Georgia Bankruptcy Blog

In re Moustafi (click for opinion), Ch. 7 Case No. 4-07-00407-EWH, 2007 Bankr. LEXIS 1925 (Bankr. D. Ariz. June 4, 2007.  The Chapter 7 debtor stated her intention to reaffirm the debt secured by her vehicle. She timely executed the reaffirmation agreement pursuant to §521, and it was accepted by the lender.  However, the court found that debtor's income could not support the payments and declined to approve the reaffirmation.  The question thus arose as to whether the lender could repossess the vehicle.

If disapproval of the Reaffirmation Agreement means that the Debtor has failed to perform her intention as required by § 521(a)(2)(B), then § 521(d) would apply, permitting Vantage to enforce its ipso facto clause. Post-discharge, Vantage would be able to repossess the Nissan because the Debtor's bankruptcy filing is an event of default under the Vantage Security Agreement.

In In re Husain, 2007 Bankr. LEXIS 768, 2007 WL 709302 (Bankr. E.D. Va. March 5, 2007), the court addressed this issue and found:

The Debtors' timely act of entering into mutually satisfactory reaffirmation Agreements with their creditors must be viewed as sufficient to satisfy the performance standards of § 521(a). Those performance requirements should not be read as a mandate for debtors to entirely consummate their stated intentions. . . . Section 521(a) of the Bankruptcy Code merely requires the debtor to "take steps to act on an intention to either retain or surrender.". . . . The Debtors in the case at bar did everything in their capacity to perform.

2007 Bankr. LEXIS 768, 2007 WL 709302, at *5 (citations omitted in text). This court agrees. The consequences of § 362(h)(1) and § 521(d) -- lifting the automatic stay and making ipso facto default clauses enforceable -- are only caused by a debtor's failure to timely file a statement of intention and/or to timely enter into a reaffirmation agreement, "not by the court's disapproval of the agreement or by its determination that the agreement is unenforceable." Id.; see also In re Blakeley, 2007 Bankr. LEXIS 538, 2007 WL 674712, at *6 (Bankr. D. Utah Feb. 21, 2007) ("It is not necessary for the Court to approve the reaffirmation agreement in order for the Debtor to comply with § 521 or § 362(h).").

In this case, the Debtor filed her Statement of Intention within 30 days of the petition date -- checking the box indicating she wished to reaffirm the Vantage debt. By filing the Statement within 30 days of her petition date, the Debtor complied with the requirements of §§ 521(a)(2)(A) and 362(h)(1)(A). The Debtor's first meeting of creditors was held on May 8, 2007. By executing and filing the Reaffirmation Agreement with the court prior to that meeting, the Debtor complied with the requirements of §§ 521(a)(2)(B) and 362(h)(1)(B). Accordingly, the Nissan remains property of the estate and the automatic stay remains in effect until the Debtor receives her discharge. See 11 U.S.C. § 362(c)(2)(C).

Once the discharge is granted, because the Debtor has complied with § 521(a)(2), Vantage may not repossess the Nissan as long as the Debtor is current on her payments and insurance obligations. n10 See Parker, 139 F.3d at 673; see also Blakeley, 2007 Bankr. LEXIS 538, 2007 WL 674712, at *6 (BAPCPA has not entirely eliminated the possibility of ride-through; "where a debtor timely complies with all requirements under §§ 521 and 362(h), the debtor can 'ride through' the bankruptcy notwithstanding a bankruptcy court's refusal to approve the reaffirmation agreement.").

n10 The result would be the same if § 521(a)(6) applied to the Debtor. Section 521(a)(6)(A) requires that a debtor enter into a reaffirmation agreement -- not that the reaffirmation agreement be approved by the court.

.......

BAPCPA added the following to the end of subparagraph (C): "except as provided under 362(h)." However, as explained earlier in this decision, § 362(h) does not apply to debtors, like Ms. Moustafi, who have timely complied with the requirements of §§ 521(a)(2)(A) and (B). Consequently, when § 362(h) does not apply, § 521(a)(2)(C) has the same effect as it did under Parker: "The debtor's other options remain available, as unambiguously stated in § 521[a](2)(C). . . ." 139 F.3d at 673. There is no reason for this court to reach beyond the plain language of the statute to implement some presumed Congressional intent to completely eliminate ride-through when the unambiguous language of §§ 521(a)(2) and (a)(6) limit BAPCPA's anti-ride-through provision to debtors who fall within the purview of §§ 362(h) and 521(d).

 

Section 362(h)(1) of the Bankruptcy Code provides that if the debtor fails to file the Statement of Intentions and perform the stated intentions within the time specified in §521(a)(2), the stay is terminated as to the collateral and it is no longer property of the estate. But "how" is the Stay Terminated. There is no separate Order filed by the Court "at that time" indicating the Stay is lifted? May a creditor safely go out and repossess its collateral once 30 days expires after the first meeting of creditors or does the creditor still need to file a Motion to Lift Stay and wait the 10 days for an Order lifting Stay - all of which costs the creditor legal fees and a delay in obtaining possession of the collateral. Should the creditor not wait and file a Motion to Lift Stay immediately if the debtors statement of intentions does not indicate the debtor will Reaffirm, Surrender or Redeem the collateral? Thank you.

We filed chapter 7 and our attorney sent a letter to our lender that we wanted to reaffirm our mortgage. They did nothing at the time. About 2 weeks before our case was discharged we called and the lender said that the received the letter stating we were doing chapter 7 but did not see a request for reaffirmation. Our Attorney said it was in there. The lender was notified again that we needed the reaffirmation in 2 to 3 day and it needed to be sent overnight because our discharge was gone to be final on a specific date which was given. Two week later the agreement showed up at the Attorneys office on the day of discharge. We still want to keep our house and our Attorney said that it is not a problem just make payments. The lender has cut us off from using their website to set payment up. We have been out of bankruptcy for over a year now. They say that they cannot let us use the website because their attorneys said it is not reaffirmed and it is an attempt to collect a debt and they cannot allow us to do so. Is this true? What can we do to be able to let them use their site to pay our payment and check on our account. They have been messing up our payment for the last 6 month and we cannot see what they are doing until its to late. In December my husband lost his job so we then had to do a loan modification and that is now completed and we still cannot use the internet to set payments up because we did not sign a reaffirmation. Which makes no sense. I sent in our payment for June and the applied it to un-applied funds. We did not see it until the July Bill came out. And for our July payment the also applied it to un-applied funds on the 28th of June. I called to see if the received payment and they said that they received a check and DID NOT KNOW WHAT TO DO WITH IT!!! I had to tell them it was my payment for July and to please move the money over for my payment! I am real scared about the lender putting my money somewhere else and not on my payment and i have no way to track it.

What can we do so we can pay on line? Is there a law that says that since we did not sign a reaffirmation we cannot pay on line or its an attempt to collect a debt?(that is what the Lendor is telling me) Who can we go to to get help?