## Facts

- Eric Thompson financed a vehicle purchase through OneMain Financial on August 30, 2016, granting OneMain a security interest in the vehicle.
- Thompson signed an application requesting that OneMain’s lien be noted and transferred on the vehicle’s certificate of title through Virginia’s titling process.
- The Virginia Department of Motor Vehicles (DMV) date-stamped the lien application “Received” on September 2, 2016.
- A DealerTrack summary reflected that the title was issued electronically on August 30, 2016, and that lien-transfer information was received as of September 28, 2016.
- In 2018, Thompson filed a Chapter 13 bankruptcy petition.
- Shortly after the bankruptcy filing, OneMain filed a proof of claim asserting a secured claim and attached Thompson’s signed security agreement and DealerTrack documentation reflecting the lien-related dates.
- About a month after the petition date, the DMV issued a paper certificate of title stamped “Original” showing OneMain’s lien, without any further action by OneMain.
- Thompson objected to OneMain’s secured claim status, contending that the lien was not perfected until the DMV printed the paper title post-petition and that this post-petition title issuance violated the automatic stay.

## Issues

1. Under Virginia’s motor-vehicle certificate-of-title lien statutes, is a security interest perfected when the lien-notation application is delivered to and received by the DMV, or only when the DMV later issues a paper certificate of title reflecting the lien?
2. If the DMV issues a paper title reflecting the lien after the bankruptcy petition date, does that issuance amount to post-petition perfection in violation of the automatic stay under 11 U.S.C. § 362, affecting the creditor’s secured status?

## Decision

- The bankruptcy court overruled Thompson’s objection to OneMain’s proof of claim.
- The court treated OneMain’s claim as secured.
- The court concluded that OneMain’s security interest was perfected pre-petition when the lien-notation application was delivered to and received by the Virginia DMV, as reflected by the DMV “Received” stamp and related electronic records.
- The court determined that the DMV’s later issuance of a paper certificate of title reflecting the already-filed lien was an administrative act that did not constitute a post-petition act by OneMain to perfect a lien and therefore did not violate the automatic stay.

## Legal Principles

- Under Virginia’s certificate-of-title system for motor vehicles (including Va. Code § 46.2-639 and related provisions), perfection of a vehicle lien turns on the delivery/receipt of the required lien-notation application by the DMV, rather than on the DMV’s later printing and issuance of a paper certificate of title.
- When state law deems a lien perfected upon timely filing with the DMV, later DMV processing steps that merely record or memorialize the lien (such as issuing a paper title) do not change the time of perfection.
- A post-petition administrative act by a governmental agency that reflects a lien already perfected under state law does not, by itself, constitute an act to create or perfect a lien barred by 11 U.S.C. § 362.
- In a claim objection, a creditor with a pre-petition perfected vehicle lien is entitled to secured-claim treatment in the debtor’s bankruptcy case.

## Conclusion

In re Thompson held that OneMain’s vehicle lien was perfected before the bankruptcy filing when the lien-notation application was received by the Virginia DMV, and the DMV’s later post-petition issuance of a paper title showing the lien was only an administrative step that did not violate the automatic stay; accordingly, the court overruled the debtor’s objection and allowed OneMain’s claim as secured.


In re Thompson, 2018 WL 2717044 (2018)