By Anerio Altman
Tuesday March 5th, 2013, Lake Forest Bankruptcy won a major victory on behalf of one of its clients in front of the Ninth Circuit Court of Appeals.
The individual Debtor is a Real Estate Broker and had filed a Chapter 7 Bankruptcy Case. In that case, she thought to claim her Mercedes as a tool of the trade that she used for the purpose of avoiding a non-possessory non-purchase money loan (title loan) on her vehicle. She has this right pursuant to 11 U.S.C. 522(f) to acquire her “fresh start” and continue to operate her business. She would be unable to do so if she could not retain her vehicle, which she could not so long as the Creditor maintained a Title Loan on the vehicle.
She had filed by herself but needed assistance on the motion and retained Lake Forest Bankruptcy for the litigation. We filed claiming that the vehicle was a tool of the trade of a real estate broker. The lender objected.
The Honorable Theodor Albert ruled for the secured lender in that the language under 11 U.S.C. 522(f) did not expressly authorize a vehicle for this purpose and that the Debtor could not utilize the “wildcard” exemption for this purpose.
We appealed to the Bankruptcy Appellate Panel and the Creditor exercised its power to push the decision to the District Court instead. Although we were not initially hopeful about a result from the traditionally conservative district courts, the Honorable Josephine S. Tucker ruled for our client.
The Secured Creditor then appealed the matter to the Ninth Circuit Court of appeals.
The court agreed with the District Court and affirmed the honorable Tucker’s opinion.
The ultimate result of this ruling is that an individual who claims that their vehicle is a tool of the trade and avoid Title Loans that they may have taken against their livelihood.
Decision attached: