Reaffirmation Agreement Validity

[TheShadow314]

Hi,

When I filed bankruptcy, the reaffirmation agreement was filed with the court but no hearing was scheduled and it has not been either approved or denied.

The case has been closed and discharged for over a year now. The bank thinks it's valid and I have been paying the car loan. It shows on my credit report as if it was reaffirmed.

The question is, is this agreement invalid and can I treat this just like a "ride through" and tell the bank to come get their car without them messing with my credit?

Thanks!

[justbroke]

The key question is whether or not you were represented by an attorney. If you were represented and the attorney did not check the hardship box, then their signature and the filing is accepted upon the filing. You have 60 days from the time that it was filed or the discharge, whichever is later. Since it has been one year, the agreement is valid.

If you were Pro Se and filed this agreement on your own, the court "should" have scheduled a hearing on the matter. While there are special rules for Credit Unions (CUs), a hearing is required for Pro Se individuals. In some cases, a represented debtor's attorney may decide to check the "hardshiop" box and/or not sign the reaffirmation agreement. In those cases, a hearing is still required unless it's the CU exception.

So, did you file with an attorney?

Also, was this a credit union?

[TheShadow314]

No, I filed pro se.

As for the bank, it is Ally bank so not a credit union.

[justbroke]

You would have to motion to re-open the case and that may cost $$$. Reopening by a debtor for purposes of determining dischargeability is free, but all other reasons cost about $360 (last time I checked). I might say that this would be a motion to re-open to determine dischargeability because, well, you're wanting to know if the debt was discharged (due to no enforceable reaffirmation agreement). The other reason for a free re-open may be that you are trying to enforce the terms of the discharge in 11 USC 524 -- regarding the "unapproved" and unenforceable reaffirmation agreement. Essentially, you'd save on the re-opening fee if you attack it as a dischargeability question.

You may also look to see if an attorney will take this on contingency, because if the attorney is successful, they'll get their fees from Ally (the creditor).

A pro se who attempts to enter into a reaffirmation agreement (meaning they are not represented) must ask for (motion for) and attend a hearing on the matter. The code is confusing, but the required reaffirmation agreement language contains the following;

7. If you were not represented by an attorney during the negotiation of your reaffirmation agreement, it will not be effective unless the court approves it. The court will notify you of the hearing on your reaffirmation agreement. You must attend this hearing in bankruptcy court where the judge will review your reaffirmation agreement. The bankruptcy court must approve your reaffirmation agreement as consistent with your best interests, except that no court approval is required if your reaffirmation agreement is for a consumer debt secured by a mortgage, deed of trust, security deed, or other lien on your real property, like your home

Here's a case, that's on point, from the Southern District of NY:
"As the agreement was never approved by the Court, it never became effective and therefore, need not have been rescinded by the Debtor to be unenforceable."... https://www.leagle.com/decision/inbco20160418438

Even though you're in NY, here are some cases in which a Pro Se didn't have a hearing:
https://www.jacksonvillebankruptcyla...5/01/acase.pdf

[TheShadow314]

Thank you for your help justbroke!