## Facts

- Randolph Lewis, Jr. and his wife filed a Chapter 13 case after financing the purchase of a 2003 Ford Ranger through a retail installment transaction.
- On October 5, 2006, Lewis executed the financing documents granting Sun Financial a security interest in the vehicle; the contract and lien were assigned to Regional Management Corporation.
- Vehicle titling/perfection documents were dated October 4, 2006, but the dealer did not deliver the required documents to the South Carolina DMV until November 15, 2006.
- The debtors filed their Chapter 13 petition on November 7, 2006, before the DMV received the lien documents.
- The DMV later issued a certificate of title reflecting Sun Financial’s lien and listing a lien date of October 4, 2006.
- Regional filed a proof of claim asserting a secured claim; the Chapter 13 trustee objected to secured status based on untimely perfection.
- Regional moved to annul the automatic stay to obtain retroactive relief regarding its lien position.

## Issues

1. Whether, under South Carolina motor-vehicle titling law, Regional’s security interest was perfected as of the bankruptcy petition date when the DMV received the lien documents after the filing.
2. Whether the lien date shown on the certificate of title caused perfection to relate back to the earlier transaction date for purposes of Bankruptcy Code timing rules applicable to purchase-money security interests.
3. Whether cause existed under 11 U.S.C. § 362(d) to annul the automatic stay to retroactively validate or protect Regional’s lien position.

## Decision

- The court held that perfection occurred only when the required documents were delivered to the DMV, which happened postpetition.
- The court rejected reliance on the lien date printed on the certificate of title to establish prepetition perfection or relation-back for bankruptcy purposes.
- The court sustained the trustee’s objection and treated Regional’s claim as unsecured in the Chapter 13 case.
- The court denied Regional’s motion to annul the automatic stay.

## Legal Principles

- State law determines when a motor-vehicle security interest is perfected; under South Carolina’s certificate-of-title scheme, perfection requires delivery of the required documents to the DMV.
- A certificate of title’s stated lien date does not override statutory perfection requirements or retroactively cure late delivery to the DMV.
- Under 11 U.S.C. § 544(a), the trustee’s status as a hypothetical lien creditor as of the petition date defeats an unperfected security interest existing at that time.
- Bankruptcy timing rules protecting purchase-money security interests do not apply when perfection occurs outside the permitted period and after the petition date.
- Annulment of the automatic stay under 11 U.S.C. § 362(d) is exceptional and will be denied where retroactive relief would reallocate priority against the estate and other creditors, especially when the creditor could have ensured timely perfection.

## Conclusion

The court ruled that the vehicle lien was unperfected on the petition date because the DMV received the required documents after the bankruptcy filing; Regional’s claim was therefore unsecured, and the court refused to annul the automatic stay to retroactively correct the perfection defect.


In re Lewis, 363 B.R. 477 (Bankr. D.S.C. 2007)