Towing Company Cannot Withhold Debtor’s Auto In Chapter 13 Bankruptcy

It seems that just about every month or so a lender or a towing company is withholding the debtor’s vehicle despite the fact that a chapter 13 bankruptcy case had been filed. Most lenders are now up to speed on the Thompson case which governs cases in the state of Illinois with regard to repossessed autos and chapter 13 bankruptcy law. However, it seems that certain towing companies and repossession companies are still getting up to speed. This is true in a most recent case where the towing company actually had the advice of counsel.

The towing company was claiming that they had a possessory interest or possessory lien in the debtor’s vehicle. The towing company also claimed that the vehicle was sold when it wasn’t, that it was transported to auction when it wasn’t, and a series of other lies pertaining to the whereabouts and ownership of said vehicle. Due to this fact, the law firm of David M. Siegel and Associates, who handles bankruptcy cases throughout Chicago and its suburbs, was forced to bring a motion for sanctions against the towing company. The Hon. Judge Cox heard argument and quickly determined that the debtor was entitled to her automobile. The case was passed several times for the attorneys to try and work out a settlement. Each time that the attorneys approached the bench, the judge wanted to know whether or not the debtor had gotten her car back. It was clear that Judge Cox was following the logic and the reasoning of the Thompson case in determining that the debtor needed that vehicle back for reorganization purposes. Whatever lien, possessory or otherwise which pertained to the vehicle could be addressed at a later date. The towing company was simply not permitted to deprive the debtor of her vehicle.

In the end, the towing company was sanctioned $1000 for the debtor’s bankruptcy attorney fees, they were order to release the vehicle immediately, and whatever possessory lien or other lien they may have had on the vehicle they were required to forfeit. The lesson here is simple: if you are a lender or a towing company or a garage who wrongfully withholds the property of a chapter 13 debtor without leave of court, you may be sanctioned depending upon which judge the case is assigned to. In any event, it’s good to know that bankruptcy judges such as Judge Cox in Chicago are following the Thompson decision in assisting debtors who are attempting to recover their vehicles after they file for chapter 13 bankruptcy.

For more information on your rights and your property as it relates to chapter 13 bankruptcy, contact the office at 847-520-8100. We have offices in Chicago, Wheeling, Aurora, Waukegan, Westchester, and Joliet.

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