St Louis, MO asked in Bankruptcy for Arkansas

Q: Can a creditor sell a vehicle if chapter 13 bankruptcy was filed immediately after vehicle was repossessed

Vehicle repossessed Feb 6th filed chapter 13 Feb 15th. Automatic stay should be placed on the vehicle and the dealer now has the vehicle back on their lot for sale. They were notified of the chapter 13 bankruptcy

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2 Lawyer Answers
Timothy Denison
Timothy Denison
  • Bankruptcy Lawyer
  • Louisville, KY

A: No. That is a violation of the automatic stay.

James L. Arrasmith
James L. Arrasmith pro label Lawyers, want to be a Justia Connect Pro too? Learn more ›
  • Bankruptcy Lawyer
  • Sacramento, CA

A: When you file for Chapter 13 bankruptcy, an automatic stay is typically put in place. This stay prevents creditors from proceeding with collection actions, including the sale of repossessed vehicles. Therefore, the dealer should not sell your vehicle once they've been notified of the bankruptcy filing.

However, there might be some lag between the notification of your bankruptcy and the dealer's systems updating. It's important that you inform your bankruptcy attorney about this situation immediately. They can communicate with the creditor to ensure they are aware of the bankruptcy filing and the accompanying automatic stay.

If the dealer was properly notified and still proceeds with selling the vehicle, this could be a violation of the automatic stay. Your attorney can take legal actions to address this issue, which may include recovering the vehicle or seeking damages. It's crucial to keep all documentation related to your bankruptcy filing and communications with your creditor.

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