Bankruptcy - Automatic Stay.

Byline: Derek Hawkins

7th Circuit Court of Appeals

Case Name: City of Chicago v. Robbin L. Fulton, et al.

Case No.: 18-2527; 18-2793; 18-2835; 18-3023

Officials: FLAUM, KANNE, and SCUDDER, Circuit Judges.

Focus: Bankruptcy - Automatic Stay

In this consolidated appeal of four Chapter 13 bankruptcies, we consider whether the City of Chicago may ignore the Bankruptcy Code's automatic stay and continue to hold a debtor's vehicle until the debtor pays her outstanding parking tickets. Prior to the debtors' filing for bankruptcy, the City impounded each of their vehicles for failure to pay multiple traffic fines. After the debtors filed their Chapter 13 petitions, the City refused to return their vehicles, claiming it needed to maintain possession to continue perfection of its possessory liens on the vehicles and that it would only return the vehicles when the debtors paid in full their outstanding fines. The bankruptcy courts each held that the City violated the automatic stay by "exercising control" over property of the bankruptcy estate and that none of the exceptions to the stay applied. The courts ordered the City to return debtors' vehicles and imposed sanctions on the City for violating the stay.

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