Current City (CC) is a retail seller of television sets. CC sells Dhani a $3,000 large-screen, high-definition, LED set on a retail installment security agreement in which he pays $100 down and agrees to pay the balance in equal installments. CC retains
a security interest in the set, and perfects that interest by filing a financing statement centrally. Two months later, Dhani is in default on the payments to CC and is involun-tarily petitioned into bankruptcy by other creditors. Discuss CC's right to repossess the TV set and whether CC has priority over the trustee in bankruptcy.
?CC will not be able to repossess the set. The filing of the in-voluntary petition in bank-ruptcy operates as an automatic stay of any creditor's action against the debtor or the property of the debtor. If CC knowingly violates the automatic stay, CC could be liable to any injured party for actual damages suffered, all costs, reasonable attorneys' fees, and even possibly punitive damages. Therefore, CC's right of reposses-sion is cut off by the bankruptcy proceeding.
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