X hits on this document





6 / 10

Bush), 169 B.R. 34, 36 (W.D. Va. 1994). If a creditor unlawfully repossesses collateral

post-petition without knowledge of the petition and subsequently sells or holds the

collateral after being given notice, then creditor willfully violated the automatic stay and

is liable to debtor for damages. See In re Wright, 75 B.R. 414, 415 (M.D. Fla. 1987).

However, if a creditor lawfully repossesses collateral and disposes of the

collateral completely to another prepetition, then creditor has not violated the automatic

stay at all. See Brown v. Joe Addison, Inc. (In re Brown), 210 B.R. 878, 881 (Bankr.

S.D. Ga. 1997). Such a creditor never had any duty not to dispose of the collateral as the

entire transaction occurred prepetition.

The evidence shows that Paxon repossessed the vehicle before Debtors filed their

second petition. Paxon did not violate the automatic stay by doing so and thus had no

duty to refrain from or prevent future disposition at this juncture. Therefore, Paxon

would not have a duty to refrain from cashing in on the seized collateral unless a debtor

filed a petition before disposition. Without this duty, the disposition is not actionable

under § 362(h).

The dispositive question, then, is when did Paxon dispose of the vehicle? In order

for Paxon to be under a duty not to dispose of the vehicle such that sanctions could be

imposed for doing so, two conditions must be present: 1. A petition must have been filed

before disposition; and 2. Paxon must have been on notice when vehicle was disposed of.

If Paxon disposed of the car post-petition, Paxon had a duty to stay or prevent disposition

of the vehicle, because the automatic stay had been violated. If Paxon knew of the

petition (and thus its duty to protect the new estate’s interest in the vehicle) when it

disposed of the car, then a duty arose to respect the stay. Therefore, Debtors bear the

Document info
Document views35
Page views35
Page last viewedMon Jan 23 06:41:51 UTC 2017