Chief Bankruptcy Judge Sarah A. Hall of Oklahoma City refused to put the court in the repo business by compelling a debtor to deliver an abandoned car to the lender.
The debtor in chapter 7 owned a car that he did not intend to keep. The auto lender got relief from the stay and an order abandoning the car. The lender then filed a two-page motion under Section 105(a) to compel the debtors “to physically surrender the collateral immediately.”
Although the debtor filed nothing in opposition, Judge Hall used the occasion to avoid putting the bankruptcy court in the business of repossessing abandoned collateral.
Judge Hall denied the motion, saying there is nothing in the Bankruptcy Code “requiring a debtor to surrender collateral to a creditor.” She refused to use Section 105(a) to compel surrender, because that section does not allow the court “to vary remedies expressly afforded by the Bankruptcy Code.”
She also said there was no jurisdiction to compel surrender because the car was no longer property of the estate.
Combined, Sections 521(a)(2) and (6) automatically terminate the automatic stay if a debtor does not reaffirm or redeem collateral within prescribed time frames. Those sections cannot be used to compel surrender because, Judge Hall said, they only allow the lender to “take whatever action as to such property as is permitted by applicable nonbankruptcy law.”