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On Thursday, January 14, 2021, the Supreme Court issued a ruling in City of Chicago v. Fulton, that holds “mere retention of property does not violate the [automatic stay in] §362(a)(3)”. Unlike in Florida, the other states in the 11th Circuit (Georgia, Alabama) require a vehicle which is repossessed but not yet sold, prior to the filing of bankruptcy, to be returned to the debtor.

This ruling looks to change this imposition on creditors; however, the Court left a lot of room for debtors to still challenge the retention of held property. They explicitly did not decide whether the turnover obligation in §542 would still require the creditor to return a vehicle in this specific situation, or whether or not §362(a)(4) and (a)(6) would apply as well. Either way, this is a step in the right direction for creditors.

If you have any questions on this ruling or any other bankruptcy matter, please do not hesitate to reach out to one of the attorneys at the Sorenson Van Leuven Law Firm.