Chapter 13 Debtor Can’t Redeem Pawned Auto Through Plan

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By Daniel Gill

A Chapter 13 debtor who had pawned his 2006 Dodge Charger and defaulted on the loan couldn’t redeem the car by paying off the loan through his repayment plan, the U.S. Court of Appeals for the Eleventh Circuit ruled Dec. 11.

When the redemption period expired after the bankruptcy filing and before confirmation of the plan, the car ceased being property of the bankruptcy estate under Georgia’s pawn laws, the court said.

Gustavius Wilber pawned his car as security for a $4,400 advance in 2015. One month later the loan came due, and Wilber failed to repay.

Under controlling Georgia law, after a grace period of 30 days, title in the car vested in the lender, Title Max.

Before the grace period expired, Wilber filed a Chapter 13 case, which allows individuals receiving regular income to obtain debt relief while retaining their property. To do so, the debtor must propose a plan that uses future income to repay all or a portion of his debts over a three- to five-year period.

In his plan, Wilber treated Title Max as a secured creditor and proposed that he pay off the loan, including five percent interest, over the course of his five-year plan.

Title Max didn’t object to the plan. Instead, it filed a motion for relief from the automatic stay—an injunction against taking collection actions created by the bankruptcy filing—arguing that at the end of the redemption period, extended 60 days by the bankruptcy filing, the car ceased being property of the estate.

The bankruptcy court confirmed the plan and later ruled that Title Max was bound by its terms.

Even though Title Max didn’t object to the plan, its motion for relief from stay was the functional equivalent. It put the parties and the court on notice that it believed the car was no longer part of the bankruptcy estate, the court here said.

Applying Georgia law, that was correct, the court said..

Judge Charles R. Wilson dissented, arguing that the plan confirmation order controlled the treatment of the company as a secured creditor.

Judge Kevin C. Newsome wrote the opinion, joined by district court judge Frederico A. Moreno, sitting by designation.

Stuart Walker, Mason, Ga., appeared for Title Max. Wilber was represented by Bruce W. Luquire, Columbus, Ga.

The case is Title Max v. Northington (In re Northington; In re Wilber) , 2017 BL 441659, 11th Cir., No. 16-17468, 12/11/17 .

To contact the reporter on this story: Daniel Gill in Washington at

To contact the editor responsible for this story: Jay Horowitz at

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