June 26, 2007
Who else despises the new reaff. requirements?
Reaffirmation agreements are not as easy as they used to be. Yes, there are forms, but they are not the ones your secured creditor clients like to use.
Check out In re Moustafi, --B.R.--, 2007 WL 1592965 (Bankr. D. Ariz., June 4, 2007). FYI: Individual chapter 7 case.
The court addressed whether "[i]f disapproval of the Reaffirmation Agreement means that that Debtor has failed to perform her intention as required by [section] 521(a)(2)(B), then [section] 521(d) would apply, permitting [the secured creditor] to enforce its ipso facto clause. Post-discharge, [the secured creditor] would be able to repossess the Nissan because the Debtor's bankruptcy filing is an event of default under the . . . security agreement."
In Moustafi, the bankruptcy court disapproved the reaffirmation agreement at issue (because the debtor's net monthly income was less than her expenses and the car loan was underwater); however the court engaged in a thoughtful discussion about whether a court's decision not to approve a reaffirmation triggers the new BAPCPA 362(h)(1) or renders a debtor in violation of section 521(d).
The court, even though declining to approve the reaffirmation agreement, noted that because the debtor filed her Statement of Intention within 30 days of the petition, she complied with sections 521(a)(2)(A) and 362(h)(1)(A) -- AND -- by filing the reaffirmation agreement prior to the section 341 meeting, she complied with sections 521(a)(2)(B) and 362(h)(1)(B), the debtor could retain the vehicle is she remained current on her payments.
Abreast of the main holding, the court also discussed the role of the bankruptcy judge in the reaffirmation process, the current status of the availability of "ride through, section 521(a)(6), and section 524(c) - the reaffirmation sub-section.
For both debtor and secured creditor attorneys -- if you have a reaffirmation issue, please make sure to find the form available on your district's website and carefully read section 524(k). See also In re Husain, 2007 WL 709302 (Bankr. E.D. Va. March 5, 2007) and In re Blakeley, 2007 WL 674712 (Bankr. D. Utah Jan. 17, 2007).
Re: the "ride through" issue -- see In re Ertha Rice, 2007 WL 781893 (Bankr. E.D. Pa. March 12, 2007); In re Rowe, 342 B.R. 341 (Bankr. D. Kan. 2006).