difficult time getting it back.
On May 27, 2009, the Seventh Circuit Court of Appeals, which covers Illinois, Indiana and Wisconsin said no to the repo man. The Court in Thompson v. GMAC said that the purpose of bankruptcy is to allow a debtor to reorganize his or her financial affairs So the debtor needs a chance to get his car back into his possession and to prove to the creditor that it can be “adequately protected” – meaning that the value of the car plus the payments won’t result in the creditor’s position getting worse than it was before bankruptcy. The debtor needs his car to get to work. And the debtor needs to work to make money to pay his bills.
So a debtor, particularly a debtor in chapter 13, has a chance to get his car back, go to work, pay his bills and move along with his life. Score one for the debtor. And tell the repo man to take a hike.
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