Creditors' Sidebar

The law governing the repossession of collateral is similar to Kenny Rogers’ advice in his classic, “The Gambler.” Like the old-time card players in Rogers’ ballad, secured parties who utilize self-help to repossess collateral must know when to walk away . . . and when to run. Indiana, like most states, allows secured parties to use “self-help” to repossess collateral securing a defaulted debt.

While a colleague has likened Kentucky’s guaranty statute to Lewis G. Carroll’s Jabberwocky, the statute that frightens us more is Kentucky’s failure to release statute. It is a statute that comes with draconian penalties ($500/day plus attorney’s fees) and a lack of judicial interpretation.

Due to foreclosure and eviction moratoriums, voluntary forbearances, or the influx of government stimulus, the anticipated wave of creditor actions as a result of the pandemic have been held at bay.

The Supreme Court has ruled unanimously that the “mere retention of property does not violate § 362(a)(3)” of the automatic stay.