Court explicitly held that the rule of Lewis does not apply in the Middle District of
Florida. See Id. at 411.
Paxon’s contention that prepetition repossession of a vehicle in which a Chapter
13 debtor has no equity vitiates a potential violation of the automatic stay lacks merit.
Therefore, Debtors had a property interest in the vehicle such that foreclosure upon the
vehicle may constitute a violation of the automatic stay. The Court proceeds to tackle the
central issue of this dispute: whether or not Paxon willfully violated the automatic stay by
disposing property of the estate after the Debtors filed their second petition, which
triggered the automatic stay.
Debtors argue that Paxon willfully violated the automatic stay by performing an
act to collect on Paxon’s interest in the vehicle after a bankruptcy petition was filed. The
Court recognizes the question as one of duty and breach. In certain circumstances, a
creditor in possession of repossessed property is under a duty to prevent disposition of the
property or, in some cases, to affirmatively return property to the Debtor. Failure to do
so willfully, with knowledge of a debtor’s filing, constitutes a breach of this duty and
may give rise to damages.
The question of whether a duty exists hinges on the timing of the repossession and
on the timing of final disposition of the collateral. Courts generally divide these cases
into three fact patterns.
First, if a creditor lawfully repossesses collateral prepetition and sells the
collateral after having received notice of a debtor’s petition for bankruptcy subsequent to
the repossession but prior to final disposition, then the creditor willfully violated the
automatic stay and is liable to the debtor for damages. See NationsBank v. Bush (In re