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Consumer Law

Impounded vehicles can’t be held after drivers file for bankruptcy

Thousands of Chicago motorists may be able to get their cars and trucks out of city impound lots immediately after filing for Chapter 13 bankruptcy following a federal appeals court ruling that the city could no longer hold onto the vehicles. 

The 7th U.S. Circuit Court of Appeals said the city’s aggressive strategy, aimed at discouraging motorists whose vehicles had been impounded over unpaid tickets from filing under Chapter 13, violated the basic protections of bankruptcy, and the city was doing so mostly to generate revenue.

“This allows Chapter 13 to accomplish its intended purpose, which is to put the property that a debtor needs to go on with the debtor’s life in the hands of the debtor,” says Eugene Wedoff, a retired chief bankruptcy judge for the Northern District of Illinois who argued the appeal on behalf of the debtors.

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