All posts in Reaffirmations

Watch out for Ford and reaff’s

This is from our consumer bankruptcy listserve, bankruptcy attys only, names have been withheld to protect the innocent.

Question (from consumer bk atty):  I filed a Chapter 7 for client.  Ford sent their letter saying to sign a reaffirmation agreement or they will repo the car.  Has anyone had Ford actually repo cars with no reaffirmation agreement?

Answer No. 1:  Yes…especially if they’re represented by Cooksey Toolen in Costa Mesa.

Answer No. 2:   Definitely. Watch out for Ford!

Comment from Hale Antico, President of our group:

I think the conventional wisdom is only Ford/Cooksey will go after a failure to reaffirm, but it’s still best practice to reaffirm, coupled with the next sentence. If the court disapproves it, we’re back to pre-BAPCPA ride-through. I know of no example of a repo after a court disapproval where debtor remained current.

Credit Unions won a reaff carve-out at 524(m)(2).

Public Counsel Reaffirmation Clinic – June 28, 2018

Email from Christian Cooper,

Did you know that bankruptcy filers with auto loans can not only keep their cars, but may be able to lower their payments substantially? Learn how at Public Counsel’s “Reaffirmation and Redemption in Chapter 7 Bankruptcy” MCLE program next Thursday in Downtown L.A. There is no cost to attend, and lunch is provided.

More info:

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Can I Reaffirm a Non-Recourse Debt?

This question was posed to a listserv in the Central District of California: “If  a debtor reaffirms an otherwise non-recourse mortgage, does the reaffirmation convert that into a recourse loan?”

This question made me consider what reaffirmation really meant because, in the fact pattern above, reaffirmation could potentially put the creditor in a better position than before the bankruptcy, and that can’t be! Don’t forget to Borrow Money Fast For Your Personal Finance –

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May 16, 2015

Presented by:
Central District Consumer Bankruptcy Attorney Association

Hon. Vincent P. Zurzolo, United States Bankruptcy Court, Los Angeles Division
Nancy B. Clark, Borowitz and Clark
Christian Cooper, Public Counsel

Southwestern Law School
3050 Wilshire Boulevard
Westmoreland Building – 3rd Floor
Los Angeles, CA 90010

Parking is $ 10 .00

Registration: 10:00am – 11:00am
cdcbaa Membership Meeting: 10:30 am – 11:00 am
Program: 11:00 am – 1:00 pm

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More on Reaffirmation Agreements

I had a short very enlightening conversation on reaffirmation agreements with a bankruptcy judge at the 9th Circuit Judicial Conf last week.  The conversation started with my comment at the program I was doing that I don’t sign – ever – the attorney declaration in 524(c)(3).  The conversation was about the consequences of not signing it.  I now have a new way of looking at the whole process thanks of the help of a law firm in Kendall County, In you can find the specialist attorneys they work with to know much further about the bankruptcy judicial management and to understand why and how is this reaffirmation agreement has been useful and will be.

Section 524(c) states that a reaffirmation agreement is not enforceable unless:

(3) such agreement has been filed with the court and, if applicable, accompanied by a declaration or an affidavit of the attorney that represented the debtor during the course of negotiating an agreement under this subsection, which states that—
(A) such agreement represents a fully informed and voluntary agreement by the debtor;
(B) such agreement does not impose an undue hardship on the debtor or a dependent of the debtor; and
(C) the attorney fully advised the debtor of the legal effect and consequences of—
(i) an agreement of the kind specified in this subsection; and
(ii) any default under such an agreement;

(5) the provisions of subsection (d) of this section have been complied with; and
(6) (A) in a case concerning an individual who was not represented by an attorney during the course of negotiating an agreement under this subsection, the court approves such agreement as—

(i) not imposing an undue hardship on the debtor or a dependent of the debtor; and
(ii) in the best interest of the debtor.

So far so good.  If I sign the declaration, the agreement is enforceable.  If I don’t, it’s unenforceable.  Can’t the court approve it anyway?  That is certainly what I and I’m sure 99% of consumer bankruptcy lawyers think.  But the debtor is still “represented by an attorney” – me – so (c)(6) doesn’t seem to apply. But it happen in many different law cases, for example in injury cases sometimes there are laws that don’t seem to apply, so the use of Injury lawyers las vegas is the best option to see all the rightful laws are applied to you.

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Response to Prof. Scarberry re Reaffirmations

Hi Jon,

I read Mark’s summary.  I think that although we reach opposite conclusions, we don’t disagree on the analysis of the issue.

However, there is a long line of cases which I cited in my article that support the position that provided the debtor states an intention to reaffirm, cooperates with creditor in executing reaffirmation K, and attends reaffirmation agreement  then ride-though exists if the judge denies the agreement.

11 U.S.C. §§362(h)(1)(a), 521(a)(2)(A), 521(a)(2)(B),521(a)(6)(B), 521(d).  In re Perez, 2010 Bankr. LEXIS 2229, at *29 (Bankr. D. N.M. July 12, 2010) (The court held that §521(a)(2)(B) does not require the debtor toconsummate an enforceable reaffirmation agreement,since whether the agreement is enforceable depends on factors outside the debtor’s power or control, but only to do all that is within the power and control of the debtor.). See also In re Moustafi, 371 B.R. 434, 438 (Bankr. D. Ariz. 2007); In re Husain, 364 B.R. 211, 219 (Bankr. E.D. Va. 2007); In re Barron, 441 B.R. 131, 137 (Bankr. D. Ariz. 2010); In re Chim, 381 B.R. 191, 198 (Bankr. D. Md. 2008). In re Hardiman, 398 B.R. 161, 187 (E.D. N.C.2008) (The court held that since the debtor had alreadycomplied with §§362 and 521, the remaining language stating, “[n]othing in this title shall prevent or limit the operation of an [an ipso facto clause]” does not apply.); In re Perez, 2010 Bankr. LEXIS 2229, at 40.  The same analysis should be applied when reading the language used later in §521(d).

As for language in 521(d), the Hardiman case sets forth that this provision only applies when the debtor fails to do something required after the passage of BAPCPA which basically requires the debtor to:

1) State an intention to reaffirm 2) Cooperate with creditor in executing and sending reaffirmation agreement back to creditor (This may be something debtors and debtor’s counsel may want to document in case creditor tries to claim debtor did not do this); and 3) Attend the reaffirmation hearings.

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Reaffirmation Discussion: Can the auto lender pick up the vehicle after the Court refuses to approve the reaffirmation? Prof. Scarberry thinks so.

From a discussion from another listserve: (Remember Prof. Scarberry is brilliant but creditor oriented).


Looking for some suggestions.  We’re finding that most car lenders won’t repo and will accept tender of payments if debtors comply with all requirements of 362(h) and 521(a)(2) but the reaff is denied based on undue hardship.  One lender – San Diego County Credit Union – simply refuses tender of payment after the reaff is denied, and then picks up the car after discharge.

For those of you at NACBA in San Antonio less than two months ago, Bankruptcy Judge Eileen Hollowell of Arizona spoke on reaffs and “ride through”.  Her Moustafi opinion essentially allows ride-through in the above circumstances, and her form Order was included in the NACBA materials.  In her form order, she specifically orders the creditor to continue accepting payments.

Here’s where I get lost.  Last year, there was a San Diego County Credit Union case that went up to the BAP.  Judge Hollowell was on that BAP panel which held that:

…a creditor does not violate the Bankruptcy Code by refusing to accept payments tendered by a debtor. Additionally, we did not find any other federal law that may apply.

If 521(d) (which makes ipso facto default clauses unenforceable) is inapplicable in a case because debtors have fully complied with 362(h) and 521(a)(2), isn’t acceptance of tender implicit – even mandatory – in the terms of an otherwise enforceable contract?

I now have a debtor with a denied reaff, sufficient funds in my trust account from every post-petition refusal of tender, and a guaranteed repo in a few days when the discharge issues.

Gary Holt
San Diego

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Absent Reaffirmation is a Post-bk Ipso Facto Repo Wrongful? Can bk judge enter a final order?

I think the answers are yes and yes.  Here is why.

Post-discharge and case closure, while debtor remains current on the payment and hasn’t otherwise defaulted under the contract terms, the 9th Circuit Court of Appeals decision In re Parker still applies and the ipso facto clause is unenforceable as a matter of law.

While Stern v. Marshall restricts Bankruptcy Courts from entering final orders in traditional common law matters not necessary to resolve allowance of claims in the case, it does not prohibit the Bankruptcy Court from entering a final order in an action involving a right derived exclusively from the Bankruptcy Code despite that it relates to a traditional commonly law contract creating other “private rights” that are not governed by the Bankruptcy Code.

I.   Wrongfulness of Repossession Based Upon Ipso Facto Clause After Debtor Satisfies 521 Requirements, Despite That Court Does Not Approve The Reaffirmation Agreement

This conclusion that Parker still applies to prevent a creditor from repossessing a debtor vehicle, after entry of a Chapter 7 discharge, only based upon a default consisting of the debtor filing the bankruptcy, is supported by the recent case In re Chim, 381 B.R. 191 (Bankr. D. Maryland 2008), see reasoning at page 7:

“Prior to the enactment of BAPCPA, the Court of Appeals for the Fourth Circuit held in Home Owners Funding Corp. v. Belanger (In re Belanger), 962 F.2d 345 (4th Cir. 1992) that an individual Chapter 7 debtor's actions with respect to a secured debt and its corresponding collateral were not confined to those options enumerated then in place 11 U.S.C. § 521(2). 12 Id. at 348. [*199] Specifically, the Court held that a debtor was not required to reaffirm a debt securing property, or redeem or surrender the same. Instead, the Court agreed with those courts that follow the ride-through approach,  [**21] and held that a debtor who is current on the payments under the loan agreement may retain the property without reaffirming the debt which it secures. Id. In reaching this conclusion, the Court expressly rejected the holding in In re Bell, 700 F.2d 1053 (6th Cir. 1983) which held that an ipso facto clause becomes effective when the trustee abandons the collateral. Id. at 1058. Following its own precedent, the Belanger Court held that “…a default-on-filing clause in an installment loan contract was unenforceable as a matter of law.” Belanger, 962 F2d at 348 (citing Riggs Nat'l Bank v. Perry, 729 F2d 982, 984-85 (4th Cir. 1984)).” (emphasis added in bold)


There is no reason to conclude that the rationale of Belanger should not apply with equal vigor to post-BAPCPA cases where a debtor complies with Section 521(a)(2) but the Court rejects the reaffirmation agreement. To be sure, the creditor relief provisions of Sections 362(h), 521(a)(6), and 521(d) may impact upon a debtor's option of having a credit agreement ride through the bankruptcy case in certain circumstances where the debtor fails to comply with Section 521(a)(2). However, where a court rejects a reaffirmation agreement that was timely entered into by a debtor, the debtor is left in the same position as a  [**23] debtor who elected to have the loan contract ride through bankruptcy prior to the adoption of the creditor relief provisions in BAPCPA, and the rationale of Belanger continues to apply.” (emphasis added in bold).

and based upon In re Dumont 581 F.3d 1105 (9th Cir. 2009) (which involved a vehicle purchase contract), see page 7:

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