§ 50.1 — Turnover of Property

Revised: August 16, 2004

[1]

Repossession of the family car or of the washer and dryer is the sort of acute, in-your-face unpleasantness that inspires debtors to find a Chapter 13 lawyer. And getting back the car and the appliances is sometimes the most concrete and meaningful thing that counsel will do for the debtor during all the long years of the case. Recovery of estate property that is in the hands of creditors at the petition is the purpose behind § 542 of the Code. Unfortunately, the drafters of Chapter 13 were less than ideally specific about the use of § 542 by debtors.

[2]

Section 542 provides in part that “an entity . . . in possession, custody or control . . . of property that the trustee may use, sell or lease under § 363 of this title, or that the debtor may exempt under § 522 of this title, shall deliver to the trustee, and account for, such property or the value of such property.”1

[3]

In a Chapter 11 case, 11 U.S.C. § 1107(a) gives the debtor-in-possession most of the powers of a trustee. The analogue to § 1107(a) in a Chapter 13 case is 11 U.S.C. § 1303, which grants the Chapter 13 debtor “exclusive of the trustee, the rights and powers of a trustee under §§ 363(b), 363(d), 363(e), 363(f) and 363(l).”2 There is no specific provision of Chapter 13 that grants the Chapter 13 debtor the rights that a trustee would have under § 542. Nor is there any provision sharing with the Chapter 13 trustee the debtor’s exclusive right to use, sell, or lease estate property under § 363. In fact, § 1306(b) further isolates the Chapter 13 trustee from the use of estate property by providing that “the debtor shall remain in possession of all property of the estate” in a Chapter 13 case except as provided in a confirmed plan.3

[4]

Sections 542, 1303 and 1306 conspire to create a very odd situation. Turnover under § 542(a) is conditioned that the property to be recovered must be property that the trustee may use, sell or lease under § 363 or that the debtor may exempt. The predicate for the trustee’s use of § 542 is precluded in a Chapter 13 case by § 1303. However, the debtor’s exclusive power to use, sell and lease property of the Chapter 13 estate is not supported by a statutory grant of power to recover such property under § 542. Literal application of the turnover power in § 542 produces nonsense in a Chapter 13 case: delivery of property to the trustee will never be required because the Chapter 13 trustee is prohibited from using or possessing estate property, at least until entry of a contrary confirmation order; the Chapter 13 debtor is exclusively empowered to use, sell and lease estate property but cannot compel turnover except to protect an exemption under § 522, and then the exempt property is delivered to the trustee, who is forbidden to possess it.

[5]

There is no logic or policy to support this outcome. It is just a glitch in the Code. The best that can be said is that Congress seems not to have thought through thoroughly that Chapter 13 debtors need the turnover power in § 542 to fully enjoy the estate property that only the debtor can use, sell, lease or possess in a Chapter 13 case.

[6]

This glitch is hardly unique to turnover under § 542(a) in Chapter 13 cases. In Hartford Underwriters Insurance Co. v. Union Planters Bank, N.A.,4 the Supreme Court held that a creditor did not have standing to seek surcharge of collateral under § 506(c)5 because § 506(c) only empowers “the trustee” to recover the expenses of preserving a lienholder’s collateral. This issue has been litigated in Chapter 11 cases with respect to the standing of creditors or committees to bring avoidance actions that are available only to the trustee under the plain language of the Code.6 Chapter 13 practitioners are in good company when the debtor needs to command the turnover of estate property under § 542(a) and a resisting creditor challenges the debtor to find standing in the Code.

[7]

Courts don’t like statutory interpretation that leads to nonsense. Debtors in Chapter 13 cases have to be able to recover possession of cars, appliances, furniture and other estate property that they then use to care for their families and produce income to fund a plan. Notwithstanding less than clear statutory authority, there are a great many reported decisions in which Chapter 13 debtors have been awarded turnover of estate property pursuant to § 542—many of these decisions explicitly find that a Chapter 13 debtor has standing to seek turnover of property repossessed before the petition.7

[8]

There are a substantial number of reported decisions refusing turnover actions by Chapter 13 debtors, but most base the refusal on reasons other than the absence of statutory authority under § 542.8 Recovery of repossessed property in a Chapter 13 case raises difficult issues with respect to property of the estate under §§ 541 and 1306,9 and has an important interaction with the automatic stay in § 362.10 Most of the reported decisions denying a Chapter 13 debtor turnover of property do not reach the question whether § 542 is available to a debtor because they first conclude that the repossessed property is no longer property of the Chapter 13 estate.11

[9]

Even if the property to be turned over can be exempted by the debtor, the Code is not consistent with respect to whether a Chapter 13 debtor can accomplish turnover without assistance of the Chapter 13 trustee. Section 522(g) of the Code provides that a debtor “may exempt . . . property that the trustee recovers under section . . . 542.” Section 522(h) authorizes a Chapter 13 debtor to avoid transfers of property to protect exemptions,12 and § 522(h)(2) by incorporation of § 550 authorizes a Chapter 13 debtor to “recover” property or the value of property that could have been recovered by a trustee as an avoidable transfer if the debtor can exempt the property.13 But there is no reference to § 542(a) in § 522(h). Recovering property through an avoidance action under § 550 is an adversary proceeding with different substantive rules and procedure than apply to turnover. The Code does not seem to contemplate that a Chapter 13 debtor uses turnover with respect to even exempt property.

[10]

Logic and good policy arguments support the outcome reached by most courts that Chapter 13 debtors can use the turnover power in § 542(a) to recover estate property that the debtor can use, sell, lease or exempt. If the Chapter 13 debtor cannot use § 542(a) directly, then the trustee and the debtor can jointly use § 542(a) to recover property that the trustee immediately delivers to the debtor for the debtor’s use or exemption. Nothing in the Code prohibits this sort of cooperation, but the trustee’s participation in every turnover action in every Chapter 13 case is expensive and contributes nothing of value to the administration of Chapter 13 cases. Why would an individual Chapter 11 debtor be permitted to use § 542 to recover exempt and nonexempt property, but the same power be forbidden to a Chapter 13 debtor? If anything, because of the smaller economies involved, Chapter 13 debtors are in greater need of § 542 to recover cars and other items of personal property essential to the debtor’s performance under a plan. The Chapter 13 trustee has no stake in the recovery of property that only the debtor can use and only the debtor can exempt. There is no obvious source of compensation or reimbursement of expenses for the Chapter 13 trustee’s participation in § 542 actions that only benefit the debtor.14

[11]

Procedurally, in some jurisdictions, turnover of property under § 542 is routinely accomplished as motion practice. In many cases, the motion suffices to cause return of the property. In other jurisdictions, turnover can only be initiated by filing a complaint consistent with Bankruptcy Rule 7001(1).15

[12]

It is important for the debtor to act quickly to recover repossessed property. Creditors usually dispose of collateral soon after repossession, and a commercially reasonable disposition prior to the request for turnover can be fatal to the debtor’s efforts. Put another way, use of a recovery power may depend on whether the debtor retains a sufficient property interest at the petition to support use, sale or lease. Cars and other personal property repossessed but not disposed of before the petition typically can be recovered by Chapter 13 debtors because at the petition a significant property interest survives in the debtor.16 The introduction of a good-faith purchaser without notice can complicate turnover. Under § 542(c), a repossessing creditor without knowledge of the Chapter 13 case can transfer the debtor’s property without violating the automatic stay and the transfer is protected from a turnover action by the debtor.17

[13]

One reported district court opinion puts an exclamation point on the importance of acting quickly after the Chapter 13 petition to seek turnover of repossessed property. In Manufacturers & Traders Trust Co. v. Alberto (In re Alberto),18 the lender repossessed the debtor’s car before the Chapter 13 petition. The lender mishandled the notice of the Chapter 13 filing and sold the repossessed car after the petition. When the debtor sought damages for this sale in violation of the automatic stay, the district court concluded that the debtor’s failure to quickly demand turnover of the car was fatal to recovering damages:

[I]n keeping with the reasoning and holding of [United States v. Whiting Pools, Inc., 462 U.S. 198, 103 S. Ct. 2309, 76 L. Ed. 2d 515 (1983)], the property of Alberto’s bankruptcy estate included his right to redeem the vehicle but did not include a possessory interest in the vehicle. In order to draw a possessory interest in the vehicle into the estate the debtor must have taken an affirmative step to do so, such as move for a turnover order pursuant to § 542 or § 543. . . . [H]ad Alberto made a turnover motion prior to the vehicle being sold, the bankruptcy court would have had authority to order M & T Trust to turn over the vehicle. . . . Alberto sat on his rights under the bankruptcy code . . . . [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.19
[14]

Discussed in more detail elsewhere,20 the district court’s reading of United States v. Whiting Pools, Inc.21 in Alberto is odd, but the message for debtors is clear: turnover of a repossessed car can depend on whether the debtor acts quickly in the Chapter 13 case. Debtor’s counsel should immediately file a motion for turnover with respect to any personal property that the debtor intends to use or exempt that was repossessed before (or after) the petition.

[15]

When the property seized before the petition is cash or cash equivalents, the courts have struggled to determine whether the debtor retains a sufficient property interest to recover and use the cash.22 On the other hand, payments of money owing to the debtor or payments that are recoverable by the debtor generally are property of the estate and are subject to turnover under § 542(a).23 Discussed separately below,24 the turnover of wages that are subject to a prepetition garnishment sometimes works under § 542(a) but may also require filing an adversary proceeding to avoid the transfer effected by the garnishment.25

[16]

Adequate protection often becomes an issue in turnover actions because it is raised by the creditor as a defense or condition to turnover.26 The creditor in possession of estate property that refuses turnover based on a demand for adequate protection runs a substantial risk of sanctions for violating the automatic stay.27 As explained by the Supreme Court in Whiting Pools, § 542 of the Bankruptcy Code changes a lienholder’s rights and expectations with respect to estate property repossessed before the petition. The Code substitutes other rights, including adequate protection under § 361, for the right of possession pursuant to contract or state law. Turnover under § 542 is not conditioned that the debtor must first satisfy a lienholder’s subjective demands for adequate protection.28 “Rather than by withholding the seized property,” a repossessing creditor “shall deliver” estate property to the trustee and “seek protection” of its adequate protection rights “according to the Congressionally established bankruptcy procedures.”29

[17]

To warrant turnover under § 542, the debtor must demonstrate that the repossessed property may be used, sold or leased by the debtor30 or that the debtor may exempt the property under § 522.31 In a Chapter 13 case, the debtor carries this burden by demonstrating that the repossessed property is necessary to the debtor’s rehabilitation. If the property is a car, the debtor might show that the car is used to go to and from work. If the property is furniture, the debtor might demonstrate that the furniture will have to be replaced if not recovered to provide an ordinary living environment. The debtor’s right to use the property must be direct to support turnover under § 542(a): It has been held that a Chapter 13 debtor is not entitled to turnover of property that is owned or used by the debtor’s corporation.32

[18]

Creditors holding estate property that was repossessed before the petition from a Chapter 13 debtor face much jeopardy with respect to the automatic stay. As discussed in more detail elsewhere,33 noticing or conducting a postpetition sale of repossessed property violates the automatic stay and subjects the repossessing creditor to sanctions. Although not without controversy, many courts have held that a creditor violates the automatic stay by refusing to deliver estate property upon demand and tender of adequate protection by a Chapter 13 debtor.34 To avoid the risk of sanctions for violating the automatic stay, a creditor in possession of estate property repossessed before the petition should deliver the property to the debtor or to the Chapter 13 trustee. Simultaneously with delivery of possession, the creditor can file a motion for emergency relief from the automatic stay and a demand for adequate protection.35 Simply hanging on to the property and refusing delivery will likely provoke the debtor to combine an action for turnover under § 542 with a request for sanctions under § 362(h).36

[19]

When property of the Chapter 13 estate is in hands of a “custodian”37 at the petition, the turnover rules are somewhat different under § 543. Chapter 13 debtors are most likely to encounter a custodian when a car repossessed before the petition is still in the hands of the repo agent—the tow truck operator would be a custodian.

[20]

Section 543(a) requires a custodian with knowledge of the Chapter 13 case to hold the property. In the car repo example, the tow truck operator with knowledge of the Chapter 13 case is prohibited from transfering the car to the lender’s tow-in lot. The custodian is instead directed by § 543(b) to “deliver to the trustee any property of the debtor.”38 The custodian is also required to “file an accounting of any property of the debtor or proceeds . . . of such property that . . . came into the possession, custody or control of such custodian.”39 The U.S. Court of Appeals for the Fifth Circuit held in a Chapter 13 case that a county sheriff satisfied the § 543 turnover duties of a custodian by giving the debtor the keys to a convenience store seized before the petition, but the sheriff also had a duty to account for all inventory that now was property of the Chapter 13 estate.40

[21]

The turnover rights of a debtor in a Chapter 13 case may be limited by other provisions of the Bankruptcy Code and other federal statutes. For example, the (non-preferential) setoff rights of creditors preserved in § 55341 can be a defense to a demand for turnover.42 A turnover complaint by a Chapter 13 debtor against the IRS to recover an intercepted tax refund was refused based on a federal statute that forbids court review of IRS intercepts.43 Sovereign immunity has been recognized as a defense to a turnover complaint against a state.44


 

1  11 U.S.C. § 542(a) (emphasis added).

 

2  11 U.S.C. § 1303 (emphasis added). See § 44.1 [ Debtor Has Exclusive Control of Estate Property ] § 45.1  Debtor Has Exclusive Possession and Control of Estate Property.

 

3  11 U.S.C. § 1306(b) (emphasis added). See § 44.1 [ Debtor Has Exclusive Control of Estate Property ] § 45.1  Debtor Has Exclusive Possession and Control of Estate Property.

 

4  530 U.S. 1, 120 S. Ct. 1942, 147 L. Ed. 2d 1 (2000).

 

5  11 U.S.C. § 506(c) provides: “The trustee may recover from property securing an allowed secured claim the reasonable, necessary costs and expenses of preserving, or disposing of, such property to the extent of any benefit to the holder of such claim” (emphasis added).

 

6  See, e.g., Official Comm. of Unsecured Creditors of Cybergenics Corp. v. Chinery (In re Cybergenics Corp.), 304 F.3d 316 (3d Cir. 2002) (Only the trustee can bring a preference action.), vacated en banc, 330 F.3d 548 (3d Cir. 2003) (Under certain circumstances a committee or a liquidating trustee can bring preference actions also.).

 

7  Williams v. Citifinancial Mortgage Co. f/k/a IMC Mortgage Co. (In re Williams), 256 B.R. 885 (B.A.P. 8th Cir. 2001) (Bankruptcy court retained jurisdiction and should not have abstained from debtor’s motion for turnover of money given to a creditor pursuant to a bankruptcy court order that was reversed on appeal; debtor is entitled to turnover of money paid to a mortgage holder on account of its (mistaken) request for an administrative expense at dismissal before confirmation.); Transouth Fin. Corp. v. Sharon (In re Sharon), 234 B.R. 676, 687 (B.A.P. 6th Cir. 1999) (In an alternative holding, Chapter 13 debtor is the party to whom a creditor must turn over a car repossessed before the petition. “[I]n a Chapter 13 case, the Bankruptcy Code is explicit about the right of possession of property of the estate. Section 1306(b) states: ‘Except as provided in a confirmed plan or order confirming a plan, the debtor shall remain in possession of all property of the estate.’ . . . Section 1303 assigns to the Chapter 13 debtor, ‘exclusive of the trustee,’ many of the rights and powers of a trustee to use property of the estate under § 363. Section 1303 thus substitutes ‘the debtor’ for ‘the trustee’ with respect to the rights and powers cross referenced in § 1303. To the extent a Chapter 13 debtor can then use property of the estate under § 363, the debtor succeeds to the mandate in § 542(a) that compels delivery of property that is usable under § 363. TranSouth’s alternative reading produces an absurd result: § 542(a) would mandate delivery of a debtor’s car to a Chapter 13 trustee who is prohibited by § 1306(b) to possess the car and is prohibited by § 1303 to use, sell or lease the car. More reasonably, §§ 1303, 363, 542 and 362 work together to require and enforce the delivery of possession of the car to the Debtor in this Chapter 13 case.”); Eden v. Robert A. Chapski, Ltd. (In re Eden), No. 03 CV 00116, 2003 WL 21147830, at *2 (N.D. Ill. May 14, 2003) (“A Chapter 13 debtor may bring an action for turnover to recover funds or other assets belonging to his or her estate.”); Giaimo v. United States (In re Giaimo), 194 B.R. 210, 213–14 (E.D. Mo. 1996) (Sustains debtor’s § 542 action for turnover of $14,198.18 in the debtor’s bank account at prepetition levy by the IRS. “[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 Sanders, 291 B.R. 97 (Bankr. E.D. Mich. 2003) (Debtor is entitled to return of car that was repossessed but not disposed of before the petition.); Foote v. Smart Chevrolet Co. (In re Foote), Nos. 4:02-BK-11975 E, 4-02-AP-1050E, 2002 WL 32114561 (Bankr. E.D. Ark. May 14, 2002) (unpublished) (Debtor is entitled to turnover of cars repossessed before the petition when finance company faked a repossession sale to an alter ego in an effort to extinguish the debtor’s property rights in the Chapter 13 case.); Tidewater Fin. Co. v. Moffett (In re Moffett), 288 B.R. 721 (Bankr. E.D. Va. 2002) (Debtor is entitled to turnover of car repossessed but not disposed of before the petition because debtor can redeem in installments through the plan consistent with § 1322(b)(3).), aff’d, 289 B.R. 55 (E.D. Va. 2003), aff’d, 356 F.3d 518 (4th Cir. 2004); 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), and citing with approval In re Rozier, 283 B.R. 810 (Bankr. M.D. Ga. 2002), Chapter 13 debtor is entitled to turnover of a car repossessed under Georgia law but not yet sold, and with respect to which the debtor is still listed as owner on the certificate of title.); In re Robinson, 285 B.R. 732 (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), Chapter 13 debtor is entitled to turnover of car repossessed but not yet sold, notwithstanding the issuance of a “repossession title,” based on plan that pays for the car consistent with § 1322(b)(2) and (b)(3).); Bell v. Instant Car Title Loans (In re Bell), 279 B.R. 890, 899 n.10 (Bankr. N.D. Ga. 2002) (If the automatic, involuntary forfeiture of a car to a pawnbroker was a fraudulent conveyance, the car would be drawn into the bankruptcy estate by § 541(a)(3) and the debtor would have standing to seek turnover. “The Chapter 13 debtor has the rights of a trustee . . . to use, sell, or lease property . . . . Thus, a Chapter 13 debtor is entitled to assert turnover claims under 11 U.S.C. § 542(a).”); In re Garcia, 276 B.R. 699, 705 (Bankr. S.D. Fla. 2002) (Decided before Bell-Tel Federal Credit Union v. Kalter (In re Kalter), 292 F.3d 1350 (11th Cir. 2002), debtor is entitled to turnover of car replevined but not retitled before the petition. “[U]nder Florida law, the Debtor maintained a significant ownership interest in the Vehicle on the petition date despite the pre-petition replevy by the Creditor. The Creditor did not carry out the essential steps necessary to erase the Debtor’s ownership interest from the Vehicle prior to the bankruptcy filing. Accordingly, the Vehicle is property of the Debtor’s bankruptcy estate under § 541 and the Creditor must turn over the Vehicle.”); In re Clelland, 268 B.R. 539, 541 (Bankr. E.D. Ark. 2001) (Applying Texas law, title to car repossessed before the petition remains property of Chapter 13 estate, and “the debtor was entitled to turnover of that vehicle.”); In re Dash, 267 B.R. 915, 917 (Bankr. D.N.J. 2001) (Chapter 13 debtor has standing under § 542 to seek turnover of leased car repossessed before the petition. “The Chapter 13 debtor has standing to bring an action for turnover of property. 11 U.S.C. § 1303 affords the debtor ‘the rights and powers of a trustee under §§ 363(b), 363(d), 363(e), 363(f) and 363(l).’ . . . 11 U.S.C. § 363(b) and (d) allow the debtor, in the shoes of the trustee, to use, sell or lease property of the estate if she provides adequate protection to the lienholder. The debtor ‘succeeds to the mandate’ under 11 U.S.C. § 542(a) “that compels delivery of property that is ‘usable’ under 11 U.S.C. § 363.”); In re Jackson, 251 B.R. 597, 600–01 (Bankr. D. Utah 2000) (Creditor that repossessed the debtor’s car before the petition violates the automatic stay by demanding insurance and adequate protection as a condition for turnover. “Section 542(a) requires any entity in possession, custody, or control of property of the estate to turn over possession of the property. . . . [United States v. Whiting Pools, Inc., 462 U.S. 198, 103 S. Ct. 2309, 76 L. Ed. 2d 515 (1983),] is dispositive on the issue of whether the debtor’s right to turnover prevails over the interests acquired by a creditor’s prepetition levy. . . . A creditor’s duty to return a vehicle repossessed prepetition is not dependent on the receipt of adequate protection or proof of insurance.”); 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 the Chapter 13 petition became property of the Chapter 13 estate and is subject to turnover; creditor’s refusal to return the car violated the automatic stay. Bankruptcy court adopts the reasoning of Transouth Fin. Corp. v. Sharon (In re Sharon), 234 B.R. 676 (B.A.P. 6th Cir. 1999).); Lauria v. Titan Security Ltd. (In re Lauria), 243 B.R. 705, 708–09 (Bankr. N.D. Ill. 2000) (Chapter 13 debtor has standing after confirmation to seek turnover of payments due under a prepetition, noncompete agreement notwithstanding that the debtor’s former attorney has an equitable lien on those payments. “Chapter 13 debtors have been held proper parties to seek turnover of funds to the estate, as the Debtor seeks here. . . . [M]oney paid pursuant to a non-competition agreement is property of a debtor’s bankruptcy estate” and thus is subject to turnover under § 542. Payments under the prepetition noncompete agreement were “earnings necessary for the implementation of a Chapter 13 plan” and thus remained property of the estate after confirmation under § 1306(a)(2) notwithstanding the vesting effect of § 1327(b).); Brown v. Town & Country Sales & Serv., Inc. (In re Brown), 237 B.R. 316, 320 (Bankr. E.D. Va. 1999) (Car lender’s refusal to turnover repossessed truck unless paid in full violated stay and debtors are entitled to turnover. “Under the modern trend approach . . . Town & Country did not have an initial duty to return the vehicle to the debtors but rather was entitled to maintain the status quo until provided adequate protection for its property interest. . . . Town & Country has made it clear to the court that its officers intended to disregard bankruptcy code requirements by refusing to turnover the debtors’ vehicle absent full payment. . . . The creditor does not ask for adequate protection. Thus, the debtors, having provided in their plan for full payment of the creditor’s security and shown proof of insurance, were entitled to turnover of their truck. . . . Town & Country’s demand for full payment, coupled with its inaction and retention of the vehicle amount to an ‘exercise [of] control’ sufficient to find a violation of the automatic stay for failure to turnover the vehicle pursuant to 11 U.S.C. § 542(a). . . . Following the majority approach, the debtors were entitled to recover the truck upon filing bankruptcy. . . . The debtors, therefore, are entitled to turnover of the truck under either majority or minority approach.” Lender was sanctioned with $2,000 of attorney’s fees and punitive damages in the form of cancellation of its security interest in the truck.); Nash v. Ford Motor Credit Co. (In re Nash), 228 B.R. 669, 671–74 (Bankr. N.D. Ill. 1999) (Debtor has standing to seek turnover of car repossessed before the petition, but lender can refuse turnover without violating stay until court determines adequate protection. “[A] Chapter 13 debtor does have standing to bring an action for turnover. . . . Section 363 provides that a debtor may use sell or lease property of the estate so long as adequate protection is provided to the lien holder. . . . [T]he few cases that discuss the issue of a debtor’s authority to seek turnover under § 542(a) have recognized that authority. . . . ‘Section 1303 provides the debtor with the rights and powers that a trustee would have under Chapter 7 or the debtor in possession would have under Chapter 11. Consequently, the debtor is a proper party to seek turnover pursuant to § 542(a) because the property that he as debtor may use in the ordinary course of business.’ . . . Several opinions have determined that once a debtor in bankruptcy requests the return of property, the secured creditor must ordinarily turn the property over to the debtor. . . . However, other opinions have found that a creditor may retain possession of collateral repossessed pre-petition until adequate protection is provided or offered. . . . The latter viewpoint is better reasoned; the creditor’s property rights merit protection when it turns over possession of an automobile to the debtor. Thus, a creditor that repossesses estate property pre-petition is under no obligation to return the property post-petition until and unless adequate protection is provided. ‘Since the purpose of the automatic stay is to maintain the status quo that existed on the date of a debtor’s bankruptcy filing, the creditor should not have to turn over the vehicle absent assurance that its pre-petition position will be protected.’ . . . While Debtor has alleged that her plan will provide adequate protection for FMC’s interest, that plan has not yet been confirmed. The delay in confirming may reflect problems in plan feasibility to be explored at trial, and we must ascertain whether promised payments under Debtor’s Chapter 13 Plan have been made. Indeed, the level of protection required is an issue for trial. Is Debtor’s promise to maintain full-comprehensive vehicle insurance along with her plan to pay FMC’s allowed secured claim sufficient? As of what date should such protection be offered and measured? Does Debtor need to reimburse FMC for costs involved with the repossession and storage of her vehicle before and also after Debtor demanded the car back?”); In re Iferd, 225 B.R. 501, 504–05 (Bankr. N.D. Fla. 1998) (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.”); In re Berscheit, 223 B.R. 579, 581 (Bankr. D. Wyo. 1998) (Debtor entitled to turnover of semi-tractor repossessed before the petition. “Once a creditor is notified of a bankruptcy filing, the creditor has an affirmative duty to turn over property, even if lawfully taken. The language of § 542(a) is mandatory and requires that a creditor in possession of estate property that the trustee may use under section 363, shall turn that property over to the trustee. . . . This is a chapter 13 case in which the debtor operates a business. As such, the debtor has the right to use property of the estate in the ordinary course of business. . . . The creditor has the burden of requesting an order of adequate protection from the court if no agreement can be reached. . . . [T]o hold otherwise allows a creditor in possession of estate property to be the final arbiter of what is or is not adequate protection. . . . Newecourt was required to turnover the vehicle to Mr. Berscheit, or seek relief in the court, without demanding proof of business income or adequate protection payments.”); Spears v. Ford Motor Credit Co. (In re Spears), 223 B.R. 159, 163–65 (Bankr. N.D. Ill. 1998) (Applying Illinois law and distinguishing Charles R. Hall Motors, Inc. v. Lewis (In re Lewis), 137 F.3d 1280 (11th Cir. 1998), debtor retained sufficient rights in car repossessed before petition to support turnover under § 542(a). “[T]he vast majority of courts have concurred that where repossession of a vehicle has occurred prepetition, but the vehicle has not yet been sold, a Chapter 13 debtor retains a sufficient interest in the vehicle so that turnover may be appropriate. . . . This court has looked to Illinois law . . . . In contrast to the conclusion in Lewis . . . the debtors . . . had rights under Illinois law that erode a common law creditor’s claim to absolute title. . . . [United States v. Whiting Pools, Inc., 462 U.S. 198, 103 S. Ct. 2309, 76 L. Ed. 2d 515 (1983),] instructs that § 542(a) is among sections of the Code that bring into the bankruptcy estate property in which the debtor did not have a possessory interest at the time bankruptcy proceedings commenced. . . . [T]his case falls squarely within Whiting Pools’ conclusion that until a sale is taken place, property seized prepetition pursuant to a creditor’s provisional remedy remains property of the estate, and as such, is subject to the turnover requirement of § 542(a).”); Northrup v. Ben Thompson Enters. (In re Northrup), 220 B.R. 855, 863 (Bankr. E.D. Pa. 1998) (Repairperson with a possessory “common law lien” under Pennsylvania law will be required to turn over car as soon as the debtor properly registers the car in Pennsylvania, obtains a Pennsylvania’s driver’s license, provides proof that the car is adequately insured, advances $200 to the repairperson, and files a plan that will liquidate the secured portion of the repairperson’s claim. Repairperson “shall retain its lien in the Auto until its entire secured claim is liquidated.”); American Honda Fin. Corp. v. Littleton (In re Littleton), 220 B.R. 710 (Bankr. M.D. Ga. 1998) (Car lender not entitled to relief from the stay and debtors are entitled to turnover conditioned on adequate protection where car was repossessed the day before the petition but under Georgia law debtor retained a title interest that became property of the Chapter 13 estate. Anticipating that car lender will turn over the car to the debtors, court denies car lender’s request for relief from the stay conditioned that the debtor provide adequate protection by proof of insurance in accordance with the underlying contract, and by payments to the trustee consistent with the proposed plan, and that the trustee make monthly disbursements to the car lender before confirmation in accordance with the proposed plan.); Dougherty v. IRS (In re Dougherty), 187 B.R. 883 (Bankr. E.D. Pa. 1995) (Turnover under § 542(a) is the appropriate way for a Chapter 13 debtor to recover a tax refund, not an action under § 362 claiming that the IRS’s refusal to pay over the refund is a violation of the automatic stay. Debtor is not entitled to turnover because the three-year limitation’s period in 26 U.S.C. § 6511(a) bars recovery of refund for 1991 where the debtors filed their 1991 return in 1995.); In re Estes, 185 B.R. 745 (Bankr. W.D. Ky. 1995) (Turnover of a car repossessed before the petition can be accomplished only by filing an adversary proceeding. Turnover by motion practice is not procedurally correct. Debtor must prove adequate protection of the creditor’s interest in the car before turnover.); Cardillo v. Andover Bank (In re Cardillo), 169 B.R. 8, 11 (Bankr. D.N.H. 1994) (Although Chapter 13 debtor does not have standing to bring preference action to recover $7,500 seized from the debtor’s checking account before the filing, the money attached by the creditor is property of the estate, and the debtor has the right to use that property under § 363(b). “Since the funds are property of the estate and subject to the ‘use, sale or lease’ by the debtor, they are subject to be turned over pursuant to section 542(a), subject to [the creditor’s] interest in the funds. . . . Section 363(e) provides adequate protection to an entity that has interest in property used, sold or leased.”); In re Jackson, 142 B.R. 172 (Bankr. N.D. Ohio 1992) (Chapter 13 debtor is entitled to turnover of car that was repossessed before the petition but that remains in the creditor’s possession pending a sale. Under Ohio law, debtor has a statutory right of redemption that is a sufficient property right to support turnover under § 542.); Washington v. GMAC (In re Washington), 137 B.R. 748 (Bankr. E.D. Ark. 1992) (Turnover of car under § 542 is denied where debtor cannot provide adequate protection.); In re Cox, 133 B.R. 198 (Bankr. N.D. Ohio 1991) (Debtor is entitled to turnover of car under § 542 notwithstanding prepetition statutory lien of and possession by a repairman.); In re Fisher, 113 B.R. 714 (Bankr. N.D. Okla. 1990) (Debtor is entitled to § 542 order requiring turnover of monies paid pursuant to an unenforceable reaffirmation agreement in a prior Chapter 7 case.); Sininger v. Fulton (In re Sininger), 84 B.R. 115 (Bankr. S.D. Ohio 1988) (Debtor can use § 542 to force the turnover of $14,000 held by the clerk of a state court pursuant to prepetition attachment.); In re Ford, 78 B.R. 729 (Bankr. E.D. Pa. 1987) (Chapter 13 debtor has § 542 power subject to debtor’s responsibility to provide adequate protection. Turnover denied because debtor is not able to provide adequate protection for wife’s interest in money held by state domestic relations court.); Sanders v. Cooper (In re Sanders), 78 B.R. 444 (Bankr. D.S.C. 1987) (Section 542(a) requires a repairman to turn over a truck to the debtor because the truck is not of inconsequential value or benefit to the estate, the debtor needs the truck for business purposes, and the debtor has offered adequate protection for the statutory lien of the repairman.); Brogdon v. Texas Commerce Bank (In re Brogdon), 75 B.R. 79 (Bankr. M.D. Fla. 1987) (Turnover of monies subject to prepetition garnishment denied without prejudice to debtor’s right to offer adequate protection or to seek to avoid the lien of the writ of garnishment as a preference.); GMAC v. Radden, 35 B.R. 821 (Bankr. E.D. Va. 1983). See also Womack v. United States (In re Womack), 188 B.R. 259 (Bankr. E.D. Ark. 1995) (Debtors’ complaint for turnover of tax refund is denied because IRS has claim for income tax liability and right of setoff under § 553 is not defeated by confirmation of plan that pays tax claim in full.).

 

8  See, e.g., Bell-Tel Fed. Credit Union v. Kalter (In re Kalter), 292 F.3d 1350 (11th Cir. 2002) (Debtors are not entitled to turnover because cars repossessed before petition are not property of the Chapter 13 estate under Florida UCC or Florida Certificate of Title statute.); Charles R. Hall Motors, Inc. v. Lewis (In re Lewis), 137 F.3d 1280 (11th Cir. 1998) (Debtor not entitled to turnover of car repossessed before the petition because statutory right of redemption became property of the Chapter 13 estate but not the automobile itself. Failure to tender redemption consistent with Alabama law is fatal of adversary proceeding for turnover of the car.); Smith v. Ford Motor Credit Co., 301 B.R. 585, 589 (N.D. Ala. 2003) (Alabama Chapter 13 debtor cannot compel turnover of car repossessed before the petition because of Charles R. Hall Motors, Inc. v. Lewis (In re Lewis), 137 F.3d 1280 (11th Cir. 1998). “Until the Eleventh Circuit Court of Appeals sitting en banc reverses Hall Motors, it is the law of this circuit.”); United States v. Coghlan (In re Coghlan), 227 B.R. 304 (D. Ariz. 1998) (Distinguishing United States v. Whiting Pools, Inc., 462 U.S. 198, 103 S. Ct. 2309, 76 L. Ed. 2d 515 (1983), debtor not entitled to turnover of cash seized pursuant to prepetition levy by the IRS. IRS was in possession of the money, and debtor had no legal or equitable interest that would support turnover.); In re Menasche, 301 B.R. 757, 760–61 (Bankr. S.D. Fla. 2003) (Citing Bell-Tel Federal Credit Union v. Kalter (In re Kalter), 292 F.3d 1350 (11th Cir. 2002), debtors cannot compel turnover of car repossessed four hours before petition because only the right of redemption came into Chapter 13 estate and payment of redemption amount over life of plan is not a satisfactory redemption under Florida law. “While the debtor’s statutory right of redemption in a repossessed automobile becomes ‘property of the estate’ at the commencement of the case, ‘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.’”); In re Gunthorpe, 280 B.R. 893, 895 (Bankr. S.D. Ala. 2001) (Debtor cannot use § 542 to recover wages garnished under Alabama law because “condemnation” of garnished funds was automatic “as of the moment of receipt” by the clerk of the state court and “[t]he debtor has no right to property to which it has lost all title and possession.” Court reserves question whether garnished funds are recoverable under other sections of the Code.); Kerney v. Capital One Fin. Corp. (In re Sims), 278 B.R. 457 (Bankr. E.D. Tenn. 2002) (In a class action by the standing trustee and several Chapter 13 debtors against Capital One Financial alleging systematic filing of claims in excess of amounts owed, debtors cannot use § 542 to recover overpayments caused by overstated proofs of claim because overpayments cannot be exempted and cannot be used by the debtor for § 542(a) purposes; however, trustee has standing to recover overpayments and debtors have standing to recover on behalf of the estate amounts paid on account of disallowed claims.); In re Dent, 275 B.R. 625, 630–31 (Bankr. M.D. Ala. 2002) (Motion for return of repossessed car was filed in violation of Bankruptcy Rule 9011. “The relief sought by way of this motion appears to be precluded by decision of the Eleventh Circuit Court of Appeals in Charles R. Hall Motors v. Lewis (In re Lewis), 137 F.3d 1280, 1285 (11th Cir. 1998), reh’g and reh’g en banc denied, 149 F.3d 1197 (1998). . . . [W]hen pressed by the Court for an explanation as to why he filed the motion, [the debtor’s attorney] orally withdrew the motion.”); In re Ragan, 264 B.R. 776, 779 (Bankr. S.D. Fla. 2001) (“The District Court for the Middle District of Florida in [Bell-Tel Federal Credit Union v. Kalter (In re Kalter), 257 B.R. 93 (M.D. Fla. 2000)] found that the law enunciated in [Charles R. Hall Motors, Inc. v. Lewis (In re Lewis), 137 F.3d 1280 (11th Cir. 1998)] is applicable to interpretation of Florida law. . . . In light of the Lewis and Kalter decisions, this Court is constrained to rule that the instant Debtor may not [regain] possession of the 1998 BMW automobile, unless she redeems the vehicle under Florida Statutes § 679.506.”); Barfield v. Sana of Jacksonville, Inc. (In re Barfield), 261 B.R. 793, 797–98 (Bankr. M.D. Fla. 2001) (Citing Charles R. Hall Motors, Inc. v. Lewis (In re Lewis), 137 F.3d 1280 (11th Cir. 1998), Chapter 13 debtor has standing to seek turnover under § 542(a), but debtor is not entitled to turnover of restaurant equipment padlocked by the sheriff before the petition because the equipment is owned by the debtor’s corporation. “A Chapter 13 debtor may bring an adversary proceeding for the turnover of property of his estate pursuant to 11 U.S.C. § 542(a) . . . . Although § 542(a) does not expressly provide that a court may order turnover to a Chapter 13 debtor rather than to a trustee, the Eleventh Circuit has recognized that courts may so order. . . . The Court finds that the Double Play equipment and inventory seized by the Defendant is not ‘property of the estate’ under § 541 and therefore that Plaintiff may not force turnover of said equipment and inventory.”); In re Im, 256 B.R. 437 (Bankr. E.D. Pa. 2000) (Debtor is not entitled to turnover of prepetition rent payments tendered to state court because in a preference action against the landlord, the debtor could not satisfy the greater percentage test in § 547(b)—the landlord would be entitled to the payments to cure default under § 365(b)(1)(A).); Lamar v. Mitsubishi Motors Credit of Am., Inc. (In re Lamar), 249 B.R. 822 (Bankr. S.D. Ga. 2000) (Chapter 13 debtors are not entitled to turnover of leased car that was repossessed before the petition because repossession coupled with the mailing of notice of termination severed all of the debtors’ interest in the car.); Barringer v. EAB Leasing (In re Barringer), 244 B.R. 402, 408–10 (Bankr. E.D. Mich. 1999) (Creditor that repossessed truck before the petition can withhold possession until ordered to turn over the truck in an adversary proceeding. “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. . . . Given the many issues that may be relevant to a turnover proceeding, and in light of the fact that the Code explicitly provides the creditor with a right to be heard on some of these issues, we cannot accept the proposition that Congress intended that the trustee’s right of possession under § 542(a) be absolute or self-effectuating. . . . We instead conclude that the right must be judicially recognized in the form of a court order compelling turnover. Upon entry of such an order, the right of possession is in effect transferred from the creditor to the trustee. At this point, the right becomes property of the estate pursuant to § 541(a)(7).”); Skinner v. Cumberland Auto Ctr. (In re Skinner), 238 B.R. 120, 125–26 (Bankr. M.D. Tenn. 1999) (Although dealer violated automatic stay by repossessing car after the petition, debtor is not entitled to turnover because debtor’s rights under prepetition purchase order were subject to a financing condition that was not satisfied. Debtor took possession of a car pursuant to a “Buyer’s Order” that contained terms for a sale including a financing contingency. The dealer repossessed the car in violation of the stay. On debtor’s complaint for turnover, “[t]he financing requirement is a condition precedent to binding effect of the purchase order. . . . The debtor has no duty to pay for the car until financing is obtained. . . . [T]he debtor’s plan attempts to deal with a debt that does not exist, or it attempts to create a debt that does not exist. . . . [T]he condition precedent also raises the question of whether the car was property the debtor could ‘use, sell, or lease under section 363’ as required by the turnover statute. 11 U.S.C. § 542(a) & § 363. The party moving for turnover has the burden of proving entitlement to turnover. The debtor’s right to possession or to continued possession, even if he carries out the confirmed plan, is too tenuous to justify turnover at this point.”); In re Kabler, 230 B.R. 525, 526 (Bankr. E.D.N.C. 1999) (On equitable grounds denies turnover of repossessed car. “Turnover is an equitable remedy, and the equities in this case weigh heavily in favor of Ford Motor Credit Company. It is true that this is Mr. Kabler’s first chapter 13 case, but he has enjoyed the benefit of the co-debtor stay in his mother’s two previous chapter 13 cases. During that time Ford Motor Credit Company’s collateral position deteriorated substantially. At the time of the filing of the debtor’s mother’s first chapter 13 case, Ford Motor Credit Company was a fully secured creditor. Today Ford Motor Credit Company is undersecured by almost $5,000. While Ford Motor Credit Company’s collateral was depreciating, Mr. Kabler, with the protection of the co-debtor stay in his mother’s two chapter 13 cases, had the use of the truck for 20 months without making a payment. In these circumstances, it would inequitable to require Ford Motor Credit Company to turnover the truck to the debtor.”); 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 not entitled to turnover of car repossessed before the petition under Alabama law because car did not become property of the Chapter 13 estate and proposed plan does not constitute “tendering fulfillment” for purposes of right of redemption.); Womack v. United States (In re Womack), 188 B.R. 259 (Bankr. E.D. Ark. 1995) (Debtors’ complaint for turnover of tax refund is denied because IRS has claim for income tax liability and right of setoff under § 553 is not defeated by confirmation of plan that pays tax claim in full.). But see Skinner v. First Union Nat’l Bank (In re Skinner), 213 B.R. 335 (Bankr. W.D. Tenn. 1997) (Debtor not entitled to turnover of truck under § 542 because truck is in the possession of the sheriff pursuant to a prepetition levy and the sheriff is a custodian who is obligated by § 543 to deliver the truck to the trustee rather than to the debtor.).

 

9  See § 46.2 [ Prepetition Repossession, Levy, Sale or Conveyance ] § 46.4  Prepetition Repossession, Levy, Sale or Conveyance.

 

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

 

11  See § 46.2 [ Prepetition Repossession, Levy, Sale or Conveyance ] § 46.4  Prepetition Repossession, Levy, Sale or Conveyance.

 

12  See § 53.1 [ Strong-Arm Powers, Statutory Liens, Preferences and Fraudulent Conveyances ] § 50.3  Strong-Arm Powers, Statutory Liens, Preferences and Fraudulent Conveyances. See, e.g., In re Brennan, 208 B.R. 448, 452 (Bankr. S.D. Ill. 1997) (Subject to the restrictions in § 522(h), a Chapter 13 debtor can use avoiding powers to bring into the estate property that is then subject to exemption under § 522(f) and (g).). See also In re Im, 256 B.R. 437 (Bankr. E.D. Pa. 2000) (Debtor is not entitled to turnover of prepetition rent payments tendered to state court because in a preference action against the landlord, the debtor could not satisfy the greater percentage test in § 547(b)—the landlord would be entitled to the payments to cure default under § 365(b)(1)(A).).

 

13  11 U.S.C. § 522(h) provides:

The debtor may avoid a transfer of property of the debtor or recover a setoff to the extent that the debtor could have exempted such property under subsection (g)(1) of this section if the trustee had avoided such transfer, if—
(1) such transfer is avoidable by the trustee under section 544, 545, 547, 548, 549, or 724(a) of this title or recoverable by the trustee under section 553 of this title; and
(2) the trustee does not attempt to avoid such transfer.

 

14  See §§ 60.1 [ Avoidance and Recovery Powers ] § 53.12  Avoidance and Recovery Powers and 63.1 [ Standard Percentage Fee and Expenses ] § 54.1  Standard Percentage Fee and Expenses.

 

15  See, e.g., In re Estes, 185 B.R. 745 (Bankr. W.D. Ky. 1995) (Turnover of a car repossessed before the petition can be accomplished only by filing an adversary proceeding. Turnover by motion practice is not procedurally correct.). See also Barfield v. Sana of Jacksonville, Inc. (In re Barfield), 261 B.R. 793, 797 (Bankr. M.D. Fla. 2001) (Perhaps in dicta, “A Chapter 13 debtor may bring an adversary proceeding for the turnover of property of his estate pursuant to 11 U.S.C. § 542(a).”).

 

16  See above in this section, and see § 46.2 [ Prepetition Repossession, Levy, Sale or Conveyance ] § 46.4  Prepetition Repossession, Levy, Sale or Conveyance.

 

17  11 U.S.C. § 542(c) provides, “[A]n entity that has neither actual notice nor actual knowledge of the commencement of the case concerning the debtor may transfer property of the estate . . . in good faith . . . to an entity other than the trustee, with the same effect as to the entity making such transfer . . . as if the case under this title concerning the debtor had not been commenced.” See, e.g., Patterson v. Chrysler Fin. Co. (In re Patterson), No. 99-35259DWS, 00-0258, 2000 WL 1692838, at *6 (Bankr. E.D. Pa. Nov. 2, 2000) (unpublished) (Although § 542(a) grants Chapter 13 estate a possessory interest in property of the debtor that was seized by a creditor prior to the petition, evidentiary hearing is necessary to determine whether creditor can claim the status of a transferee without knowledge of the petition under § 542(c) to avoid a violation of the automatic stay when the creditor refuses turnover.), after trial, 263 B.R. 82 (Bankr. E.D. Pa. 2001).

 

18  271 B.R. 223 (N.D.N.Y. 2001).

 

19  271 B.R. at 227–28.

 

20  See §§ 46.2 [ Prepetition Repossession, Levy, Sale or Conveyance ] § 46.4  Prepetition Repossession, Levy, Sale or Conveyance and 75.1 [ Examples of Stay Violations, and Not ] § 62.1  Examples of Stay Violations, and Not.

 

21  462 U.S. 198, 103 S. Ct. 2309, 76 L. Ed. 2d 515 (1983).

 

22  See § 46.2 [ Prepetition Repossession, Levy, Sale or Conveyance ] § 46.4  Prepetition Repossession, Levy, Sale or Conveyance.

 

23  See Williams v. Citifinancial Mortgage Co. f/k/a IMC Mortgage Co. (In re Williams), 256 B.R. 885 (B.A.P. 8th Cir. 2001) (Debtor is entitled to turnover of money paid to a mortgage holder on account of its (mistaken) request for an administrative expense at dismissal before confirmation.); Lauria v. Titan Sec. Ltd. (In re Lauria), 243 B.R. 705 (Bankr. N.D. Ill. 2000) (Chapter 13 debtor has standing after confirmation to seek turnover of payments due under a prepetition, noncompete agreement notwithstanding that the debtor’s former attorney has an equitable lien on those payments.).

 

24  See § 52.2 [ Relief from Garnishments ] § 50.2  Relief from Garnishments.

 

25  See, e.g., In re Gunthorpe, 280 B.R. 893, 895 (Bankr. S.D. Ala. 2001) (Debtor cannot use § 542 to recover wages garnished under Alabama law because “condemnation” of garnished funds was automatic “as of the moment of receipt” by the clerk of the state court and “[t]he debtor has no right to property to which it has lost all title and possession.” Court reserves question whether garnished funds are recoverable under other sections of the Code.); Rodriguez v. First Am. Bank (In re Rodriguez), 278 B.R. 749 (Bankr. N.D. Tex. 2002) (Chapter 13 debtor is entitled to turnover of funds subject to prepetition garnishment because the lien is avoidable under § 522(f) and the funds are property of the Chapter 13 estate.).

 

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

 

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

 

28  See, e.g., Boggan v. Hoff Ford, Inc. (In re Boggan), 251 B.R. 95, 101 (B.A.P. 9th Cir. 2000) (Citing Expeditors International of Washington, Inc. v. Colortran, Inc. (In re Colortran, Inc.), 210 B.R. 823 (B.A.P. 9th Cir. 1997), aff’d in part and vacated in part on other grounds, 165 F.3d 35 (9th Cir. 1998), “a creditor who requires possession in order to achieve or maintain perfection has the right to file a motion for relief from the automatic stay and request adequate protection such that its lien rights are preserved. However, the creditor must tender the goods or face sanctions for violation of the stay. . . . [I]t may not unilaterally condition the return of the property on its own determination of adequate protection.”); In re Jackson, 251 B.R. 597, 600–01 (Bankr. D. Utah 2000) (“A creditor’s duty to return a vehicle repossessed prepetition is not dependent on the receipt of adequate protection or proof of insurance. . . . Because a creditor has immediate access to court pursuant to § 362(f) and § 363(e) in order to assure that adequate protection is provided, there is no reason for the creditor to delay in the turnover of estate property. This interpretation of § 542 is consistent with [United States v. Whiting Pools, Inc., 462 U.S. 198, 103 S. Ct. 2309, 76 L. Ed. 2d 515 (1983)] . . . which places the burden of seeking adequate protection on the creditor . . . . For a secured creditor to withhold property of the estate until the debtor complies with the creditor’s demand for adequate protection permits the creditor to unilaterally determine the amount, type and sufficiency of adequate protection. It is the duty of the court, not the privilege of the creditor, to determine what adequate protection is appropriate.”). But see Barringer v. EAB Leasing (In re Barringer), 244 B.R. 402 (Bankr. E.D. Mich. 1999) (Creditor that repossessed truck before the petition can withhold possession until ordered to turn over the truck in an adversary proceeding.).

 

29  462 U.S. at 211–12.

 

30  As discussed immediately above and in §§ 44.1 [ Debtor Has Exclusive Control of Estate Property ] § 45.1  Debtor Has Exclusive Possession and Control of Estate Property and 46.2 [ Prepetition Repossession, Levy, Sale or Conveyance ] § 46.4  Prepetition Repossession, Levy, Sale or Conveyance, the predicate for turnover under § 542 is that the property to be recovered must be property that “the trustee may use, sell or lease under § 363 of this title, or that the debtor may exempt under § 522 of this title.” 11 U.S.C. § 542(a). Many courts have allowed Chapter 13 debtors to use § 542 to recover property that only the debtor can use, sell, or lease under 11 U.S.C. § 1303.

 

31  As discussed immediately above, § 522(g) contemplates that a Chapter 13 debtor can exempt property that the trustee recovers under § 542.

 

32  See Barfield v. Sana of Jacksonville, Inc. (In re Barfield), 261 B.R. 793 (Bankr. M.D. Fla. 2001) (Debtor is not entitled to turnover of restaurant equipment because equipment is owned by the debtor’s corporation.).

 

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

 

34  See §§ 48.1 [ Adequate Protection of Lienholders prior to Confirmation ] § 47.1  Adequate Protection of Lienholders before Confirmation and 75.1 [ Examples of Stay Violations, and Not ] § 62.1  Examples of Stay Violations, and Not.

 

35  See §§ 48.1 [ Adequate Protection of Lienholders prior to Confirmation ] § 47.1  Adequate Protection of Lienholders before Confirmation, 67.2 [ Adequate Protection Rights ] § 57.2  Adequate Protection Rights, 80.1 [ Timing, Procedure and Form ] § 63.2  Timing, Procedure and Form and 81.1 [ Lack of Adequate Protection ] § 64.1  Lack of Adequate Protection.

 

36  See § 77.1 [ Sanctions or Contempt? ] § 62.3  Sanctions or Contempt?.

 

37  11 U.S.C. § 101(11) defines “custodian” as:

(A) receiver or trustee of any of the property of the debtor, appointed in a case or proceeding not under this title;
(B) assignee under a general assignment for the benefit of the debtor’s creditors; or
(C) trustee, receiver, or agent under applicable law, or under a contract, that is appointed or authorized to take charge of property of the debtor for the purpose of enforcing a lien against such property, or for the purpose of general administration of such property for the benefit of the debtor’s creditors.

 

38  11 U.S.C. § 543(b)(1).

 

39  11 U.S.C. § 543(b)(2).

 

40  Foust v. McNeill (In re Foust), 310 F.3d 849 (5th Cir. 2002).

 

41  See § 72.1 [ Setoffs and Recoupments ] § 58.12  Setoffs and Recoupments.

 

42  See, e.g., In re Shortt, 277 B.R. 683 (Bankr. N.D. Tex. 2002) (Chapter 13 debtor is not entitled to turnover of tax refund because another government agency has a right of setoff under § 553, the debt to the other agency is larger than the refund and no tax refund became property of the estate for purposes of turnover.).

 

43  See Bowen v. United States Dep’t of Educ. (In re Bowen), Nos. 94-82310, 02-8265, 2003 WL 22148997 (Bankr. C.D. Ill. Sept. 17, 2003) (unpublished) (Complaint against IRS for return of intercepted tax refund is dismissed because 26 U.S.C. § 6402(f) forbids court review of IRS intercept; debtor must seek relief from the student loan creditor that received the intercepted refund.).

 

44  See King v. Florida Dep’t of Revenue (In re King), 280 B.R. 767 (Bankr. S.D. Ga. 2002) (On remand, Congress did not constitutionally abrogate Florida’s sovereign immunity with respect to debtor’s complaint to recover tax refund intercepted by the state to recover support.).