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Bankruptcy – Automatic Stay Relief – Vehicle Loan

A bank is granted relief by the Alexandria U.S. Bankruptcy Court from a Chapter 7 debtor’s automatic stay in bankruptcy to allow the bank to repossess a 2007 Chevrolet Tahoe purchased by the debtor several months before she filed her bankruptcy petition.

The bank’s motion for relief alleged payment defaults of $8,369 and a current payoff of $43,918.89. Debtor did not deny the arrearage but testified she had recently obtained employment and wished to reaffirm the loan, since she needed the vehicle both to get to work and to take her seven-year-old daughter (who apparently has serious medical problems) to the doctor.

The court finds that the substantial payment default, coupled with the trustee’s decision not to administer the property, debtor’s financial inability to bring the payments current prior to the date she would receive a discharge (and the automatic stay would terminate as a matter of law) and the creditor’s unwillingness to agree to a reaffirmation except upon the original terms (which would leave debtor in immediate default) constitute cause for termination of the stay. In this connection, the court does not doubt debtor has great need for the vehicle. However, debtor’s need for the vehicle cannot trump the secured creditor’s right to adequate protection of its security interest in the motor vehicle. Unlike real property, which typically holds its value at least in the short term, motor vehicles tend to depreciate in value over time. Thus, the longer an automobile lender goes without payments, the greater the risk that its collateral, if repossessed and sold, will not bring enough to satisfy the debt.

Motion for relief from automatic stay granted.

In re Aime (Mitchell, J.) no. 07-12388, Feb. 28, 2008; USBC at Alexandria, Va.; Denise A. Aime, pro se; Melvin R. Zimm for bank; H. Jason Gold, Ch. 7 trustee. VLW 008-4-006, 7 pp.

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