## Facts

- Theodore A. Thompson bought a 2003 Chevrolet Impala under an installment contract financed by General Motors Acceptance Corporation, LLC (GMAC).
- After Thompson defaulted, GMAC repossessed the vehicle on January 24, 2008.
- Thompson filed a Chapter 13 petition in the Northern District of Illinois a few days after repossession.
- The day after filing, Thompson demanded return of the vehicle for commuting; GMAC refused unless Thompson first demonstrated “adequate protection” of GMAC’s secured interest.
- Thompson moved for sanctions, arguing GMAC’s refusal violated the automatic stay, including 11 U.S.C. § 362(a)(3)’s bar on acts to “exercise control” over property of the estate.
- The bankruptcy court denied sanctions, following a local practice placing the burden on debtors to initiate turnover proceedings while creditors retained repossessed collateral pending adequate protection.

## Issues

1. Whether a vehicle repossessed pre-petition is “property of the estate” in a Chapter 13 case when the debtor retains state-law ownership and redemption interests.
2. Whether a secured creditor’s post-petition retention of such a vehicle constitutes an act to “exercise control” over estate property, violating 11 U.S.C. § 362(a)(3).
3. Whether the creditor must return the vehicle immediately upon the bankruptcy filing, leaving disputes about protection of the creditor’s interest to be addressed through 11 U.S.C. § 363(e).

## Decision

- The Seventh Circuit reversed and remanded.
- The court held the repossessed vehicle became property of the estate under 11 U.S.C. § 541 because the debtor retained legal and equitable interests under state law.
- The court held GMAC’s continued possession after the petition was filed constituted exercising control over estate property in violation of 11 U.S.C. § 362(a)(3).
- The court ruled the creditor must promptly return the vehicle to the estate; the creditor’s remedy is to seek adequate protection from the bankruptcy court under § 363(e), rather than conditioning turnover on the debtor’s advance showing.

## Legal Principles

- “Property of the estate” under 11 U.S.C. § 541 includes the debtor’s legal and equitable interests at the commencement of the case, including interests in collateral seized pre-petition when the debtor retains ownership and redemption rights.
- Under 11 U.S.C. § 362(a)(3), post-petition retention of estate property by a creditor can constitute an act to exercise control over that property.
- 11 U.S.C. § 542(a) requires turnover of estate property; turnover is not conditioned on the debtor first proving adequate protection.
- If a creditor believes its secured interest is at risk, 11 U.S.C. § 363(e) provides the mechanism for the creditor to request adequate protection from the bankruptcy court.
- The automatic stay serves to preserve estate property for orderly administration and to prevent creditors from gaining advantage through unilateral post-petition control of assets needed for reorganization.

## Conclusion

The Seventh Circuit held that a creditor’s refusal to return a vehicle repossessed before a Chapter 13 filing violates § 362(a)(3) because the vehicle is estate property and continued retention is an exercise of control; the creditor must return the vehicle and seek adequate protection through the bankruptcy court.


Thompson v. Gen. Motors Acceptance Corp., 566 F.3d 699 (7th Cir. 2009)