ROBERT J. WOODSIDE, Bankruptcy Judge.
Cumberland County National Bank (CCNB) has filed a motion to lift the stay so it can pursue its state remedies in repossessing a 1983 Toyota Celica GT-8 Lift Back. An answer has been filed by Richard L. Elicker and Linda L. Elicker (debtors) which in essence avers that debtors have equity in the car. A hearing was held, and the matter is now ready for decision.
The debtors filed their voluntary Chapter 7 petition on January 20, 1989. On January 24, 1989 the Clerk's Office sent the debtors notice that it was necessary for them to file additional documents to complete their petition. The notice provided:
On February 6, 1989, debtors moved to extend the time to file bankruptcy schedules, statement of affairs and related items. On February 9, 1989, I signed an order extending the time fifteen days from the date of the order. On March 9, 1989, debtors filed their second motion to extend time. On March 10, 1989, CCNB filed its motion to lift the stay. On March 13, 1989, I signed an order extending the time fifteen days from the date of the order. On March 24, 1989, debtors filed their answer to CCNB's motion to lift the stay. On March 29, 1989, debtors filed their third motion to extend time. On April 13, 1989, I signed an order extending the time ten (10) days from the date of the order. On April 28, 1989, the debtors filed the documents requested by the Clerk's Office.
A pre trial conference was held on CCNB's Motion to Lift the Stay on March 29, 1989, and the trial was held on April 21, 1989.
In their answer to CCNB's Motion, debtors admitted that they had not made any payments on the automobile since October 25, 1988 and that they were in breach of the note and security agreement. Moreover, the debtors' answer does not indicate that they intended to retain the Toyota. The court does not recall any testimony by Linda Elicker on this issue. The thrust of debtors' defense to CCNB's motion was that debtors had equity in the Toyota. Linda Elicker, who had experience in selling used cars testified that the Toyota was worth $6,500. She submitted an exhibit which listed all the extras which were on this particular car.
CCNB introduced an exhibit showing that as of the date of the hearing it was owed $6,212.15. Its expert who had owned and operated the Harrisburg auction for a number of years opined that the Toyota was worth considerably less than what was due the bank. He attached significance to the fact that the car had been driven over 100,000 miles. While he did not drive the car I find his opinion more reliable and thus find that the debtors have no equity in the car.
Obtaining relief from the stay is governed by 11 U.S.C. § 362(d) which provides:
In this case CCNB has met its burden for relief both under section d(1) and d(2).
There is no equity in the Toyota and the question of effective reorganization is not relevant. CCNB is, therefore, entitled to relief under section 362(d)(2).
The filing of a petition under Chapter 7 precipitates the appointment of a trustee who is charged with the statutory duty of collecting and reducing to money the property of the estate for which he or she serves, and of closing such estate as expeditiously as possible. See 11 U.S.C. § 704(1). The bankruptcy filing also imposes a stay, applicable to all entities, of various actions against the debtor or the debtor's property or against property of the estate
In the meantime, it has been held that there are only three options available to a Chapter 7 individual debtor who is in default on an obligation to a creditor having a valid non-avoidable lien which would allow the debtor to retain possession of the encumbered property. These options are: (1) redemption of the property under section 722
In cases such as the one at hand, where the creditor's lien is not challenged, the default is admitted, and the Chapter 7 Trustee does not oppose the lifting of the automatic stay, I believe that in order to justify the continued imposition of the stay individual debtors must raise the defense that they will seek to redeem or reaffirm the obligation or that they will be converting to a Chapter 13 case. In this case the debtors have raised none of those defenses.
In addition, as noted earlier the debtors have received a notice from the Clerk's Office informing them of the requirement to file a statement of their intention as required by section 521(1) and (2) of the Bankruptcy Code.
The Code was recently amended to require debtors to take certain action in regard to consumer debts which are secured by property of the estate. Sections 521(1) and (2) of the Code provide:
The debtor shall—
11 U.S.C. §§ 521(1) and (2).
The purpose of 11 U.S.C. § 521(2) is to provide a secured creditor with knowledge as to the debtors' intentions concerning the collateral in which the creditor holds a security interest. While there are often times when debtors need to obtain an extension of time to file the documents required by 11 U.S.C. § 521(1), I am of the opinion that granting an extension of time to file the statement of intention should rarely be granted. I recognize in this case that debtors can argue that they received extensions which were signed by the court. However, I am of the opinion that the failure of the debtors to raise as a defense to the motion to lift the stay their intention to redeem the Toyota requires the requested relief to be granted for cause.
An appropriate order will be entered.