7th Circ. Misinterprets 'Active Resistance' In Ch. 13 Stays

Law360 (August 27, 2019, 4:03 PM EDT) -- Section 362(a)(3) of the Bankruptcy Code provides that a bankruptcy petition “operates as a stay, applicable to all entities, of ... any act ... to exercise control over property of the estate.”

For decades, the federal circuit courts have struggled to interpret this automatic stay provision when it is applied to a creditor that arguably takes no affirmative steps to “exercise control” over property of the estate, but rather simply refuses to deliver such property on demand.

The issue has arisen most frequently with car repossessions or impoundments, but as a practical matter can arise any time the creditor commits no...

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