In re Williams

• Citation: 7 BR 234
• Decision Date: 25 November 1980
• Docket Number: Bankruptcy No. 80-00320-COL,A.P. No. 80-0410-COL.
• Parties: In re Melissa Jan WILLIAMS, f/k/a Melissa Williams Musslewhite, Debtor. The NATIONAL BANK AND TRUST COMPANY OF COLUMBUS, Plaintiff, v. Melissa Jan WILLIAMS, f/k/a Melissa Williams Musslewhite, Defendant.
• Court: United States Bankruptcy Courts. Eleventh Circuit. U.S. Bankruptcy Court — Middle District of Georgia

7 B.R. 234 (1980)

In re Melissa Jan WILLIAMS, f/k/a Melissa Williams Musslewhite, Debtor The NATIONAL BANK AND TRUST COMPANY OF COLUMBUS, Plaintiff, v. Melissa Jan WILLIAMS, f/k/a Melissa Williams Musslewhite, Defendant.

Bankruptcy No. 80-00320-COL, A.P. No. 80-0410-COL.

United States Bankruptcy Court, M.D. Georgia, Columbus Division.

November 25, 1980.

J. Barrington Vaught, Columbus, Ga., for plaintiff.

David A. Clark, Columbus, Ga., for defendant.

COMPLAINT FOR RELIEF FROM STAY

FINDINGS OF FACT

ALGIE M. MOSELEY, Jr., Bankruptcy Judge.

1. On August 20, 1979, Debtor executed a security agreement in favor of Plaintiff, same being secured by a 1977 AMC automobile, and said security interest was properly perfected.

2. This security agreement represents a refinancing arrangement of a security agreement previously between Plaintiff and Defendant.

3. The total amount to be paid under the contract was $4,612.32, and the annual percentage rate is 13.06%.

4. No payments were made on the security agreement subsequent to April 15,

1980, and on June 2, 1980 Defendant filed a Chapter 7 voluntary bankruptcy petition, out of which this adversary proceeding arises.

5. On September 19, 1980, Plaintiff filed a Complaint for Relief from Stay.

6. The trustee has filed a No Asset Report, and has abandoned said automobile.

7. The fair market value of the automobile is $1,775.00, and there is at present a net balance due Plaintiff of $3,543.81. Monthly payments on the note and security agreement are $128.12 per month as specified in the promissory note.

8. Debtor has offered to begin again her monthly payments.

9. Debtor, recently divorced, needs the automobile to go to and from work, she has two jobs, she needs the automobile to transport children to school, the automobile is an absolute necessity.

10. Debtor offers to pay the current payments plus some extra so that she might retain possession of the automobile.

ISSUE

The question for decision is whether the automatic stay (11 U.S.C. § 362) should be terminated or should the stay be continued and provide the Plaintiff with adequate protection.

APPLICABLE LAW

1. 11 U.S.C. § 103(a) is as follows:

"(a) Except as provided in section 1161 of this title, chapters 1, 3, and 5 of this title apply in a case under chapter 7, 11, or 13 of this title."

2. Accordingly, 11 U.S.C. § 361, Adequate protection is applicable in this Chapter 7 case.

3. Also by reason of said 11 U.S.C. § 103, 11 U.S.C. § 362, Automatic stay, is applicable to this Chapter 7 case.

4. 11 U.S.C. § 361, Adequate protection, is applicable to this proceeding under 11 U.S.C. § 362(d) for relief from stay as it is so stated in the first line of 11 U.S.C. § 361.

5. The bankruptcy court is essentially a court of equity and should consider the "balance of hurt" in fashioning relief.

6. Relief from the automatic stay may be denied if adequate protection is provided.

CONCLUSIONS OF LAW

1. The automobile is necessary for Debtor's "new start."

2. The "interest in property" to be adequately protected in 11 U.S.C. § 362 is the value of the collateral, which is $1,775.00.

3. The Plaintiff has an allowed secured claim in the amount of $1,775.00 (11 U.S.C. § 502).

4. All of the debt in excess of the allowed secured claim is an unsecured claim or deficiency, and is freed from the lien (11 U.S.C. § 506) and is discharged in bankruptcy.

5. The Automatic stay (11 U.S.C. § 362) should not be terminated, but the stay should be continued and the Plaintiff provided with adequate protection.

6. The stay is modified so as to remain in full force and effect until and after the case is closed or the discharge is granted.

7. The Plaintiff is adequately protected by periodic monthly payments for fourteen months in the amount of $148.82 until such time as the total of $2,060.00 is paid to Plaintiff by Debtor.

8. The lien on the automobile remains in full force and effect in the amount of $1,775.00 decreasing periodically as each payment is paid by Defendant to Plaintiff.

9. Upon the Debtor's failure to make any monthly payment of $148.82, Plaintiff is relieved of the stay without further order of the Court.

10. Defendant should provide adequate insurance to protect the Plaintiff's interest in said property.

DISCUSSION

(Hereinafter, H.R. p. ___ has reference to H.R. Rep. No. 595, 95th Cong., 1st sess., p. ___, (1977). Also, S.Rep. p. ___ refers to S.Rep. No. 989, 95th Cong., 2nd sess., p. ___, (1978), U.S.Code Cong. & Admin. News 1978, p. 5787. Also, all emphases have been added).

The facts in this case frequently occur in consumer Chapter 7 bankruptcy cases. The debtor is behind in car payments, the creditor wants its collateral, the car, but possession of the car is an absolute necessity to the debtor. In deciding this case, the Court, being a court of equity, has tried to "balance the hurt" between the right of the Debtor to a "new start" and the right of the creditor to its "bargain."

"It must also be recognized that as a court of equity the bankruptcy court will be required to consider the impact of the stay on the parties and to consider the `balance of hurt\' in fashioning relief. The method of adequate protection may vary. Where the nondebtor party is in the business of extending credit a moratorium in debt service if accompanied by measures to preserve the collateral value may suffice. If, however, the collateral and the obligation which it secures are the principal assets of a retired husband and wife, adequate protection of their interest may necessitate periodic cash payments. The ultimate meaning of the term will be developed on a case by case basis, in each instance with the relief being tailored to the fact situation.

Finally, section 506(a) will simply operate to reinforce the existing rule to the effect that valueless junior secured positions or unsecured deficiency claims will not be entitled to adequate protection." Collier on Bankruptcy 15th Ed., ¶ 362.07, pp. 362-47, 362-48.

The bankruptcy court is essentially a court of equity and does not read "statutory words with the ease of a computer. There is an overriding consideration that equitable principles govern the exercise of bankruptcy jurisdiction." Bank of Marin v. England, (1966) 385 U.S. 99, 87 S.Ct. 274, 17 L.Ed.2d 197.

"A Court of bankruptcy is a court of equity seeking to administer the law according to its spirit and not merely by its letter." Johnson v. Norris, 190 F. 459 (5th 1911).

"Equitable principles are a guiding factor in all bankruptcy matters." In re Atlas Sewing Centers, Inc., 437 F.2d 607, 615 (5th 1971).

The purpose of straight bankruptcy under Chapter 7 is for a debtor to obtain a fresh start free from creditor harassment and free from the worries and pressures of too much debt (H.R., p. 125 and S.Rep., p. 6). This purpose of the Code continues the purpose often expressed in former decisions under the Act such as the following quote in In re Love, (5th 1978) 577 F.2d 344, 351 from Perez v. Campbell, 400 U.S. 818, 91 S.Ct. 71, 27 L.Ed.2d 45 (1971).

"This Court on numerous occasions has stated that `one of the primary purposes of the bankruptcy act\' is give debtors `a new opportunity in life and a clear field for future effort, unhampered by the pressure and discouragement of preexisting debt.\' Local Loan Co. v. Hunt, 292 U.S. 234, 244 54 S.Ct. 695, 699, 78 L.Ed. 1230 (1934). Accord, e.g., Harris v. Zion\'s Savings Bank & Trust Co., 317 U.S. 447, 451 63 S.Ct. 354, 357, 87 L.Ed. 390 (1943); Stellwagen v. Chum, 245 U.S. 605, 617 38 S.Ct. 215, 218, 62 L.Ed. 507 (1918); Williams v. United States Fidelity & Guaranty Co., 236 U.S. 549, 554, 555 35 S.Ct. 289, 290, 59 L.Ed. 713 (1915)."

Similarly, Lines v. Frederick, et al., 400 U.S. 18, 91 S.Ct. 113, 27 L.Ed.2d 124,

". . . the basic purpose of the Bankruptcy Act to give the debtor a `new opportunity in life and a clear field for future effort, unhampered by the pressure and discouragement of preexisting debt. The various provisions of the bankruptcy act were adopted in the light of that view and are to be construed when reasonably possible in harmony with it so as to effectuate the general purpose and policy of the act.\'" Citations omitted.

28 U.S.C. § 1481, Powers of bankruptcy court, among other things, provides that a bankruptcy court shall have the powers of a court of equity and 11 U.S.C. § 105, Power of court, provides that

"The bankruptcy court may issue any order, process, or judgment that is necessary or appropriate to carry out the provisions of this title."

It should be noted that illustrations rather than rigidly defined boundaries, as shown hereinafter, is the proper construction of "adequate protection" in 11 U.S.C. § 361, of "cause" in 11 U.S.C. § 362(d), and of "relief" in 11 U.S.C. § 362(d). This flexibility indicates that Congress intended that the "statutory words" of the Bankruptcy Code were not intended to be read "with the ease of a computer."

11 U.S.C. § 362, the Automatic stay, provides at subsection (d) that the court "shall" grant relief from stay for cause, including a lack of adequate protection of an interest in property. Actually, the subsection (d) says that the relief shall be granted for "cause," and everything else is illustrative of what "cause" might be. The word "including" follows the word "cause," and 11 U.S.C. § 102, Rules of construction, at Number 3, including is not limiting. It appears then from the illustration in this subsection that if Plaintiff's "cause" is lack of adequate protection, the complaint for relief from stay should be granted. Conversely, if adequate protection can be provided then there is no "cause," and the complaint for relief from the stay should be denied. Also in 11 U.S.C. § 362(d) "relief" is not defined or limited, it is only illustrated because of the words "such as" precede "terminating, annulling, modifying, or conditioning."

What is "the interest in property" of the Plaintiff herein that...