Seventh Circuit Review


Bankruptcy is largely a collective process that furthers two goals—the equitable distribution of the debtor’s assets on account of his liabilities and either granting the debtor a fresh start, or the rehabilitation of the debtor by utilizing his income and property to reorganize his affairs. The most significant tool available to further these goals is the automatic stay, which is widely recognized to enjoin most collection efforts against the debtor and prevent the chaotic scramble for the debtor’s assets would otherwise occur between his creditors. However, the debate has intensified the automatic stay is just a “stay”, or whether it additionally places an affirmative obligation to return seized property belonging to the debtor once the bankruptcy commences. This issue is largely important in the Seventh Circuit, where Chicagoans hold some of the highest traffic ticket debt in the country, resulting in the City’s mass immobilization of their vehicles. In 2019, the Seventh Circuit reaffirmed that the stay requires the City to return the debtors’ cars in In re Fulton, giving debt-riddled Chicagoans a fair chance at rehabilitation.. In light of the Supreme Court agreeing to hear Fulton, this Note analyzes the automatic stay provision and argues that the Seventh Circuit’s approach best reflects bankruptcy’s purpose and how it furthers important policy goals underlying the Bankruptcy Code. Bankruptcy, as a collective process, requires all creditors, including the government, to cooperate and help facilitate an equitable outcome.

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