PHILADELPHIA-A U.S. Bankruptcy Court this week ordered Citadel Financial CU to return a 2002 Honda to a delinquent member who filed for Chapter 13 bankruptcy a week after the credit union repossessed her car.
In its Wednesday order, the court cited federal bankruptcy statute, which states "a debtor may recover collateral transferred to a secured creditor within ninety days of bankruptcy, subject to the provision of adequate protection, if the property is necessary to effect a reorganization or rehabilitation."
In the case, the member, Kimberly Reid, filed an adversary proceeding seeking return of her car from the credit union, which had repossessed it on Dec. 9. Two days later, on Dec. 11, the credit union sent her a letter that said, "This vehicle will be held for a maximum period of 15 days from the date of mailing this notice in order for you to pay the amount agreed upon or balance due plus costs, which are itemized below."
Reid filed for bankruptcy on Dec. 17 and sent the credit union a letter demanding the return of her car. In the letter, the member explained her intent to pay the entire secured amount remaining on her loan under a Chapter 13 reorganization.
Citadel, based in the Philadelphia suburb of Thorndale, rejected her demand and told her it would retain possession of the vehicle by seeking relief from the bankruptcy stay.
The credit union member had purchased a 2002 Honda Accord Coupe from Newark Toyota World, located in Newark, Del. After trading in her 1997 Ford Contour, the purchase price was about $21,000, to be financed by payments of $399 per month for 72 months, according to the court record.
A lawyer representing Citadel in the case did not return a phone call seeking comment.
