When do you reaffirm

[mrskal]

Thanks!

[debee]

I believe this clause is now illegal, at least when dealing with auto loans. Tom (tcreegan) has posted extensively on it, it has to do with the change in wording of the law in 2005 and sections 541 a - c, where 541 a specifically defines bankruptcy filing as not breach of lease or contract.

Section 541 of the BK Code address Property of the Estate. Section 521 addresses Debtor's Duties.

When BAPCPA was introduced 521 (d) was added which permits creditors to enforce the ipso facto clause if debtor fails to comply with the provisions of 521 (a)(2)(A) and (B) which require the debtor to state their intention to redeem or reaffirm and then perform that intention. 521 (a)(6) removes the stay if debtor fails to enter agreement or redeem and 362(h) alters the debtors and trustees rights under this title and removes the stay if debtor fails to file statement of intentions and perform accordingly within the allowed time frames.

Prior to BAPCPA and the introduction of 521(d), the ride-through was allowed in some districts because the ipso facto clause wasn't enforceable. But now it is.

[tcreegan]

Hi all, Hi debee,

It is an odd case, the law giveth then the law taketh away...

11 U.S.C. §521 (a)(6) gives creditors the ipso facto clause then

11 U.S.C. §541(c) takes the ipso facto clause away

....an interest of the debtor in property becomes property of the estate......notwithstanding any provision in an agreement, transfer instrument, or applicable nonbankruptcy law...

(B) that is conditioned on the insolvency or financial condition of the debtor, on the commencement of a case under this title, or on the appointment of or taking possession by a trustee in a case under this title or a custodian before such commencement, and that effects or gives an option to effect a forfeiture, modification, or termination of the debtor’s interest in property.

[tcreegan]

*^&%*# computer....sorry for the split post....

Lots of lawyers are now holding that 11 U.S.C. §521 (a)(6) only requires the intention to reaffirm, not an actual reaffirmation. They say check the reaffirm box on the statement of intentions but never get the reaffirmation signed or approved and, barring any other default, 11 U.S.C. §541(c) prevents a foreclosure or repossession.

What I want to see is a case where the debtor signs the reaffirm, gets it approved, then rescinds it after discharge but w/in the 60 days and invokes 11 U.S.C. §541(c) to prevent foreclosure/repo The reason I want to see this is that it effectively gives back the 'retain and pay' that Congress tried to remove w/ BAPCPA (under pressure from lenders)

oh well, maybe another Supreme Court case?

Tom in Colo

[debee]

11 U.S.C. §521 (a)(6) gives creditors the ipso facto clause then

11 U.S.C. §541(c) takes the ipso facto clause away

....an interest of the debtor in property becomes property of the estate......notwithstanding any provision in an agreement, transfer instrument, or applicable nonbankruptcy law...

362(h) alters the debtors and trustees rights under this title and removes the stay if debtor fails to file statement of intentions and perform accordingly within the allowed time frames.

[debee]

Lots of lawyers are now holding that 11 U.S.C. §521 (a)(6) only requires the intention to reaffirm, not an actual reaffirmation. They say check the reaffirm box on the statement of intentions but never get the reaffirmation signed or approved and, barring any other default, 11 U.S.C. §541(c) prevents a foreclosure or repossession.

In 362(h) & 521 (a)(b) BAPCPA incorporated the line between personal and real property. In the new code, 362(h) and 521 (a)(b) relate only to personal property and not to real property. Checking reaffirm on the house is different than checking it on the car.

362(h) lifts the automatic stay and alters not just the debtors rights, but also the trustee's rights in terms of what is considered property of the estate.

In the cases when back door ride-throughs have been allowed (because the judge would not sign off on the reaffirmation agreement), it was explicitly stated by the court that the debtor had complied with 521(a)(6), 521 (a)(2) and 362 (h) and were able to keep their cars so long as they didn't default. I'm thinking of In re: Chim, In re: Bower, In re: Moustafi, In re: Stevens, In re: Riggs, In re: Husain.

In the cases in which ride-through was not allowed by the court, specific reference was also made to 521(a)(6), 521 (a)(2), and 362(h): In re: Caraballo, In re: Dumont, In re: Rowe, In re: Steinhaus, In re: Norton, In re: Anderson, In re: McFall, In Re: Ruona, In Re; Quintero, In re: Craker, In re: Faught, In re: Boring, In re: Bennett, etc

If the debtor checks off 'reaffirm' for the car and the lender doesn't send an agreement, the debtor can't sign one. We know it's possible to keep a car in the situation where the lender doesn't need a reaffirmation agreement. But if they send one, and the debtor doesn't sign it, then the debtor has failed to comply with code cited above and the car is no longer property of the estate and the stay is lifted and so long as they abide by state law and the security agreement, they can take it. The exception being the cases where the judge refuses to allow it and further adds some kind of declaration preventing the creditor from repo.

[mrskal]

Just an update, I did get my reaffirmation papers a few weeks after the 341. Answered the questions and sent back to lawyer. Looked on Pacer and it was accepted by Ford and approved by court. Thanks all.