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Debtors Beware! Bankruptcy Law may protect you but your OWN behavior may cost you!

If your vehicle has been repossessed and you file bankruptcy prior to it being sold at auction, the creditor must return the vehicle. Failure to return the vehicle is a violation of the automatic stay. However, in a recent decision out of Houston, Texas, the bankruptcy court looked at both the creditor and debtor's behavior. In this case, a debtor's vehicle was repossessed (but not sold at auction yet) prior to filing bankruptcy. The debtor filed for bankruptcy and his attorney demanded the vehicle be returned. The creditor refused. The debtor's attorney asked the bankruptcy court to order the return of the vehicle. The creditor still refused. Finally, the vehicle was returned. The debtor and his attorney asked for $25,000.00 in damages due to the delay in returning the vehicle. The bankruptcy court did find a violation of the automatic stay. However, the court stated that due to the Debtor's behavior prior to the repossession, it would only award approximately $7,000.00 in damages. The bankruptcy court stated:

 R.D. Affordable Foreign Auto Repair ("R.D. Auto") repossessed Jackson's automobile prior to bankruptcy. Jackson owed R.D. Auto money for services performed on the automobile. Ware, owner of R.D. Auto, went to extraordinary lengths to accommodate Jackson's precarious financial situation, but eventually repossessed the automobile for nonpayment. Jackson paid nothing on the amount owed for many months prior to bankruptcy, despite being employed. Simply put, Jackson took advantage of Ware's kindness and, understandably, Ware eventually became quite upset. This does not excuse Ware's refusal to turn over the automobile after Jackson filed for bankruptcy. Ware's violation of the automatic stay was egregious—at one point disregarding a court turnover order until a United States Marshall appeared to retrieve the automobile.

 The take home lesson for Debtors: When you file bankruptcy, you are protected by the bankruptcy laws. However, you should be careful of your behavior before filing bankruptcy and during the bankruptcy proceeding. If the bankruptcy court feels that you have behaved in an unfair manner, they may lower the damages you can receive even if the creditor violated the law.

If you are drowning in debt and need help, please call today at 254-633-2876 or email us at [email protected] for a FREE, no-obligation consultation with experienced staff. Saturday appointments are available, so call today. Welcome to your fresh start!

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