Yet Another Indiana Bankruptcy Lawyer Case Lesson: Automatic Stay or Else

Learning about decisions handed down in bankruptcy courts in other states, I've found, helps my Indiana bankruptcy clients and blog readers better understand how the new bankruptcy laws in Indiana work. I chose today's case study from the Illinois bankruptcy court for two reasons:

1. It involves a car, and a very big part of my work as an Indiana lawyer for bankruptcy, as well as my work as a debt consolidation lawyer, is about keeping cars from being repossessed.

2. It demonstrates bankruptcy's automatic stay in action.

Here are the details of the Illinois case:

I. filed Chapter 13 bankruptcy on May 29, 2009.
At the time, I. owned a car worth $3,700 on which she owed $9,200 to lender AG.
On June 15, AG received notice of I.'s bankruptcy filing.
On June 21, AG repossessed I's car anyway.
For two days, I. could not work and was without her personal possessions that had been inside her car.
The bankruptcy court agreed that the creditor had violated the automatic stay, and ordered AG to pay:

a) Money to I. for her missed work pay

b) Money to I. for her frustration and inconvenience

c) Punitive damages to I.

d) $1,500 in attorney's fees to I's lawyer.

Under the new bankruptcy laws of Indiana, you are allowed to keep your car, provided:

You file Chapter 13 bankruptcy
You absolutely need the car
You can afford to make the debt repayment plan payments to the lender
You address your problems with the lender before missing any car payments.

As happened in I's case in Illinois, there are ways that I, along with my colleagues the Anderson, Bloomington, Indianapolis, or Columbus bankruptcy lawyers who work in the Mark Zuckerberg bankruptcy law offices are able to help clients recover their cars even after repossession, but once the car has been taken, matters become much more complicated.

What bankruptcy can do is to enforce the automatic stay, putting a halt on collection efforts and harassment, giving you time to work out a plan of action. As we saw in the Illinois case, the automatic stay really does mean "Stay! Stop collections! Stop phone calls! Stop repossession efforts!" The automatic asks creditors: "What don't you understand about the word "STOP!"?