§ 46.4     Prepetition Repossession, Levy, Sale or Conveyance
Cite as:    Keith M. Lundin, Lundin On Chapter 13, § 46.4, at ¶ ____, LundinOnChapter13.com (last visited __________).
[1]

Chapter 13 debtors often file bankruptcy after creditors with liens or security interests have foreclosed, repossessed their collateral or dispossessed the debtor. One of the major battlefields in Chapter 13 practice is the extent of a debtor’s power to recover property that was seized or repossessed before the petition. Whether the issue arises as a turnover action by the debtor1 or as an action against the creditor for sanctions for violating the automatic stay,2 the foundation questions are whether and to what extent the property involved remains property of the Chapter 13 estate. Although the debtor’s powers may vary with the kind of property involved,3 the threshold issues are basically the same whether the property is a car or a house and whether the prepetition action was repossession by a tow truck or foreclosure on the courthouse steps.

[2]

Determining a Chapter 13 debtor’s interest in property repossessed or foreclosed upon before the petition requires negotiating a nasty intersection between bankruptcy law and state law. The broad definition of property of the Chapter 13 estate in §§ 541 and 1306 of the Bankruptcy Code4 collides with state law and with contracts that reduce or eliminate a debtor’s interest in collateral upon repossession. Complicating the mix are the special turnover, avoidance and recovery powers in the Bankruptcy Code that empower debtors and trustees to recover possession of property of the estate that was lost before the petition.5 Overlaying all of this is the automatic stay that prohibits a lienholder from exercising control over property of the estate—even property of the estate that was lawfully repossessed before the petition.6 It is not surprising that there are great conflicts in the reported decisions addressing whether property of the Chapter 13 estate includes real or personal property that was repossessed, seized or foreclosed upon before the petition. Cars and houses have drawn the most attention. Almost all of the cases claim to be applying the Supreme Court’s holding in United States v. Whiting Pools, Inc.,7 although the conflicting outcomes hardly support those claims.

[3]

In 1983, in Whiting Pools the IRS seized a Chapter 11 debtor’s personal property pursuant to a tax levy before the petition but had not sold the property. The IRS contended that the bankruptcy estate was not entitled to possession of the property because the Service’s levy was complete before the petition and divested the debtor of all interest in the property. The Supreme Court disagreed, holding that the right of possession of the property seized by the IRS was itself property of the Chapter 11 estate and that § 542(a) of the Code required the IRS to deliver possession to the debtor. The Supreme Court observed that the Bankruptcy Code changed the IRS’s nonbankruptcy entitlements and drew into the bankruptcy estate the right of possession notwithstanding prepetition loss of that right under nonbankruptcy law. The Bankruptcy Code substituted for the right of possession other rights under bankruptcy law such as the right of adequate protection.8

[4]

Consistent with Whiting Pools, many courts have concluded that the Chapter 13 estate includes cars and other personal property repossessed before the petition but still in the possession of the lienholder.9 Other courts on essentially identical facts have either distinguished Whiting Pools or found state law to support the conclusion that personal property repossessed before the petition does not become property of the Chapter 13 estate.10 This fracture in the case law creates many difficult issues for Chapter 13 practice. If repossessed property remains property of the Chapter 13 estate, the repossessing creditor is obligated by § 542 to deliver possession to the debtor or the trustee.11 A creditor in possession of estate property that refuses to deliver possession to the debtor or trustee risks sanctions for violating the automatic stay.12

[5]

When repossessed property has been disposed of by the lienholder before the Chapter 13 petition, the courts generally recognize that no interest remains in the debtor to become property of the Chapter 13 estate.13 But a fake or defective prepetition sale leaves the debtor with rights against the repossessing creditor that become property of the Chapter 13 estate.14 When the property levied upon before the petition is future wages,15 cash, securities or negotiable instruments, the reported decisions are split whether the debtor retains a property interest at the filing of a Chapter 13 petition.16 If the prepetition repossession or sale is an avoidable transfer—for example, because it is a fraudulent conveyance under § 548 or preferential under § 54717—then the property (or its value) becomes property of the Chapter 13 estate under § 541(a)(3).18

[6]

The extent to which distressed real property becomes property of the Chapter 13 estate has been a perennial source of conflicting decisions notwithstanding congressional efforts to fix the problem. The issue comes before the bankruptcy court most often in the context of a Chapter 13 plan that proposes to cure defaults and maintain payments with respect to a mortgage that proceeded from default through acceleration to foreclosure sale before the petition.19 From the earliest days of the 1978 Code, the courts have struggled to determine when in the death spiral of a home mortgage the debtor ceases to have a sufficient property interest to cure defaults and reinstate the debt.20 This question has befuddled the courts because of the difficult interaction of state property law and the special power of Chapter 13 debtors to rehabilitate home mortgages that are in default at the petition.

[7]

Similar issues arise when real property has been subject to a prepetition tax sale. Most state laws preserve in the property owner only some sort of “right of redemption” after a tax sale. Many reported decisions conclude that only the right of redemption as defined by state law becomes property of the Chapter 13 estate.21

[8]

In 1994, Congress tried to fix the problem by amending § 1322(c)(1) to provide a limit on the power of a Chapter 13 debtor to cure defaults and maintain payments with respect to a home mortgage.22 The 1994 amendment to § 1322(c)(1) forbids a Chapter 13 debtor to cure defaults and maintain payments on a home mortgage if the residence was “sold at a foreclosure sale that is conducted in accordance with applicable nonbankruptcy law.”23 Whatever hope there was that the 1994 amendment would provide a bright-line test for the minimum property interest that must remain in the debtor at the petition to support rehabilitation of a mortgage in a Chapter 13 case has been dashed by the many conflicting decisions interpreting § 1322(c)(1).24

[9]

The existence of a “right of redemption” under state law or by contract has much confused the question whether property repossessed or foreclosed upon before the petition becomes property of the Chapter 13 estate. Typically, a right of redemption permits a borrower to acquire complete ownership and possession of collateral that was repossessed or foreclosed upon by tendering the amount provided by contract or by statute within a specified time. Under state law, redemption is sometimes the only right remaining in the borrower after repossession or foreclosure.25 And typically by contract or state law, redemption after repossession or foreclosure requires tendering a lump sum, not an offer of installment payments over time.26

[10]

But under the Bankruptcy Code, Chapter 13 debtors have many more rights with respect to lienholders. For example, even though a mortgage holder has declared a default and accelerated the note, and the debtor’s only contract remedy remaining is immediate payment in full, so long as a foreclosure sale has not been conducted, Chapter 13 empowers the debtor to cure defaults and reinstate the original maturity and other terms of the underlying mortgage contract.27 Put another way, state law plays an important role in defining the property rights that come into the Chapter 13 estate, but the Bankruptcy Code enhances those rights in many ways. The Chapter 13 estate contains both the property interests the debtor held under state law at the petition and the property interests that are redefined or enhanced by the Bankruptcy Code.

[11]

With respect to home mortgages, the stage of foreclosure at which the debtor files the Chapter 13 petition determines whether there is a sufficient property interest remaining in the debtor to support the power to cure defaults.28 The existence or nonexistence of a right of redemption under state law or by contract is not outcome determinative, unless redemption rights bear on whether the property has been “sold at a foreclosure sale . . . in accordance with applicable nonbankruptcy law” for purposes of § 1322(c)(1).

[12]

With respect to personal property, there is no Code section analogous to § 1322(c)(1). In other words, the Bankruptcy Code does not specify with respect to personal property the point in the deteriorating relationship between the debtor and the creditor after which the filing of the Chapter 13 petition does not trigger the rights and powers that debtors ordinarily have with respect to lienholders. Not unlike the home mortgage cases before the 1994 enactment of § 1322(c)(1), the courts are struggling with the question whether a right of redemption is a sufficient property interest in a car to bring the car into the Chapter 13 estate and empower the debtor to manage the lien notwithstanding prepetition repossession of the car. Some courts hold that the right of redemption itself comes into the Chapter 13 estate but no other interest in the car; thus the debtor can exercise the right of redemption consistent with state law or contract through the plan, but the debtor cannot use any other powers with respect to the car—for example, turnover of possession under § 542(a)29 or the ordinary power of a Chapter 13 debtor to modify the rights of secured claim holders.30 Other courts have concluded that so long as the car has not been sold by the repossessing creditor before the Chapter 13 petition, the right of redemption remaining in the debtor is sufficient property interest to bring possession of the car itself into the Chapter 13 estate.31

[13]

This is a very curious debate. It is almost as if Whiting Pools never happened or, at least, that Whiting Pools doesn’t say what it says. The Chapter 1132 debtor in Whiting Pools lost the right of possession before the petition. The debtor in Whiting Pools could not regain possession outside bankruptcy except by tendering payment in full—in other words, by “redeeming” the collateral from the IRS by payment in full.

[14]

But the Supreme Court resplendently did not say in Whiting Pools that the only right the debtor could exercise or “use” in the Chapter 11 case was payment in full (redemption!). Instead, the Supremes say in Whiting Pools that bankruptcy law gives the debtor a right of possession enforceable by turnover under § 542(a) and bankruptcy law substitutes for the IRS’s repossession other rights such as adequate protection. Cases concluding that state law or contract redemption rights somehow limit a Chapter 13 debtor’s right of possession and use of repossessed collateral are not being honest to the holding of the Supreme Court in Whiting Pools.

[15]

Litigation of the extent to which a repossessed car becomes property of the Chapter 13 estate has become quite a drama in the Eleventh Circuit. In 1998, in Charles R. Hall Motors, Inc. v. Lewis (In re Lewis),33 the U.S. Court of Appeals for the Eleventh Circuit shocked the Chapter 13 world by interpreting the Alabama Uniform Commercial Code to preclude a Chapter 13 debtor from recovering a car repossessed but not disposed of before the petition. The Eleventh Circuit found in Lewis that the debtor’s statutory right of redemption became property of the Chapter 13 estate but this property right only permitted the debtor to redeem by paying the balance of the car loan plus the creditor’s expenses within the short time allowed by state law. In other words, according to the Eleventh Circuit in Lewis, the right of redemption under Alabama law was not a sufficient property interest to support the Chapter 13 debtor’s exercise of the right recognized by the Supreme Court in Whiting Pools to require turnover of the car itself under § 542(a).

[16]

Whatever hope there was that Lewis would be limited to Alabama car loans and Alabama repossessions evaporated four years later when the Eleventh Circuit reached a similar outcome on different logic applying Florida law in Bell-Tel Federal Credit Union v. Kalter (In re Kalter).34 Kalter involved basically the same facts as in Lewis—car repossessed before the petition but not disposed of when the Chapter 13 petition was filed. This time the Eleventh Circuit looked hard at both the Florida Uniform Commercial Code and the Florida car title registration statute. The Eleventh Circuit acknowledged in Kalter that the Uniform Commercial Code did not cause title to pass to the repossessing creditor at the time of repossession, thus title came into the Chapter 13 estate. However, looking to the title registration laws, because the repossessing creditor could cause a “repossession title” to be issued after retaking possession, the car did not become property of the Chapter 13 estate and could not be recovered by the debtor. Same outcome as in Lewis but different reasoning.

[17]

Lewis and Kalter are troubling at many levels and have been intensely criticized both within and outside the Eleventh Circuit.35 The fairly typical Article 9 provisions addressed in Lewis preserve many rights of owners in property that has been repossessed by a lienholder—the right of redemption being just the most obvious. That very similar rights remaining in the debtor in Whiting Pools were found to be sufficient by the Supreme Court to drag the right of possession into the bankruptcy estate was lightly disregarded by the Eleventh Circuit in Lewis. Kalter acknowledges the substantial rights remaining in the debtor after repossession under the Florida Uniform Commercial Code then forfeits the bankruptcy entitlements that follow from those rights by sleight of hand under the Florida title registration law. Kalter misses altogether the point that once a substantial bundle of rights came into the Chapter 13 estate, the debtor can use powers such as § 542(a) to command the return of possession and permit continued use of the car by the debtor. The creditor’s right to seek a repossession title is stayed by the bankruptcy filing and can’t trump the debtor’s bankruptcy entitlements.

[18]

In any case, Lewis and Kalter are not the end of the story in the Eleventh Circuit. In the four years between Lewis and Kalter, bankruptcy courts and district courts within the Eleventh Circuit struggled to distinguish Lewis and to explain Whiting Pools to the Eleventh Circuit.36 One of these cases, interpreting Georgia law on facts indistinguishable from those in Lewis and Kalter, reached the Eleventh Circuit in 2003.

[19]

In In re Rozier,37 the bankruptcy court distinguished Lewis and Kalter and held under Georgia law the Chapter 13 debtor retained sufficient interest in a car repossessed before the petition to support recovery by the estate:

Georgia law can be distinguished from Alabama law and Florida law because Georgia case law supports the contention that Uniform Commercial Code . . . provisions do not automatically transfer title to a secured creditor upon repossession. Thus, in Georgia, repossession is not the same as change of ownership, nor does repossession transfer all of a debtor’s interest in the property to a secured creditor. . . . Kalter is based on Florida law . . . . [T]he default provisions in Georgia’s U.C.C. statute do not automatically transfer title to a secured creditor upon debtor’s default. . . . Georgia’s transfer of vehicle by operation of law statute substantially differs from the Florida statute of the same name. . . . [O]wnership is not terminated until the sale of the collateral by the secured creditor or by legal process, neither of which has happened in this case. Thus, the repossessed automobile, which had not been sold by the creditor pre-petition, is property of Debtor’s Chapter 13 bankruptcy estate.38

The U.S. District Court for the Middle District of Georgia affirmed Rozier, accepting the bankruptcy court’s reasoning that Kalter and Lewis were “inapposite.”39 Rozier then went to the Eleventh Circuit.

[20]

A panel of the Eleventh Circuit different from the panels in Lewis and Kalter took a fresh look at the property of the estate issue and blinked. Instead of filtering Georgia law through Lewis and Kalter, the Rozier panel certified the following question to the Supreme Court of Georgia:

Does legal title, or any other ownership interest that would give a right of possession, pass to that creditor under Georgia law upon repossession of an automobile subsequent to a debtor’s default on an automobile installment loan contract, or does such legal title or other ownership interest remain in the debtor?40
[21]

At this writing, the Georgia Supreme Court has yet to respond to the question certified in Rozier. Just speculating, it has to be said that it looks as though the Eleventh Circuit panel in Rozier was not altogether satisfied with the reasoning in Lewis and Kalter. It would have been too simple for the panel in Rozier to apply Lewis and/or Kalter to the similar Georgia UCC and car registration statutes. That Rozier was instead certified to the Georgia Supreme Court kindles hope that the Eleventh Circuit will reconsider whether a Chapter 13 debtor enjoys the rights in repossessed personal property that the Supreme Court acknowledged more than 20 years earlier in Whiting Pools.

[22]

The Fourth Circuit dared to go where the Eleventh feared without the side step to certification. In Tidewater Finance Co. v. Moffett (In re Moffett),41 the Chapter 13 case was filed later on the same day that Tidewater repossessed the debtor’s 1998 Honda Accord. Tidewater refused demands to return the car. The plan was a bit unusual in that the debtor proposed to cure the delinquency in car payments over the life of the plan and to continue making the regular monthly contract payments directly to Tidewater.42 Citing Lewis and Kalter, Tidewater argued that no property interest in the car came into the Chapter 13 estate; that Moffett could not “redeem” the car in installments as provided in the plan; and in the alternative, Moffett’s interest, if any, in the car should be determined by certification to the Virginia Supreme Court.

[23]

Citing Whiting Pools, the Fourth Circuit had no trouble finding that Moffett’s rights of redemption, notice and surplus under the UCC were “unquestionably ‘legal or equitable interests’ . . . that are included within [Moffett’s] bankruptcy estate.”43 Ironically, the Fourth Circuit cites Lewis and Kalter to support the proposition that Moffett’s statutory right to redeem became part of the Chapter 13 estate.

[24]

But the Fourth Circuit departs from Lewis and Kalter by holding that the Bankruptcy Code empowered Moffett to exercise the right of redemption as proposed in the plan:

Moffett’s reorganization plan does not provide for a lump sum payment of all outstanding debts. However, even if the purchase agreement and . . . the UCC require such acceleration of her debts upon default, the Bankruptcy Code entitles Moffett to restructure the timing of her payments in order to facilitate the exercise of her right of redemption. Section 1322(b)(2) of the Bankruptcy Code permits debtors to modify the rights of holders of secured claims. Section 1322(b)(3) also allows debtors to cure their defaults. Courts have recognized that the Bankruptcy Code permits debtors to restructure the timing of payments to secured creditors by de-accelerating debts, in order to allow debtors to regain collateral necessary to their financial recuperation.44
[25]

The Fourth Circuit in Moffett is true to Whiting Pools in all the ways that aren’t evident in the Eleventh Circuit’s cases. Although careful to confine its analysis to curing default with respect to the right of redemption under § 1322(b)(3), the Fourth Circuit citation of the power to modify in § 1322(b)(2) invites the question whether a Chapter 13 debtor can also modify the right of redemption for payment through the Chapter 13 plan. Moffett is a big step in the right direction for Chapter 13 debtors. Arguably, Moffett sets up a split in the circuits for purposes of Supreme Court review.

[26]

Good arguments can be made that Congress should step in and fix the problem with respect to personal property—and, it is hoped, with more precision than § 1322(c)(1). In the meantime, debtors and creditors might look to pre-1994 mortgage cases to see how their jurisdiction is likely to analyze the issue. For example, in the Sixth Circuit, with respect to home mortgages before the 1994 enactment of § 1322(c)(1), the rule was that until sale of the property at foreclosure, the Chapter 13 debtor retained a sufficient property interest to cure default and maintain payments through a Chapter 13 plan.45 The Bankruptcy Appellate Panel for the Sixth Circuit has adopted a similar rule for cars. In National City Bank v. Elliott (In re Elliott),46 the BAP concluded there was a sufficient property right to draw a car into the Chapter 13 estate if the petition was filed before sale of the car by the repossessing lienholder. The BAP rejected the car lender’s argument that only the right of redemption came into the Chapter 13 estate.

[27]

There is some consensus in the reported decisions that “bare legal title” is not a sufficient property interest to enable a Chapter 13 debtor to use an item of property. In this context, bare legal title is shorthand for the absence of rights in property other than a nominal claim because of the debtor’s name on a deed, title or other document of ownership. With respect to real property, if a foreclosure sale was completed before the Chapter 13 petition or, with respect to personal property, if a repossessing creditor sold the property before the petition, all that remains in the debtor is title to the property—the debtor has no equitable interest by law or by contract. Consistent with § 541(d),47 the courts hold that bare legal title is not expanded by the Bankruptcy Code into anything that the debtor can use or possess in the Chapter 13 case.48 When the debtor remains in possession of the real property at the petition, that possessory interest becomes property of the Chapter 13 estate notwithstanding a prepetition foreclosure, but physical possession unsupported by any other right, title or interest is of limited use to the debtor.49


 

1  See § 52.1 [ Turnover of Property ] § 50.1  Turnover of Property.

 

2  See § 75.1 [ Examples of Stay Violations, and Not ] § 62.1  Examples of Stay Violations, and Not.

 

3  See, e.g, the limitations on curing default with respect to a personal residence, discussed in § 130.1 [ Prepetition Defaults ] § 82.1  Prepetition Defaults—When is Property “Sold” at Foreclosure?.

 

4  See § 45.1 [ What Is Property of the Chapter 13 Estate? ] § 46.1  What Is Property of the Chapter 13 Estate?.

 

5  See §§ 52.1 [ Turnover of Property ] § 50.1  Turnover of Property, 53.1 [ Strong-Arm Powers, Statutory Liens, Preferences and Fraudulent Conveyances ] § 50.3  Strong-Arm Powers, Statutory Liens, Preferences and Fraudulent Conveyances and 60.1 [ Avoidance and Recovery Powers ] § 53.12  Avoidance and Recovery Powers.

 

6  See § 75.1 [ Examples of Stay Violations, and Not ] § 62.1  Examples of Stay Violations, and Not.

 

7  462 U.S. 198, 103 S. Ct. 2309, 76 L. Ed. 2d 515 (1983).

 

8  See § 48.1 [ Adequate Protection of Lienholders prior to Confirmation ] § 47.1  Adequate Protection of Lienholders before Confirmation.

 

9  See, e.g., Tidewater Fin. Co. v. Moffett (In re Moffett), 288 B.R. 721 (Bankr. E.D. Va. 2002) (Applying United States v. Whiting Pools, Inc., 462 U.S. 198, 103 S. Ct. 2309, 76 L. Ed. 2d 515 (1983), legal and equitable ownership of car remained with the debtor, subject only to creditor’s lien and remedies upon default; repossession divested the debtor of the present right to use the car but did not preclude recovery of possession in the Chapter 13 case.), aff’d, 289 B.R. 55 (E.D. Va. 2003), aff’d, 356 F.3d 518 (4th Cir. 2004); In re Rozier, 283 B.R. 810 (Bankr. M.D. Ga. 2002) (Distinguishing Charles R. Hall Motors, Inc. v. Lewis (In re Lewis), 137 F.3d 1280 (11th Cir. 1998), and Bell-Tel Federal Credit Union v. Kalter (In re Kalter), 292 F.3d 1350 (11th Cir. 2002), under Georgia law the debtor retains sufficient ownership in a car repossessed before the petition to trigger the automatic stay and provide the predicate for turnover.), aff’d, 290 B.R. 910, 913 (M.D. Ga.) (“[U]nder Georgia law, there is clear case law which provides that, under the default provisions of the UCC, title does not automatically pass to the creditor upon the debtor’s default, but instead, title remains with the debtor. . . . In light of this interpretation of Georgia’s version of Article 9 of the UCC, a debtor has more than the mere right to redeem after repossession by a creditor. More specifically, title remains with the debtor after repossession. As a result, the Eleventh Circuit’s holdings in Kalter and Lewis are inapposite.”), question certified, 348 F.3d 1305, 1307 (11th Cir. 2003); TranSouth Fin. Corp. v. Sharon (In re Sharon), 234 B.R. 676, 681 (B.A.P. 6th Cir. 1999) (Citing United States v. Whiting Pools, Inc., 462 U.S. 198, 103 S. Ct. 2309, 76 L. Ed. 2d 515 (1983), “possession of the Debtor’s car was property of the Chapter 13 estate from the moment of the petition” notwithstanding prepetition repossession by secured creditor. “Transouth repossessed the Debtor’s car before the Chapter 13 petition, but had not disposed of the car. In Whiting Pools, the IRS seized the debtor’s property pursuant to a tax levy before the petition but had not sold the property. Whiting Pools requires that the right to possess the Debtor’s car became property of this Debtor’s Chapter 13 estate.”); National City Bank v. Elliott (In re Elliott), 214 B.R. 148, 152 (B.A.P. 6th Cir. 1997) (Car surrendered before petition is property of Chapter 13 estate when petition is filed before sale and debtor retains statutory right of redemption under Ohio law. Applying Federal Land Bank of Louisville v. Glenn (In re Glenn), 760 F.2d 1428 (6th Cir.), cert. denied, 474 U.S. 849 (1985), “sale or other disposition . . . is the cutoff point of a Chapter 13 debtor’s power to modify a secured creditor’s claim under § 1322(b)(2).”); In re Johnson, No. 03-66402-PWB, 2003 WL 21703529, at *3 (Bankr. N.D. Ga. July 18, 2003) (unpublished) (Distinguishing Charles R. Hall Motors, Inc. v. Lewis (In re Lewis), 137 F.3d 1280 (11th Cir. 1998), and Bell-Tel Federal Credit Union v. Kalter (In re Kalter), 292 F.3d 1350 (11th Cir. 2002), “repossession of collateral in Georgia does not automatically transfer title to a secured creditor. . . . Under the principles of Whiting Pools, . . . repossession of Debtor’s vehicle did not terminate her ownership interest, and the car was property of her estate when she filed her chapter 13 petition.”); In re Sanders, 291 B.R. 97, 100–01 (Bankr. E.D. Mich. 2003) (Applying TranSouth Financial Corp. v. Sharon (In re Sharon), 234 B.R. 676 (B.A.P. 6th Cir. 1999), car repossessed but not disposed of before the petition remains property of the Chapter 13 estate and can be recovered by the debtor. “[R]epossession is merely a device to collect on the creditor’s claim, and . . . repossession does not transfer ownership to the creditor. . . . Until the creditor disposes of the property, the debtor remains the legal and equitable owner, subject only to the creditor’s debt collection remedies.” Citing United States v. Whiting Pools, Inc., 462 U.S. 198, 103 S. Ct. 2309, 76 L. Ed. 2d 515 (1983), bankruptcy court rejects argument that Chapter 13 estate includes right of redemption but not right of possession.); In re Bonner, 286 B.R. 917 (Bankr. M.D. Ga. 2002) (Distinguishing Bell-Tel Federal Credit Union v. Kalter (In re Kalter), 292 F.3d 1350 (11th Cir. 2002), car repossessed under Georgia law but not yet sold remained property of the Chapter 13 estate.); In re Robinson, 285 B.R. 732 (Bankr. W.D. Okla. 2002) (Applying United States v. Whiting Pools, Inc., 462 U.S. 198, 103 S. Ct. 2309, 76 L. Ed. 2d 515 (1983), debtor retained interest in car that became property of the Chapter 13 estate notwithstanding prepetition repossession.); In re Garcia, 276 B.R. 699 (Bankr. S.D. Fla. 2002) (Decided before Bell-Tel Fed. Credit Union v. Kalter (In re Kalter), 292 F.3d 1350 (11th Cir. 2002), under Florida law, Chapter 13 debtor’s ownership interest in a repossessed car became property of the Chapter 13 estate and will support turnover of possession of the car.); In re Shunnarah, 268 B.R. 657, 662–64 (Bankr. M.D. Fla. 2001) (“The Court respectfully disagrees with the district court decisions in [Bell-Tel Federal Credit Union v. Kalter (In re Kalter), 257 B.R. 93 (M.D. Fla. 2000)] and [Tidewater Finance Co. v. Chiodo, No. 6:00-CV0396-3A06-JGG (M.D. Fla. May 30, 2001)] . . . . The Court agrees with the Chiodo bankruptcy court’s holding that a debtor retains an ownership interest sufficient to constitute property of the estate in a repossessed vehicle until the repossessing creditor obtains a new certificate of title pursuant to Fla. Stat. § 319.28. Additionally, the Court finds that [Charles R. Hall Motors, Inc. v. Lewis (In re Lewis), 137 F.3d 1280 (11th Cir. 1998)] does not control.”); In re Clelland, 268 B.R. 539, 540–41 (Bankr. E.D. Ark. 2001) (Applying Texas law, title to car remained property of Chapter 13 estate notwithstanding prepetition repossession. “[N]either the debtor’s default or the exercise of the right to repossession, effected a transfer of title from the debtor to the credit union. . . . [I]n order for title of the property to pass after repossession, a sale must take place. . . . [P]roperty of the estate includes all interests of the debtor, even interests in property in which the debtor does not have the right of possession.”); In re Dash, 267 B.R. 915 (Bankr. D.N.J. 2001) (Car lease remained property of the estate because prepetition repossession did not terminate the lease under New Jersey Consumer Leasing Act.); Baker v. Health Servs. Credit Union (In re Baker), 264 B.R. 759, 763–64 (Bankr. M.D. Fla. 2001) (“The Court respectfully disagrees with the district court in [Bell-Tel Federal Credit Union v. Kalter (In re Kalter), 257 B.R. 93 (M.D. Fla. 2000)]. Under this Court’s interpretation of Florida law, a debtor’s ownership interest in a repossessed vehicle survives until a new certificate of title is issued pursuant to § 319.28. See In re Ratliff, 260 B.R. 526, 530 (Bankr. M.D. Fla. 2000) (adopting the reasoning of the bankruptcy court in [Tidewater Finance Co. v. Chiodo (In re Chiodo), No. 6:00-CV-396-3A06-JGG (M.D. Fla. May 30, 2001)]). If a new certificate of title to a repossessed vehicle is not issued by the petition date, then the surviving ownership interest is property of a debtor’s bankruptcy estate.”); Patterson v. Chrysler Fin. Co. (In re Patterson), No. 99-35259DWS, 00-0258, 2000 WL 1692838 (Bankr. E.D. Pa. Nov. 2, 2000) (Car repossessed before the petition but not sold by creditor becomes property of the estate under § 541, and the debtor’s right of possession is drawn into the estate by § 542(a) as interpreted by the Supreme Court in United States v. Whiting Pools, Inc., 462 U.S. 198, 103 S. Ct. 2309, 76 L. Ed. 2d 515 (1983).), after trial, 263 B.R. 82 (Bankr. E.D. Pa. 2001); In re Chiodo, 250 B.R. 407, 412 (Bankr. M.D. Fla. 2000) (Applying Florida law and distinguishing Charles R. Hall Motors, Inc. v. Lewis (In re Lewis), 137 F.3d 1280 (11th Cir. 1998), Chapter 13 debtor retains more than a minor interest in a car repossessed before the petition when the repossessing creditor has not applied for or received a new certificate of title; the repossessing creditor may have the right to sell the car under Florida law, but the repossessing creditor cannot transfer marketable title until a new certificate of title is issued. “Lewis is not controlling in this case. . . . Lewis rests exclusively upon an analysis of Alabama law that is not applicable in this case and that is very dissimilar from Florida law.”), rev’d sub nom. Tidewater Fin. Co. v. Chiodo, No. 6:00-CV0396-3A06-JGG (M.D. Fla. May 30, 2001); Greene v. Associates (In re Greene), 248 B.R. 583 (Bankr. N.D. Ala. 2000) (In a long, fascinating discussion of the errors of logic and law in Charles R. Hall Motors, Inc. v. Lewis (In re Lewis), 137 F.3d 1280 (11th Cir.), reh’g denied en banc, 149 F.3d 1197 (11th Cir. 1998), car repossessed but not disposed of before Chapter 13 petition remains property of the estate. Lewis is distinguishable on the facts based on the absence of a contract provision that retained title in the lender. Jim Walter Homes, Inc. v. Saylors (In re Saylors), 869 F.2d 1434 (11th Cir. 1989), not Southtrust Bank of Alabama, N.A. v. Thomas (In re Thomas), 883 F.2d 991 (11th Cir. 1989), is controlling.); In re Bunton, 246 B.R. 851 (Bankr. N.D. Ohio 2000) (Car that the debtor did not redeem, reaffirm or surrender in prior Chapter 7 case that was repossessed a few days before Chapter 13 petition became property of the Chapter 13 estate.); In re Nowell, 232 B.R. 370, 373 (Bankr. S.D. Ohio 1999) (Title to car remained in debtor and was property of the estate protected by the automatic stay notwithstanding prepetition repossession and contract for sale of car to unrelated third party. “Under Ohio law, an enforceable contract of sale also terminates a debtor’s right to redeem. . . . [T]hat the contract of sale . . . terminated the debtor’s right to redeem the car does not mean that the debtor lacked any interest in the car at the time of his bankruptcy filing. The vehicle was still titled to the debtor. Under 11 U.S.C. § 541(a)(1), therefore, that title interest, however limited it may be because of the termination of the debtor’s right to redeem, is still a legal interest which is property of the bankruptcy estate. [The repossessing creditor] was not free to exercise any control over that legal interest without first obtaining relief from the automatic stay.”); Nash v. Ford Motor Credit Co. (In re Nash), 228 B.R. 669, 673 (Bankr. N.D. Ill. 1999) (Under Illinois law, debtor retains sufficient property interest in a car repossessed before the petition to require turnover; however, creditor does not violate stay by refusing turnover until adequate protection is determined by the court after trial. Citing United States v. Whiting Pools, Inc., 462 U.S. 198, 103 S. Ct. 2309, 76 L. Ed. 2d 515 (1983), and distinguishing Charles R. Hall Motors, Inc. v. Lewis (In re Lewis), 137 F.3d 1280 (11th Cir. 1998), “here we look to Illinois law as the basis to discuss this debtor-plaintiff’s property interest in her repossessed vehicle. . . . ‘This court believes that the situation presented in this case falls squarely within Whiting Pools’ conclusion that until a sale has taken place, property seized pre-petition pursuant to a creditor’s provisional remedy remains property of the estate, and as such, is subject to the turnover requirements of § 5[42](a).’ . . . Therefore, Debtor can certainly attempt to vindicate her rights under § 5[42](a) in this proceeding if she can offer adequate protection to the Defendant.”); In re Iferd, 225 B.R. 501, 504–05 (Bankr. N.D. Fla. 1998) (Applying Florida law and distinguishing Charles R. Hall Motors, Inc. v. Lewis (In re Lewis), 137 F.3d 1280 (11th Cir. 1998), “under Florida law, a debtor retains title and other ownership interests in a repossessed motor vehicle until the creditor re-sells the vehicle. Here, TFCU only has possession of the vehicle, and Iferd has legal title. This interest is sufficient to make the vehicle property of the estate. . . . I direct TFCU to turn possession over to Iferd’s estate without further delay.”); Spears v. Ford Motor Credit Co. (In re Spears), 223 B.R. 159 (Bankr. N.D. Ill. 1998) (Distinguishing Charles R. Hall Motors, Inc. v. Lewis (In re Lewis), 137 F.3d 1280 (11th Cir. 1998), under Illinois law, debtor retains sufficient property interest in car repossessed before petition but not yet sold by the creditor that debtor can require turnover under § 542(a).); American Honda Fin. Corp. v. Littleton (In re Littleton), 220 B.R. 710, 714–15 (Bankr. M.D. Ga. 1998) (Debtors’ property interest in car repossessed in Georgia the day before the petition but subject to a security interest created under Alabama law is determined by Georgia law, thus Charles R. Hall Motors, Inc. v. Lewis (In re Lewis), 137 F.3d 1280 (11th Cir. 1998), does not control; under Georgia law, debtor retained a sufficient property interest to support recovery and use through a Chapter 13 plan. The retail installment contract provided that Alabama law would apply. Applying Georgia decisions, “the court concludes that . . . a Georgia court would find that Georgia law applies with respect to a car repossessed in Georgia when the parties have not specified in a contract that another state’s law would apply to determine rights after repossession. . . . [U]nder Georgia law upon repossession a creditor acquires the right of possession, but not absolute title. As a result, a debtor retains a title interest in the vehicle. . . . Furthermore, the court finds that this interest is sufficient to make the vehicle property of the estate.” Upon providing adequate protection, debtors will be entitled to turnover.); In re Pluta, 200 B.R. 740, 742 (Bankr. D. Mass. 1996) (Car repossessed prepetition remains property of the Chapter 13 estate notwithstanding that Massachusetts law only gives the debtor a right of redemption after default, acceleration, and repossession. “Chrysler had not disposed of the Collateral, entered into a contract for its disposition, or gained the right to retain the Collateral in satisfaction of the Debtor’s obligation. . . . [A]s of the Petition Date, the Debtor retained the right to redeem his Jeep. More importantly, as of the Petition Date, the Debtor remained title holder and owner of the Jeep. Thus, the Jeep constitutes property of the estate under § 541 of the Code.” Citing United States v. Whiting Pools, Inc., 462 U.S. 198, 103 S. Ct. 2309, 76 L. Ed. 2d 515 (1983), debtor can manage the claim secured by the Jeep through a Chapter 13 plan, but court reserves turnover pending a hearing on the creditor’s motion for stay relief.); In re Young, 193 B.R. 620, 621 (Bankr. D.D.C. 1996) (Prepetition repossession of the debtor’s car did not terminate the debtor’s title, thus the car became property of the Chapter 13 estate. “The mere seizure of the vehicle did not suffice to destroy the debtor’s title as long as the debtor had a right to redeem.” Car lender did not violate the automatic stay by refusing to turn over the car pending the debtor’s providing adequate protection. Lender was entitled to maintain the status quo postpetition.); Robinson v. Ford Motor Credit Co., 36 B.R. 35 (Bankr. E.D. Ark. 1983) (Citing United States v. Whiting Pools, Inc., 462 U.S. 198, 103 S. Ct. 2309, 76 L. Ed. 2d 515 (1983), automobile repossessed by creditor remains property of the estate and is subject to turnover under § 542.). Accord Coleman v. Grand Nat’l Bank (In re Coleman), 229 B.R. 428 (Bankr. N.D. Ill. 1999); In re Jackson, 142 B.R. 172 (Bankr. N.D. Ohio 1992); Associates Commercial Corp. v. Attinello, 38 B.R. 609 (Bankr. E.D. Pa. 1984); Tektronix Employees Fed. Credit Union v. Title, 37 B.R. 173 (Bankr. D. Ariz. 1984); GMAC v. Radden, 35 B.R. 821 (Bankr. E.D. Va. 1983); Willis v. Parks Chevrolet, Inc., 34 B.R. 451 (Bankr. M.D.N.C. 1983).

 

10  See, e.g., Bell-Tel Fed. Credit Union v. Kalter (In re Kalter), 292 F.3d 1350 (11th Cir. 2002) (Applying Charles R. Hall Motors, Inc. v. Lewis (In re Lewis), 137 F.3d 1280 (11th Cir. 1998), cars repossessed before petition are not property of Chapter 13 estate whether applying the Florida UCC or the Florida Certificate of Title statute.); Charles R. Hall Motors, Inc. v. Lewis (In re Lewis), 137 F.3d 1280, 1284 (11th Cir. 1998) (Right of redemption with respect to car repossessed under Alabama Uniform Commercial Code is insufficient interest to render the car property of Chapter 13 estate. Car was repossessed before the petition. Debtors “did not retain title, possession or any other functionally equivalent ownership interest in the repossessed automobile. . . . [W]e readily conclude that Elgin Lewis’s statutory right of redemption in the automobile became ‘property of the estate’ . . . . As such, the Lewises’ Chapter 13 estate, through the trustee, could exercise or ‘use’ this right just as Elgin Lewis could have. . . . We are not convinced, however, that the mere existence of the estate’s ability to redeem the automobile renders the automobile itself ‘property of the estate,’ at least to the extent that it should be turned over pursuant to 11 U.S.C. § 542(a). In accordance with state law, one must take certain affirmative steps to change the otherwise dormant right to redeem repossessed collateral into a meaningful ownership interest. As relevant to this case, the trustee had to ‘tender[ ] fulfillment of all [secured] obligations’ plus expenses to exercise the estate’s right of redemption.”); Manufacturers & Traders Trust Co. v. Alberto (In re Alberto), 271 B.R. 223, 226–28 (N.D.N.Y. 2001) (Creditor that repossessed car before the petition did not violate automatic stay by selling the car after notice of bankruptcy because debtor did not seek turnover and only the right to redeem, not the right of possession, became property of the Chapter 13 estate. “Once the lawful repossession occurred, Alberto no longer had the right to possess the vehicle; he merely retained the right pursuant to § 9-506 to redeem it before the secured creditor disposed of it. Alberto filed the Chapter 13 petition after the lawful repossession. Accordingly, what became property of the bankruptcy estate was the interest the debtor, Alberto, had in the property: the right to redeem but not the right to possess. . . . Alberto sat on his rights under the bankruptcy code, which provided an avenue for him to effectuate a change in the right to possession of the vehicle from M & T Trust to the bankruptcy estate. . . . [I]t is axiomatic that state law rights are unaffected unless affirmative action is taken to bring property that is not ‘property of the estate’ at the commencement of the bankruptcy proceeding within the protection of the bankruptcy code. . . . Only Alberto’s right to redeem the vehicle was property of the estate absent a turnover order. Thus, M & T Trust’s retention and sale of the collateral pursuant to state law did not violate the automatic stay.”); In re Menasche, 301 B.R. 757, 760–61, 763 (Bankr. S.D. Fla. 2003) (Citing Bell-Tel Federal Credit Union v. Kalter (In re Kalter), 292 F.3d 1350 (11th Cir. 2002), upon repossession four hours before the Chapter 13 petition “[u]nder Florida law . . . the Debtors’ ownership interest pass[ed] to the secured creditor.” Although statutory right of redemption became property of the Chapter 13 estate, “‘the mere existence of the estate’s ability to redeem the automobile [does not render] the automobile itself “property of the estate,” at least to the extent that it should be turned over pursuant to 11 U.S.C. § 542(a).’ . . . Debtors’ proposed redemption through their chapter 13 plan does not satisfy the [Florida law] requirement to ‘tender fulfillment of all obligations secured by the collateral,’ and therefore the Debtors’ proposed redemption does not operate to bring the vehicle within the property of the bankruptcy estate, such that Debtors may compel its turnover.”); In re Coleman, No. 02-11603, 2003 WL 1562140 (Bankr. D. Vt. Mar. 20, 2003) (unpublished) (Because car was lawfully repossessed the day before the petition, only “redemptive right” became property of the Chapter 13 estate and repossessing creditor’s refusal to return the car did not violate the automatic stay.); Lamar v. Mitsubishi Motors Credit of Am., Inc. (In re Lamar), 249 B.R. 822 (Bankr. S.D. Ga. 2000) (Debtor retained no interest in leased car because contract was a true lease under Georgia law and the lessor terminated all of the debtors’ interest by repossession before the petition and mailing a notice of termination. Debtors were not entitled to turnover and lessor did not violate the automatic stay by selling the car after the petition because the car was not property of the estate.); Barringer v. EAB Leasing (In re Barringer), 244 B.R. 402, 407–08 (Bankr. E.D. Mich. 1999) (Disagreeing with TranSouth Financial Corp. v. Sharon (In re Sharon), 234 B.R. 676 (B.A.P. 6th Cir. 1999), truck repossessed before the petition does not become property of the Chapter 13 estate until, after an adversary proceeding, a bankruptcy court orders turnover. “[I]n this Court’s view, the majority in Sharon erred in asserting that under ‘[United States v. Whiting Pools, Inc., 462 U.S. 198, 103 S. Ct. 2309, 76 L. Ed. 2d 515 (1983)], possession of the Debtor’s car was part of the bundle of rights that become “property of the estate” at the Chapter 13 petition.’ . . . When a creditor’s prepetition seizure is lawful . . . the right of possession does not automatically become part of the estate by virtue of § 541(a)(1). . . . Rather, this right remains non-estate property until it is acquired by the trustee from the creditor.” Prepetition repossessing creditor does not violate the automatic stay by refusing to turn over the truck until after ordered to do so in an adversary proceeding.); Warren v. SouthTrust Bank (In re Warren), 221 B.R. 843, 845 (Bankr. N.D. Ala. 1998) (Applying Charles R. Hall Motors, Inc. v. Lewis (In re Lewis), 137 F.3d 1280 (11th Cir. 1998), debtor’s car was not property of the Chapter 13 estate because it was repossessed before the petition and under Alabama law, upon repossession, the lender “acquires both title to and the right to possession of the automobile and the automobile’s purchaser retains only a statutory right of redemption.” Because plan did not constitute “tendering fulfillment” for purposes of the Alabama redemption statute, debtor could not bring the automobile into the bankruptcy estate through the plan.); In re Fitch, 217 B.R. 286, 289–90 (Bankr. S.D. Cal. 1998) (Right to possession did not become property of the Chapter 13 estate because of prepetition repossession of debtor’s car; creditor did not violate the automatic stay by refusing to turn over the car after the petition. “Prior to the commencement of the case the Debtor had lost her right to possession of the car. . . . Since the Debtor retained the right to redeem under California law, the mere seizure of the vehicle did not destroy the Debtor’s title to the car. . . . Debtor retained title to the car, but the right to possess the car remained with Autoflow and did not become property of the estate. . . . Since the right to possess the car was not among the property interests which became property of the estate, Autoflow’s acts to exercise control over the right to possess the car did not violate the stay. Autoflow did not violate the automatic stay by retaining the car pending adequate protection.”); Weiser v. Pennsylvania Nat’l Bank & Trust Co., 44 B.R. 224 (Bankr. M.D. Pa. 1984) (Where debtors’ truck was repossessed and the 15-day redemption period under Pennsylvania law expired prior to the petition, no property interest remained in the estate.).

 

11  See § 52.1 [ Turnover of Property ] § 50.1  Turnover of Property.

 

12  See § 75.1 [ Examples of Stay Violations, and Not ] § 62.1  Examples of Stay Violations, and Not.

 

13  See In re Walker, 204 B.R. 812, 816 (Bankr. M.D. Fla. 1997) (Debtor had no interest in tractor trailer where in between two Chapter 13 cases, debtor defaulted on a Motor Vehicle Title Pledge Contract, and the title holder repossessed and sold the truck to a related entity. Debtor pledged the title to his 1979 Kenworth tractor trailer in exchange for a loan of $2,028.25 from National Title Loan, Inc., pursuant to a “Contract of Title Pledge.” Debtor remained in possession of the truck but was required by the contract to redeem the title within 30 days with accrued “redemption premium” of 22% of the loan amount per month. “Debtor signed his Contract of Title Pledge with National Title Loan, Inc. on February 27, 1996. Thus, but for the Debtor’s first bankruptcy filing on March 14, 1996, the redemption period would have expired on April 27, 1997. . . .  Debtor failed to redeem the truck prior to the expiration of the redemption period, and the Court finds that his interest in the property was terminated by law on May 14, 1996. National Title Loan, Inc. repossessed the truck on August 16, 1996. The repossession occurred after the expiration of the redemption period but prior to the debtor’s current bankruptcy filing. Thus, on the date of the repossession, the truck was not property of a bankruptcy estate and was not protected by the automatic stay.”); Duffy v. Big Al’s Autorama, Inc. (In re Duffy), 186 B.R. 503 (Bankr. D. Colo. 1995) (Creditor does not need relief from the stay because debtor’s car was repossessed and sold pursuant to a “purchase contract” four days before the Chapter 13 petition. No property interest remained in the debtor at the petition to trigger the automatic stay.).

 

14  See, e.g., Foote v. Smart Chevrolet Co. (In re Foote), Nos. 4:02-BK-11975 E, 4-02-AP-1050E, 2002 WL 32114561, at *3 (Bankr. E.D. Ark. May 14, 2002) (unpublished) (Repossessing creditor’s fake sale to itself cannot defeat the debtor’s rights under § 542. Prior to the petition, Motors Finance Company repossessed the debtor’s cars and auctioned them to Smart Chevrolet Company. Bankruptcy court found that Smart and Motors were alter egos. “[T]he creditor, Smart/Motors, had possession of property of the Debtor’s estate on the date Debtor filed bankruptcy, and the Debtor still had rights in that property. Under § 542(a), the Debtor’s property should have been returned to the Debtor upon her request. Rather than returning the property, and in reliance on ‘orchestrated’ invalid sales between the same entity, Smart/Motors transferred the vehicles from its possession following the filing of Debtor’s bankruptcy with knowledge of the Debtor’s bankruptcy. . . . [A] creditor cannot extinguish a debtor’s rights in property and avoid a turnover action in bankruptcy by trumping up a sale of the collateral to itself.”); In re Johnson, 289 B.R. 251 (Bankr. M.D. Ga. 2002) (Title pawnbroker that repossessed car prepetition is not entitled to summary judgment with respect to the debtor’s property rights in the car because title pawn contract failed to comply with Georgia law with respect to the term of the contract and the length of the grace period for redemption.). See also In re Kitts, 274 B.R. 491 (Bankr. E.D. Tenn. 2002) (Prepetition foreclosure sale did not remove residence from Chapter 13 estate because mortgage holder failed to follow default notice provisions of deed of trust and was unable to prove that it was assignee entitled to foreclose.); In re Cooper, 273 B.R. 297 (Bankr. D.D.C. 2002) (Equitable title to District of Columbia real property remained in debtor sufficient to invoke automatic stay when purchaser at prepetition nonjudicial foreclosure sale defaulted and trustees under deed of trust elected to resell the property after the Chapter 13 petition.).

 

15  See § 52.2 [ Relief from Garnishments ] § 50.2  Relief from Garnishments for discussion of relief from wage garnishment.

 

16  See United States v. Coghlan (In re Coghlan), 227 B.R. 304 (D. Ariz. 1998) (Distinguishing Whiting Pools, because the IRS received cash pursuant to its levy before the Chapter 13 petition, debtor had no legal or equitable interest in the cash, money did not become property of the estate, and debtor cannot compel the IRS to turn over the money.); Giaimo v. United States (In re Giaimo), 194 B.R. 210, 213 (E.D. Mo. 1996) ($14,198.18 in the debtor’s bank account levied upon by the IRS before the petition remains property of the Chapter 13 estate and is subject to turnover under § 542. “[A]n IRS levy on money in a bank account does not transfer ownership of the money to the IRS; rather, the debtor retains sufficient interest in the intangible property before it is surrendered to the IRS such that the money is properly included in the bankruptcy estate and therefore is subject to turnover under § 542.”); In re Gunthorpe, 280 B.R. 893 (Bankr. S.D. Ala. 2001) (Debtor had no interest in funds garnished before the petition because “condemnation” is automatic under Alabama law at the moment garnished funds are received by the clerk of the state court.); In re Steenstra, 280 B.R. 560 (Bankr. D. Mass. 2002) (Prepetition domestic relations support order did not remove a portion of the debtor’s wages from the Chapter 13 estate; § 1306(a)(2) contains no exclusion for wages that are payable for support of the debtor’s family.); Rodriguez v. First American Bank (In re Rodriguez), 278 B.R. 749, 753 (Bankr. N.D. Tex. 2002) (Bank account subject to prepetition garnishment became property of Chapter 13 estate because, under Texas law, service of writ of garnishment did not transfer title to garnished funds. “Unlike in some states, a judgment of garnishment in Texas is not self executing. . . . ‘[O]wnership of property subject to a judgment does not transfer until a writ of execution is issued and levied.’ . . . It is not the service of the writ of garnishment or the entry of a judgment of garnishment, therefore, that transfers title to garnished funds. Rather, service of the writ of execution transfers title in such funds. . . . Execution cannot issue before the expiration of thirty days from the time a final judgment is signed. . . . Debtors filed for bankruptcy protection . . . twenty-seven days after the state court signed the agreed judgment. . . . [A]s there was no execution . . . title to the garnished funds never passed . . . . Debtors’ legal and equitable interests in the garnished funds therefore became property of the bankruptcy estate.”); In re Raspberry, 264 B.R. 495, 499–500 (Bankr. N.D. Ill. 2001) (Prepetition wages subject to the garnishment of a judgment creditor are not property of the Chapter 13 estate and are not subject to turnover. Interpreting new Illinois Wage Deduction Act, “[O]nce the wage deduction order was entered pre-petition, the Debtor was divested of any claim to, or interest in, his pre-petition garnished wages. Morever, because he had no interest in those garnished wages, they did not become property of the bankruptcy estate under § 541 when he filed this case. . . . The pre-petition withheld wages . . . are not property of the bankruptcy estate pursuant to § 541 and should be turned over to the Judgment Creditor who holds a presumptively secured claim under § 506(b).” Avoidance or recovery of the prepetition wages under § 547 was not addressed because the debtor did not file an adversary proceeding or claim the wages exempt.); Boutilier v. United States (In re Boutilier), 196 B.R. 323, 327–28 n.9 (Bankr. W.D. Va. 1996) (Prepetition IRS levy on debtor’s IRA did not sever the debtor’s property right because the contents of the IRA were not yet sold by the IRS. “Whiting Pools stands for the proposition that when the IRS levies on assets of the debtor prepetition it elevates itself to the status of a prepetition secured creditor with special statutory liquidation rights under the Internal Revenue Code and that the arrival of bankruptcy prior to completion of the exercise of those special statutory rights permits the IRS to assert in the proceeding its lien status and to take steps in the proceeding to obtain relief to exercise its lien rights by sale. . . . [T]he more logical approach is to treat the property as property of the estate subject to the lien of the IRS. Then all parties may litigate in the bankruptcy proceeding their respective rights in and to the property.” The debtor’s right of redemption in the IRA may have significance because “the asset value to the debtor may be greater than its fair market value because of the tax consequences of its liquidation.”); In re Smiley, 189 B.R. 338, 341 (Bankr. E.D. Pa. 1995) (Prepetition IRS levy on debtor’s bank account divests debtor of all property interests in the money, thus debtor cannot enjoin the bank from transferring the accounts to the IRS after the petition. “When the IRS levies upon a saleable asset, the owner of the subject property retains two significant interests in the property prior to its tax sale. . . . [T]he right to redeem . . . also . . . the right to receive any surplus . . . . [A] levy on nonsalable assets, specifically cash or cash equivalents, is a different matter. After a levy on cash or a cash equivalent, the property owner no longer retains any significant interest in the cash or the cash equivalent. . . . [T]he rights of redemption or surplus are not applicable. . . . [S]ince the tax debt exceeds the funds in the Debtor’s bank account, the Debtor has no effective right of surplus. Accordingly, the Debtor did not retain any identifiable interest in her bank account after the IRS levy on the account. It follows that the funds did not become property of the subsequently created estate. Since the funds did not become property of the estate, the postpetition demand of the IRS that Sharon Savings Bank transfer Debtor’s funds to the IRS pursuant to a prepetition notice of levy does not violate the provisions of the automatic stay under 11 U.S.C. § 362(a).”); Hooper v. United States (In re Hooper), 152 B.R. 309, 310 (Bankr. D. Colo. 1993) (“The IRS levy of prepetition wages gave it a secured interest in those wages. It did not give the IRS title to those funds, however, and the IRS is required to turnover those funds to the estate if the Debtor provides adequate protection.” The debtor’s plan proposal to pay the IRS claim in full is not sufficient adequate protection to require the IRS to turn over the cash it seized prepetition from the debtor’s employer.); Sininger v. Fulton (In re Sininger), 84 B.R. 115 (Bankr. S.D. Ohio 1988) ($14,000 held by the clerk of a state court pursuant to an attachment remains property of the estate. Debtor can force turnover under § 542.).

 

17  See §§ 53.1 [ Strong-Arm Powers, Statutory Liens, Preferences and Fraudulent Conveyances ] § 50.3  Strong-Arm Powers, Statutory Liens, Preferences and Fraudulent Conveyances and 60.1 [ Avoidance and Recovery Powers ] § 53.12  Avoidance and Recovery Powers.

 

18  See, e.g., Bell v. Instant Car Title Loans (In re Bell), 279 B.R. 890 (Bankr. N.D. Ga. 2002) (Proof that prepetition forfeiture of car to pawnbroker was a fraudulent conveyance under § 548 would draw the car into the Chapter 13 estate through § 541(a)(3) notwithstanding prepetition repossession by pawnbroker; preliminary injunction is appropriate to prevent the pawnbroker from disposing of the car pending adversary proceeding under § 548. “[Section] 541(a)(3) . . . provides that property of the estate includes any interest in property that the trustee recovers under 11 U.S.C. § 550, among others; section 550, in turn, authorizes the recovery of property, or its value, from certain transferees if the transfer is avoidable under 11 U.S.C. § 548 . . . . If the vehicle is not timely redeemed, [Georgia law] provides for forfeiture of the borrower’s ownership interest. . . . Debtor’s interest in the vehicle automatically and by operation of law, and without any further act on anyone’s part, was forfeited to Pawnbroker. . . . Pawnbroker became the owner of a vehicle worth $16,735 (in Debtor’s estimation) based on Debtor’s failure to pay $5,300 within the grace period . . . . [I]f the transfer of the vehicle to Pawnbroker . . . was a fraudulent transfer avoidable under § 548, the vehicle is property of the estate.”).

 

19  See § 129.1 [ Overview: General Rules for Saving Debtor’s Home ] § 81.1  Overview: General Rules for Saving Debtor’s Home.

 

20  See § 130.1 [ Prepetition Defaults ] § 82.1  Prepetition Defaults—When is Property “Sold” at Foreclosure? and App. I.

 

21  See § 130.1 [ Prepetition Defaults ] § 82.1  Prepetition Defaults—When is Property “Sold” at Foreclosure?. See, e.g., Rodgers v. County of Monroe (In re Rodgers), 333 F.3d 64, 69 (2d Cir. 2003) (Under New York law, prepetition tax foreclosure sale extinguished the debtor’s legal and equitable interests notwithstanding that deed was delivered and recorded by the purchaser after the petition. Distinguishing United States v. Whiting Pools, Inc., 462 U.S. 198, 103 S. Ct. 2309, 76 L. Ed. 2d 515 (1983), “‘Congress intended to exclude from the estate property of others in which the debtor had some minor interest such as a lien or bare legal title.’ . . . Because Rodgers lost her legal and equitable interests in the property by virtue of the foreclosure sale, the property did not become property of the estate when the bankruptcy petition was filed.”); Tax 58 v. Froehle (In re Froehle), 286 B.R. 94, 98–103 (B.A.P. 8th Cir. 2002) (Applying Johnson v. First National Bank of Montevideo (In re Johnson), 719 F.2d 270 (8th Cir. 1983), cert. denied, 465 U.S. 1012, 104 S. Ct. 1015, 79 L. Ed. 2d 245 (1984), and Justice v. Valley National Bank, 849 F.2d 1078 (8th Cir. 1988), prepetition tax sale under Iowa law left only a right of redemption for the Chapter 13 estate; automatic stay did not toll the running of the right of redemption, and debtor’s failure to tender a lump sum before the redemption period expired precludes management of tax claim through plan.“‘[F]oreclosure extinguishes the mortgage . . . . [I]t is only the right of redemption, rather than the property itself, which passes into the bankruptcy estate if the redemption period has not expired at the time . . . the bankruptcy petition is filed.’ . . . [T]he same analysis can and should be applied in Iowa’s tax redemption context: once the Notice of the Right of Redemption is served upon the appropriate parties, the rights of the parties are fixed and the Bankruptcy Code does not toll the running of the redemption period, subject only to the additional 60 days granted pursuant to § 108(b).”); S.I. Sec. v. Dabal, No. 03 C 274, 2003 WL 21785625 (N.D. Ill. Aug. 1, 2003) (unpublished) (Right of redemption was only property interest that came into estate after prepetition tax sale; failure to redeem within redemption period plus 60 days under § 108(b) extinguished the debtor’s property interest altogether.); Smith v. Phoenix Bond & Indem., 288 B.R. 793 (N.D. Ill. 2002) (When Chapter 13 petition is filed after Illinois tax sale and before expiration of statutory redemption period, the right to redeem comes into the Chapter 13 estate as extended by § 108(b); when the debtor fails to redeem within the statutory redemption period as extended by § 108(b), the debtor cannot use § 1322(c)(1) or § 1322(b)(2) to manage the delinquent taxes.); In re Haynes, 283 B.R. 147, 155–56 (Bankr. S.D.N.Y. 2002) (Because the mandatory period for redemption of property from a tax sale expired before the petition, debtor had no interest in rental property notwithstanding that debtor remained in possession. “If a petition is filed while the redemption right is unexpired, the equitable right of redemption becomes a part of the bankruptcy estate. . . . The Debtor no longer has the right to redeem. The Mandatory Period expired on December 11, 2000. . . . [H]er petition was not filed until May 3, 2001. . . . [T]he Debtor had a possessory interest in the property. However, a possessory interest alone is ‘so tenuous as to represent merely a scintilla of an interest insufficient to warrant the continued protection of the automatic stay.’”); In re Murray, 276 B.R. 869 (Bankr. N.D. Ill. 2002) (Declining to follow In re Bates, 270 B.R. 455 (Bankr. N.D. Ill. 2001), when Chapter 13 petition is filed after delinquent tax sale under Illinois law and last day to redeem expires before confirmation, the redemption right was the only property interest that came into the Chapter 13 estate and the debtor cannot use § 1322(b)(2) to pay the delinquent taxes over the life of the plan.).

 

22  See § 130.1 [ Prepetition Defaults ] § 82.1  Prepetition Defaults—When is Property “Sold” at Foreclosure?.

 

23  11 U.S.C. § 1322(c)(1).

 

24  See § 130.1 [ Prepetition Defaults ] § 82.1  Prepetition Defaults—When is Property “Sold” at Foreclosure?.

 

25  See, e.g.,Canney v. Merchants Bank, 284 F.3d 362 (2d Cir. 2002) (Prepetition foreclosure judgment under Vermont strict foreclosure law left only equity of redemption for Chapter 13 estate; equity of redemption expired because period was not stayed by § 362 but was extended for 60 days by § 108(b).); Tax 58 v. Froehle (In re Froehle), 286 B.R. 94 (B.A.P. 8th Cir. 2002) (Prepetition tax sale under Iowa law left only a right of redemption for the Chapter 13 estate.); S.I. Sec. v. Dabal, No. 03 C 274, 2003 WL 21785625 (N.D. Ill. Aug. 1, 2003) (unpublished) (Right of redemption was only property interest that came into Chapter 13 estate after prepetition tax sale.); Smith v. Phoenix Bond & Indem., 288 B.R. 793 (N.D. Ill. 2002) (When Chapter 13 petition is filed after Illinois tax sale, only the right to redeem comes into the estate as extended by § 108(b).); In re Mangano, 253 B.R. 339, 345 (Bankr. D.N.J. 2000) (Applying New Jersey law, prepetition sheriff’s sale eliminated all of the debtor’s rights except for the right to redeem the property within the 10 days allowed by state law. “[T]he debtor’s property was sold at a sheriff’s sale on January 6, 2000. Pursuant to state law, the debtor had until January 16, 2000, or 10 days from the sheriff’s sale, within which to object and redeem the property. The debtor, however, failed to exercise that right. Instead, on January 14, 2000 the debtor filed a chapter 13 petition, and thereby extended the redemption period an additional 60 days. When the 60-day redemption period expired, the debtor had not yet exercised her right to redeem the property. As a result of that failure, therefore, the debtor has lost all title, right and interest in the property. Accordingly, the court finds that there is cause under Code section 362(d) to grant Homeside relief from the automatic stay.”); In re Dow, 250 B.R. 6, 8 (Bankr. D. Mass. 2000) (“[R]edemption rights, indeed the entire property interest, passed to the bankruptcy estate” when auctioneer’s hammer came down at 10:25 a.m., debtor filed Chapter 13 petition at 10:28 a.m. and the mortgage holder signed a memorandum of sale after the petition. The memorandum of sale was void and, accordingly, the debtor could cure default and reinstate the mortgage on the property. “[U]nder Massachusetts law redemption rights still exist until the execution of a memorandum of sale following the bidding process.”); In re Jones, 233 B.R. 799 (Bankr. E.D. Mich. 1999) (Only statutory right of redemption became property of the Chapter 13 estate when real property was foreclosed upon and sold prior to the petition. Because the confirmed plan did not redeem the property, purchaser at foreclosure sale is entitled to relief from the stay to evict the debtor.).

 

26  See, e.g., In re Menasche, 301 B.R. 757, 763 (Bankr. S.D. Fla. 2003) (“Debtors’ proposed redemption through their chapter 13 plan does not satisfy the [Florida law] requirement to ‘tender fulfillment of all obligations secured by the collateral,’ and therefore the Debtors’ proposed redemption does not operate to bring the vehicle within the property of the bankruptcy estate, such that Debtors may compel its turnover.”).

 

27  See 11 U.S.C. §§ 1322(b)(2), 1322(b)(3), 1322(b)(5) and 1322(c)(1), discussed in §§ 115.1 [ Curing Default, Waiving Default, Maintaining Payments and Combinations ] § 78.4  Curing Default, Waiving Default, Maintaining Payments and Combinations, 118.1 [ Most Home Mortgages Cannot Be Modified: § 1322(b)(2) and Nobelman ] § 79.1  Most Home Mortgages Cannot Be Modified: § 1322(b)(2) and Nobelman, 128.2 [ Providing for and Accounting for an Unprotected Mortgage: Modifying, Curing Default, Maintaining Payments and Combinations ] § 80.14  Providing for and Accounting for an Unprotected Mortgage: Modifying, Curing Default, Maintaining Payments and Combinations, 129.1 [ Overview: General Rules for Saving Debtor’s Home ] § 81.1  Overview: General Rules for Saving Debtor’s Home and 130.1 [ Prepetition Defaults ] § 82.1  Prepetition Defaults—When is Property “Sold” at Foreclosure?.

 

28  See § 130.1 [ Prepetition Defaults ] § 82.1  Prepetition Defaults—When is Property “Sold” at Foreclosure?. See, e.g., McLouth v. Advanta Mortgage Corp. (In re McLouth), 268 B.R. 244 (D. Mont. 2001) (Applying Montana law, foreclosure sale was complete when successful bidder paid the purchase price and trustee’s deed was delivered at 11:00 a.m.; Chapter 13 petition at 4:59 p.m. did not upset sale, and no interest in the property came into the Chapter 13 estate.); United States v. Bishop, 262 B.R. 401 (W.D. Tex. 2000) (Citing United States v. Whiting Pools, Inc., 462 U.S. 198, 103 S. Ct. 2309, 76 L. Ed. 2d 515 (1983), real property remained property of the Chapter 13 estate when foreclosure sale occurred at 10:00 a.m., but petition was filed at 8:03 a.m. on the same day.); St. Clair v. Beneficial Mortgage Co. (In re St. Clair), 251 B.R. 660 (D.N.J. 2000) (Bankruptcy court appropriately ordered that no future bankruptcy filed by the debtors would impose an automatic stay on mortgage holder when a sheriff’s sale took place before the Chapter 13 petition, the mortgage holder was the successful bidder and writ of possession was issued by state court before the petition.); In re Delong, No. 03-74355, 2003 WL 22989682 (Bankr. C.D. Ill. Dec. 16, 2003) (unpublished) (Real property was not property of Chapter 13 estate when foreclosure sale occurred at 9:30 a.m. on September 17, and hand delivered petition was filed at 10:24 a.m. on September 17; petition mailed September 12 was never received by the bankruptcy court and thus was never filed.); In re Grant, 303 B.R. 205 (Bankr. D. Nev. 2003) (Under Nevada law, foreclosure sale completed the day before Chapter 13 petition left no legal or equitable interest for the Chapter 13 estate.); In re Grassie, 293 B.R. 829 (Bankr. D. Mass. 2003) (At moment of Chapter 13 petition, purchaser at foreclosure sale had signed memorandum of sale but agent for creditor had not; under Massachusetts law, debtor retained equity of redemption because parties to foreclosure sale had not yet satisfied the statute of frauds, and stay prevented completion of sale.); In re Kent, No. 3:03-BK-11277, 2003 WL 21540996 (Bankr. E.D. Ark. July 1, 2003) (unpublished) (Because foreclosure sale was completed by execution of trustee’s deed before the petition, property was not property of Chapter 13 estate and debtor could not include mortgage in plan.); In re Jay, No. 02-21010, 2002 WL 31941459, at *5 (Bankr. D. Idaho Dec. 31, 2002) (unpublished) (Applying Idaho’s race-notice recording statute, mortgage holder’s purchase of debtor’s residence at foreclosure sale the day before the petition left only possession and bare legal title for the Chapter 13 estate.); In re Pellegrino, 284 B.R. 326 (Bankr. D. Conn. 2002) (Distinguishing Canney v. Merchants Bank, 284 F.3d 362 (2d Cir. 2002), because strict foreclosure under Connecticut law does not vest absolute title in the mortgagee until the unification of legal and equitable title at the expiration of all law days, filing a Chapter 13 case prior to the passage of all law days preserves the debtor’s interest in the property for purposes of curing default under § 1322(c)(1).); Martin v. USDA Rural Hous. Serv. (In re Martin), 276 B.R. 552 (Bankr. N.D. Miss. 2001) (Debtor lost all title to real property under Mississippi law upon default under the note and deed of trust before the petition; foreclosure sale cut off the debtor’s right of redemption notwithstanding that foreclosure deed was recorded after the petition.); In re Williams, 247 B.R. 449, 451–52 (Bankr. E.D. Tenn. 2000) (Residence did not become property of the Chapter 13 estate because foreclosure sale occurred two days before the petition and a trustee’s deed was executed an hour or two before the petition. Citing In re Johnson, 213 B.R. 134 (Bankr. W.D. Tenn.), modified after reh’g, 215 B.R. 988 (Bankr. W.D. Tenn. 1997), “‘Tennessee has consistently required the exchange of consideration and the satisfaction of the statute of frauds before a foreclosure sale is deemed final.’ . . . Under Tennessee law, ‘the fall of the auctioneer’s hammer is not alone sufficient to satisfy the statute of frauds requirement.’ . . . Satisfaction of the statute of frauds . . . requires a writing which evidences ‘“an existing and binding contract.”’ . . . Execution of a written contract satisfies the statute of frauds . . . . [R]ecording is not necessary.”); In re Hernandez, 244 B.R. 549, 552–53 (Bankr. D.P.R. 2000) (Because mortgage foreclosure sale was completed under Commonwealth law prior to the Chapter 13 petition, debtor does not have an interest in the underlying real property and the purchaser is entitled to relief from the automatic stay. “[T]his Court has held that in a mortgage foreclosure sale, title to the property is transferred to the purchaser when the deed of judicial sale is executed. . . . [T]wo events must have occurred in order to consummate the judicial sale: the adjudication of the sale and the execution of the deed. . . . In the case at bar, the Property was sold at a public auction on June 11, 1999 . . . . [O]n July 7th, 1999, a deed of judicial sale was executed. . . . [T]itle to the Property was conveyed to the Movant on July 7th, 1999, the date when the deed of judicial sale was executed and conveyance of the Property was consummated. Consequently, the Debtor did not have an interest in the Property when he filed his petition for bankruptcy on November 2nd, 1999.”); In re Verdi, 244 B.R. 494 (Bankr. M.D. Ga. 2000) (Installment land sales contract under Georgia law is most like a “bond for title”; because seller had not foreclosed by any legal proceeding prior to the Chapter 13 petition, debtor retained an interest in the property notwithstanding prepetition default in payments.).

 

29  See § 52.1 [ Turnover of Property ] § 50.1  Turnover of Property.

 

30  See above in this section. See, e.g., Manufacturers & Traders Trust Co. v. Alberto (In re Alberto), 271 B.R. 223, 226 (N.D.N.Y. 2001) (“Once the lawful repossession occurred, Alberto no longer had the right to possess the vehicle; he merely retained the right . . . to redeem it before the secured creditor disposed of it.”); In re Menasche, 301 B.R. 757 (Bankr. S.D. Fla. 2003) (Citing Bell-Tel Federal Credit Union v. Kalter (In re Kalter), 292 F.3d 1350 (11th Cir. 2002), under Florida law, statutory right of redemption became property of the Chapter 13 estate, but car itself is not property of the estate, and debtor cannot use turnover under § 542(a) to regain possession while payment is made through a Chapter 13 plan.); In re Coleman, No. 02-11603, 2003 WL 1562140 (Bankr. D. Vt. Mar. 20, 2003) (unpublished) (Because car was repossessed the day before the petition, only right of redemption became property of the Chapter 13 estate, and repossessing creditor can refuse to return the car to the debtor.); Warren v. SouthTrust Bank (In re Warren), 221 B.R. 843 (Bankr. N.D. Ala. 1998) (Applying Charles R. Hall Motors, Inc. v. Lewis (In re Lewis), 137 F.3d 1280 (11th Cir. 1998), because debtor’s car was repossessed under Alabama law before the Chapter 13 petition, only the debtor’s right of redemption became property of the estate; proposed plan did not constitute “tendering fulfillment” for purposes of the redemption statute, and thus the car was not brought back into the estate by the plan.); Dunlap v. Cash Am. Pawn (In re Dunlap), 158 B.R. 724 (M.D. Tenn. 1993) (Debtor’s right to redeem personal property in the context of a pawn transaction did not become property of the Chapter 13 estate because right of redemption expired before the filing of the petition. Even where the debtor filed Chapter 13 before expiration of the redemption right, the debtor’s only remedy was to exercise the right of redemption within the period provided by contract or state law, as extended by § 108. Court does not explain why § 1322(b)(2) is neutralized in the context of a pawn of personal property.).

 

31  See above in this section. See, e.g., National City Bank v. Elliott (In re Elliott), 214 B.R. 148, 152 (B.A.P. 6th Cir. 1997) (Statutory right of redemption under Ohio law is a sufficient property interest to bring a Chapter 13 debtor’s car into the estate notwithstanding that the car was surrendered to the lender before the petition and the lender has obtained a “repossession title” under Ohio law. Applying Federal Land Bank of Louisville v. Glenn (In re Glenn), 760 F.2d 1428 (6th Cir.), cert. denied, 474 U.S. 849, 106 S. Ct. 144, 88 L. Ed. 2d 119 (1985), “After receipt of a repossession title, but before sale of the collateral, a secured party cannot exercise unrestricted control over the repossessed vehicle due to the right of redemption, and accordingly does not have true ‘ownership,’ rights, despite holding a repossession title. . . . [W]e hold that the sale or other disposition under [Ohio law] is the cut off point of a Chapter 13 debtor’s power to modify a secured creditor’s claim under § 1322(b)(2) of the Bankruptcy Code.”); In re Sanders, 291 B.R. 97 (Bankr. E.D. Mich. 2003) (Car repossessed but not disposed of before the petition remains property of the Chapter 13 estate and can be recovered by the debtor.); In re Robinson, 285 B.R. 732, 738 (Bankr. W.D. Okla. 2002) (“[T]here is no dispute that Debtor’s right of redemption is property of the bankruptcy estate. . . . Debtor is not limited to the state law right of redemption . . . . Debtor also retains the rights conferred upon her by 11 U.S.C. § 1322(b)(2) to modify the rights of holders of secured claims, and by 11 U.S.C. § 1322(b)(3) to cure the default and thereby negate the effect of [acceleration].”); In re Jackson, 142 B.R. 172 (Bankr. N.D. Ohio 1992) (Debtor’s right under Ohio law to redeem car that was repossessed before the petition is a sufficient property interest to support turnover of the car under § 542 and to support the debtor’s right to manage the lien secured by the car through the Chapter 13 plan.).

 

32  Is this why courts seem to have forgotten United States v. Whiting Pools, Inc., 462 U.S. 198, 103 S. Ct. 2309, 76 L. Ed. 2d 515 (1983) in the Chapter 13 context?—Because it was a Chapter 11 case? This is a distinction without a difference. If anything, the definition of property of the estate is broader in Chapter 13 than in Chapter 11 because of 11 U.S.C. § 1306. See § 45.1 [ What Is Property of the Chapter 13 Estate? ] § 46.1  What Is Property of the Chapter 13 Estate?. The Whiting Pools analysis should apply in spades in a Chapter 13 case.

 

33  137 F.3d 1280 (11th Cir. 1998).

 

34  292 F.3d 1350 (11th Cir. 2002).

 

35  See, e.g., In re Sanders, 291 B.R. 97, 100–01 (Bankr. E.D. Mich. 2003) (Rejecting Bell-Tel Federal Credit Union v. Kalter (In re Kalter), 292 F.3d 1350 (11th Cir. 2002), and applying TranSouth Financial Corp. v. Sharon (In re Sharon), 234 B.R. 676 (B.A.P. 6th Cir. 1999) and National City Bank v. Elliott (In re Elliott), 214 B.R. 148 (B.A.P. 6th Cir. 1997), car repossessed but not disposed of before the petition remains property of the Chapter 13 estate and can be recovered by the debtor. Michigan law “does not state that the repossession alone divests a debtor of all ownership interests. . . . [T]he debtors maintain an equitable right of redemption. . . . [R]epossession is merely a device to collect on the creditor’s claim, and . . . repossession does not transfer ownership to the creditor. . . . Until the creditor disposes of the property, the debtor remains the legal and equitable owner, subject only to the creditor’s debt collection remedies.” Citing United States v. Whiting Pools, Inc., 462 U.S. 198, 103 S. Ct. 2309, 76 L. Ed. 2d 515 (1983), bankruptcy court rejects argument that Chapter 13 estate includes right of redemption but not right of possession.); Tidewater Fin. Co. v. Moffett (In re Moffett), 288 B.R. 721 (Bankr. E.D. Va. 2002) (Applying Virginia UCC and United States v. Whiting Pools, Inc., 462 U.S. 198, 103 S. Ct. 2309, 76 L. Ed. 2d 515 (1983), and rejecting Charles R. Hall Motors, Inc. v. Lewis (In re Lewis), 137 F.3d 1280 (11th Cir. 1998), and Bell-Tel Federal Credit Union v. Kalter (In re Kalter), 292 F.3d 1350 (11th Cir. 2002), “The debtor had both legal and equitable ownership of the vehicle, subject only to Tidewater’s lien and its remedies upon default. Those remedies include the right upon default to peacefully take possession of the collateral and to sell it after notice in a commercially reasonable manner. To be sure, lawful repossession of the vehicle deprives the debtor of perhaps the major incident of ownership, namely the immediate right to possession. But the immediate right of possession and ownership are not synonymous. . . . [B]oth the installment sales contract and the Virginia Uniform Commercial Code require that any surplus from the sale or other disposition of the collateral be paid to the debtor. Such a right is completely inconsistent with the notion that the debtor has no form of property interest in the collateral or at best only bare legal title. . . . [R]epossession, under the statutory scheme set forth in the UCC, merely divests the debtor of the present right to use the vehicle, but does not immediately extinguish the debtor’s title.”), aff’d, 289 B.R. 55 (E.D. Va. 2003), aff’d, 356 F.3d 518 (4th Cir. 2004); In re Robinson, 285 B.R. 732, 737–38 (Bankr. W.D. Okla. 2002) (Applying Oklahoma UCC and United States v. Whiting Pools, Inc., 462 U.S. 198, 103 S. Ct. 2309, 76 L. Ed. 2d 515 (1983), debtor retained interest in car repossessed before the petition but not yet sold, notwithstanding that lienholder had obtained a “repossession title.” “As of the petition date, Debtor’s rights included the right to notice of the sale of the repossessed collateral, the right to the surplus proceeds, if any, from the sale of the collateral, and the right to redeem the collateral prior to sale . . . . These are the very rights possessed by the debtor in the Whiting Pools case, where the Supreme Court found the debtor to be the owner of the property. . . . Eldorado’s interest in the Vehicle, as of the petition date, was therefore limited to enforcement of its security interest or lien . . . . Debtor retained an interest in the Vehicle, subject to Eldorado’s lien, and this interest was included among property of the bankruptcy estate. . . . [T]here is no dispute that Debtor’s right of redemption is property of the bankruptcy estate. . . . Debtor is not limited to the state law right of redemption and thus does not need any extension of time in which to exercise such right. Debtor also retains the rights conferred upon her by 11 U.S.C. § 1322(b)(2) to modify the rights of holders of secured claims, and by 11 U.S.C. § 1322(b)(3) to cure the default and thereby negate the effect of Eldorado’s acceleration clause.”).

 

36  See, e.g., In re Rozier, 283 B.R. 810 (Bankr. M.D. Ga. 2002), aff’d, 290 B.R. 910 (M.D. Ga.), question certified, 348 F.3d 1305 (11th Cir. 2003) (discussed below in this section); In re Johnson, No. 03-66402-PWB, 2003 WL 21703529, at *3 (Bankr. N.D. Ga. July 18, 2003) (unpublished) (Prepetition repossession did not end debtor’s property rights in car. “[In re Rozier, 283 B.R. 810 (Bankr. M.D. Ga. 2002), aff’d, 290 B.R. 910 (M.D. Ga. 2003),] and [In re Bonner, 286 B.R. 917 (Bankr. M.D. Ga. 2002)], correctly state the applicable law in this State. . . . [P]roperty that is in possession of a creditor to enforce a lien, but has not yet been disposed of, remains property of the debtor’s bankruptcy estate. . . . Under Georgia law, unlike the laws in Florida and Alabama as construed in [Bell-Tel Federal Credit Union v. Kalter (In re Kalter), 292 F.3d 1350 (11th Cir. 2002),] and [Charles R. Hall Motors, Inc. v. Lewis (In re Lewis), 137 F.3d 1280 (11th Cir. 1998)], repossession of collateral in Georgia does not automatically transfer title to a secured creditor. . . . Under the principles of [United States v. Whiting Pools, Inc., 462 U.S. 198, 103 S. Ct. 2309, 76 L. Ed. 2d 515 (1983)], . . . repossession of Debtor’s vehicle did not terminate her ownership interest, and the car was property of her estate when she filed her chapter 13 petition.”); In re Bonner, 286 B.R. 917, 918 (Bankr. M.D. Ga. 2002) (Distinguishing Bell-Tel Federal Credit Union v. Kalter (In re Kalter), 292 F.3d 1350 (11th Cir. 2002), car repossessed under Georgia law but not yet sold, with respect to which the debtor is still listed as owner on the certificate of title, remains property of the Chapter 13 estate. Citing In re Rozier, 283 B.R. 810 (Bankr. M.D. Ga. 2002), “ownership of a vehicle is not terminated unless the vehicle is sold by the secured creditor or by legal process. The Court is not persuaded the repossession by itself, is sufficient to terminate ownership under Georgia law.”); In re Garcia, 276 B.R. 699, 704–05 (Bankr. S.D. Fla. 2002) (Decided before Bell-Tel Federal Credit Union v. Kalter (In re Kalter), 292 F.3d 1350 (11th Cir. 2002), under Florida law, “a debtor’s ownership interest in a repossessed vehicle survives until a new certificate of title has been issued . . . . If a new certificate of title to a repossessed vehicle is not issued by the petition date, then the surviving ownership interest is property of a debtor’s bankruptcy estate . . . and the Creditors must turn over the Vehicle.”).

 

37  283 B.R. 810 (Bankr. M.D. Ga. 2002).

 

38  283 B.R. at 812–13.

 

39  290 B.R. 910, 913 (M.D. Ga. 2003).

 

40  In re Rozier, 348 F.3d 1305, 1307 (11th Cir. 2003).

 

41  288 B.R. 721 (Bankr. E.D. Va. 2002), aff’d, 289 B.R. 55 (E.D. Va. 2003), aff’d, 356 F.3d 518 (4th Cir. 2004).

 

42  “Curing default” in this manner through the Chapter 13 plan is the treatment allowed by 11 U.S.C. § 1322(b)(3). See § 115.1 [ Curing Default, Waiving Default, Maintaining Payments and Combinations ] § 78.4  Curing Default, Waiving Default, Maintaining Payments and Combinations.

 

43  356 F.3d at 522.

 

44  356 F.3d at 523 (emphasis added).

 

45  See Federal Land Bank of Louisville v. Glenn (In re Glenn), 760 F.2d 1428 (6th Cir.), cert. denied, 474 U.S. 849, 106 S. Ct. 144, 88 L. Ed. 2d 119 (1985).

 

46  214 B.R. 148 (B.A.P. 6th Cir. 1997).

 

47  See § 45.1 [ What Is Property of the Chapter 13 Estate? ] § 46.1  What Is Property of the Chapter 13 Estate?.

 

48  See Rodgers v. County of Monroe (In re Rodgers), 333 F.3d 64, 69 (2d Cir. 2003) (Apply New York law, prepetition tax foreclosure sale extinguished the debtor’s legal and equitable interests: “‘Congress intended to exclude from the estate property of others in which the debtor had some minor interest such as a lien or bare legal title.’ . . . Because Rodgers lost her legal and equitable interests in the property by virtue of the foreclosure sale, the property did not become property of the estate when the bankruptcy petition was filed.”); Boyd v. United States (In re Boyd), 11 F.3d 59, 60–61 (5th Cir. 1994) (Foreclosure sale 33 months before the petition, recording of trustee’s deed, and order of eviction severed all of the debtor’s rights in the real property. “Mississippi law provides that a valid foreclosure cuts off the mortgagor’s right of ‘redemption and any other rights in and to the property (all of which are transferred to the foreclosure sale proceeds), with the sole exception of rights perfected prior to the filing of the deed of trust under which the foreclosure sale is held.’ . . . On the date Boyd filed for bankruptcy he had no legal rights in the Property. His equitable rights, if any, were extinguished by the district court’s eviction order . . . . Having no viable interest in the Property at the time the Chapter 13 petition was filed, Boyd conveyed nothing to his bankruptcy estate.”); In re Jay, No. 02-21010, 2002 WL 31941459, at *5 (Bankr. D. Idaho Dec. 31, 2002) (unpublished) (Because mortgage holder purchased debtors’ residence at a foreclosure sale the day before the petition, “Debtors’ interest in the residence on the date of filing consisted of only (1) possession and (2) bare legal or record title”; purchaser was entitled to annulment of the stay to validate recording of trustee’s deed.); In re Moore, 267 B.R. 111 (Bankr. E.D. Pa. 2001) (Applying Pennsylvania law, bankruptcy estate contained only bare legal title because foreclosure sale was conducted between 10:00 a.m. and noon and Chapter 13 petition was time-stamped at 4:37 p.m.; that sheriff’s office designated the sale as “postponed” when it later learned of the bankruptcy petition does not neutralize sale.); In re Samaniego, 224 B.R. 154, 165 (Bankr. E.D. Wash. 1998) (Tax sale two weeks before Chapter 13 case divested the debtors of all but “bare legal title”; though recording of tax deeds two days after the petition was void, automatic stay was annulled to validate delivery and recording of the tax deed. “The debtors hold bare legal title to the lots sold at the tax sale. They retain no interest in this property of benefit to themselves or their estate. . . . [W]here the purchasers hold equitable title and the debtors retain only bare legal title, cause exists to allow the equitable owner to obtain the legal title.”); Davisson v. Engles (In re Engles), 193 B.R. 23 (Bankr. S.D. Cal. 1996) (Nonjudicial foreclosure sale four minutes before Chapter 13 petition did not divest the debtors of legal title. Bare legal title came into the Chapter 13 estate and is protected by the automatic stay. However, cause exists to lift the stay to allow the equitable owner to unite legal with equitable title.); Golden v. Mercer County Tax Claim Bureau (In re Golden), 190 B.R. 52 (Bankr. W.D. Pa. 1995) (Prepetition tax sale divested the debtor of all equitable rights under Pennsylvania law, thus only bare legal title became property of the Chapter 13 estate. Cause exists to lift the stay to allow the purchaser at the tax sale to gain legal title. The sale was not a fraudulent conveyance in light of BFP v. Resolution Trust Corp., 511 U.S. 531, 114 S. Ct. 1757, 128 L. Ed. 2d 556 (1994).).

 

49  See St. Clair v. Beneficial Mortgage Co. (In re St. Clair), 251 B.R. 660, 665–67 (D.N.J. 2000) (Although in possession of real property, debtor’s right to possession was terminated before the petition when state court issued writ of possession. “[U]pon issuance of a writ of possession, any possessory interest a mortgagor has vis-a-vis the purchaser, whether at tenancy at sufferance or otherwise, is expunged. . . . [W]e hold that ‘property from the estate’ encompasses property in the possession or control of the trustee or the debtor-in-possession, but only to the extent the trustee or debtor-in-possession has a good-faith colorable claim to possession or control of the property.”); In re Haynes, 283 B.R. 147, 156 (Bankr. S.D.N.Y. 2002) (Because period for redemption of property from a tax sale expired before the petition, debtor had no interest in rental property other than that debtor remained in possession; “a possessory interest alone is ‘so tenuous as to represent merely a scintilla of an interest insufficient to warrant the continued protection of the automatic stay.’”); In re Hernandez, 244 B.R. 549 (Bankr. D.P.R. 2000) (Because mortgage foreclosure sale was completed under Commonwealth law prior to the Chapter 13 petition, debtor does not have an interest in the underlying real property sufficient to overcome the purchaser’s right to evict the debtor from possession.); In re Fitzgerald, 237 B.R. 252, 258–59 (Bankr. D. Conn. 1999) (Bare possessory interest in real estate became property of the Chapter 13 estate protected by the automatic stay notwithstanding completed prepetition foreclosure and order for ejectment. “‘[A] mere possessory interest in real property, without any accompanying legal interest, is sufficient to trigger the protection of the automatic stay.’ . . . That is because a debtor’s bare possessory interest in realty is property of the estate that is protected by the automatic stay even if the realty itself is not property of the estate.” Action for ejectment is subject to the automatic stay because it is the “‘enforcement, against the debtor . . . of a judgment obtained before the commencement of the case.’”).