In re Velichko
473 B.R. 64
Bankr. S.D.N.Y.2012Background
- Quorum repossessed the Debtors’ 2003 Dodge Caravan on November 21, 2011, before the Debtors filed for Chapter 7 on November 25, 2011.
- Quorum was listed as a secured creditor and was notified of Debtors’ intent to keep the vehicle and reaffirm the debt.
- Quorum withheld the vehicle and conditioned release on paying arrears of $817 and providing proof of insurance.
- Debtors paid $817, signed a reaffirmation, provided insurance, and regained possession forty-five days after filing.
- Debtors seek actual damages, including rental costs and legal fees, plus punitive damages for the stay violation.
- Quorum argues the vehicle was not property of the estate and that reaffirmation cured any violation; the court disagrees.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Was the vehicle turnover required upon filing? | Velichko | Quorum | Yes; turnover required to estate. |
| Whether the stay violation was willful and recoverable damages apply. | Debtors | Quorum | Yes; damages and punitive relief awarded. |
| Does reaffirmation after stay issuance bar sanctions for early withholding? | Debtors | Quorum | No; reaffirmation does not validate prior stay violation. |
Key Cases Cited
- United States v. Whiting Pools, 462 U.S. 198 (1983) (property of the estate includes creditor-held collateral after filing)
- In re Knaus, 889 F.2d 773 (8th Cir. 1989) (duty to turnover arises upon petition; not required to wait for litigation)
- Sensenich v. Ledyard Nat’l Bank (In re Campbell), 398 B.R. 799 (Bankr.D.Vt.2008) (willful stay violation supports damages regardless of intent)
- In re Gerwer, 898 F.2d 730 (9th Cir. 1990) (estate includes property of debtor and creditor’s turnover obligations extend beyond possession)