Debra A. Brown

UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF COLUMBIA
In re
DEBRA A. BROWN,
Debtor.
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Case No. 08-00712
(Chapter 7)
Not for Publication in
West’s Bankruptcy Reporter
MEMORANDUM DECISION AND ORDER REQUIRING
FILING OF AMENDED REAFFIRMATION AGREEMENT
The debtor has filed a reaffirmation agreement with GMAC.
The agreement must be viewed as ineffective unless the debtor
files an amended reaffirmation agreement as explained below.
I
The debtor included with the reaffirmation agreement a
Statement of Total Income and Expenses in accordance with Rule
4008. 	On that statement, the debtor notes that she listed her
expenses on Schedule J as being $3,285.00, whereas she lists her
current monthly expenses on the reaffirmation agreement as being
$2,757.00. 	Although the Official Form of reaffirmation agreement
filed by the debtor prompts the debtor to explain any discrepancy
between expenses listed on Schedule J and current monthly
expenses, the debtor failed to provide such an explanation.
The order below is hereby signed.
Signed: January 17, 2009.
_____________________________
S. Martin Teel, Jr.
United States Bankruptcy Judge
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2
A review of the debtor’s schedules permits the inference
that $409.00 of the $528.00 difference in monthly expenses is
attributable to the car payment the debtor now seeks to reaffirm.
That still, however, leaves $119.00 of the variance unaccounted
for, and that unexplained $119.00 shortfall gives rise to a
presumption of undue hardship. 	The reaffirmation agreement
includes no explanation why the debtor can comply with the
reaffirmation agreement despite that presumption. 	Accordingly,
the reaffirmation agreement is ineffective. 	See In re Jo, 2007
WL 4411619, at *1 (Bankr. E.D. Va. Dec. 14, 2007):
It is not appropriate to provide income and expenses in
Part D different from those on Schedules I and J
without explaining the changes. 	See In re Laynas, 345
B.R. 505, 513-15 (Bankr. E.D. Pa. 2006) (holding that
the court has the authority to consider the accuracy of
the financial information reported in Part D and find a
presumption of undue hardship if the debtor fails to
harmonize the Part D information with the information
contained in the schedules and the Rule 4008
statement). 	The changes and the reasons for them are
important for the court in its review of a
reaffirmation agreement.
Accordingly, I will require the submission of an amended
reaffirmation agreement.
II
The reaffirmation agreement includes the debtor’s counsel’s
recitation that the agreement represents a fully informed
agreement by the debtor. 	Although the court has no discretion to
second guess the debtor’s attorney’s judgment in that regard, I
note that it is not at all clear that a reaffirmation agreement
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1 	In light of 11 U.S.C. § 727(a)(10) (providing for denying
a discharge if “the court approves a written waiver of discharge
executed by the debtor after the order for relief under this
chapter”), the debtor may wish to endorse the proposed order
(even though that type of order, I think, only clarifies the
discharge injunction and does not amount to a denial of
discharge).
3
would be necessary to assure that GMAC would not seize the car.
The car is worth $9,900 according to the debtor’s schedules, and
the debt to be reaffirmed stands at $17,890.30. 	If the debtor
remains current on car payments and keeps the car insured, GMAC’s
best interests may be to permit the debtor to retain the car even
if it has a right to enforce an ipso facto (due-on-bankruptcy)
clause. 	Moreover, the debtor can seek entry of an order giving
GMAC assurances that she will be liable for any loss arising from
failure to keep the car insured or any damage arising from
failing to facilitate a turnover if GMAC invokes a right to
repossess the car. 	See In re Morgan, 2008 WL 2705205, at *1-2
(Bankr. D.D.C. July 7, 2008). 1
A debtor’s filing of a reaffirmation agreement has been held
to prevent the automatic stay from terminating under 11 U.S.C.
§ 362(h)(1)(B) even if the reaffirmation agreement is disapproved
as imposing an undue hardship. 	But that is only short-term
insurance against enforcement of any ipso facto clause.
Inevitably the automatic stay will terminate in this case
pursuant to 11 U.S.C. § 362(c)(1) and (2). 	Nothing in the
Bankruptcy Code alters whatever rights the secured creditor has
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2 	Some decisions issued prior to amendments made in 2005 to
the Bankruptcy Code held that ipso facto clauses were
unenforceable by reason of the automatic stay. 	See Riggs Nat'l
Bank v. Perry, 729 F.2d 982, 984-85 (4th Cir. 1984)). 	Some
decisions have been viewed as having extended that reasoning to
hold that ipso facto clauses were unenforceable even after entry
of a discharge and the termination of the automatic stay, Capital
Commc'ns Fed. Credit Union v. Boodrow (In re Boodrow), 126 F.3d
43, 51 (2d Cir. 1997), although those decisions arose in the
context of what the debtor was required to do under 11 U.S.C.
§ 521, not what the creditor was entitled to do pursuant to an
ipso facto clause after termination of the automatic stay. 	To
the extent that, prior to the amendments to the Bankruptcy Code
in 2005, those decisions were interpreted as making ipso facto
clauses unenforceable after termination of the automatic stay,
those decisions, as thus interpreted, ran afoul of Butner v.
United States, 440 U.S. 48 (1979). 	See In re Kasper, 309 B.R.
82, 87 n.7 (Bankr. D.D.C. 2004). 	Nothing in the 2005 amendments
to the Bankruptcy Code alters that assessment. 	Specifically, 11
U.S.C. § 521(d) addresses the effect of a failure timely to
comply with §§ 362(h) and 521(a)(6), and expressly does not alter
the effect of a timely compliance with those provisions. 	Section
521(d) provides that “[n]othing in this subsection shall be
deemed to justify limiting [an ipso facto clause] in any other
circumstance” (which would include a timely compliance with
§§ 362(h) and 521(a)(6)). 	If Congress intended to make ipso
facto clauses unenforceable postdischarge, 11 U.S.C.
§ 365(b)(2)(B) demonstrates that it knows how to do that in
unambiguous terms that are absent from the current Bankruptcy
Code.
4
under nonbankruptcy law to enforce its lien based on an ipso
facto (due-on-bankruptcy) clause when the debt has not been
reaffirmed and the automatic stay has terminated. 	But see, e.g.,
In re Moustafi, 371 B.R. 434 (Bankr. D. Ariz. 2007) (if the
debtor filed a reaffirmation agreement and it was disapproved,
then invocation of ipso facto clause is inappropriate even after
discharge). 2 	The Supreme Court has made clear that, except as
provided otherwise by the Bankruptcy Code, liens pass through
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3 	In the event that no provision of the Bankruptcy Code
bars enforcement of an ipso facto clause once the automatic stay
has terminated, non-bankruptcy law will control whether the ipso
facto (due-on-filing-bankruptcy) clause can be enforced. 	See In
re Rowe, 342 B.R. 341 (Bankr. D. Kan. 2006) (Kansas statute
likely barred post-discharge enforcement based solely on ipso
facto, due-on-bankruptcy, clause); 4 C OLLIER ON BANKRUPTCY
¶ 521.10[4] (Matthew Bender 15th ed. rev.) (“[Section 521(a)(6)]
does not authorize a creditor to repossess property. 	It leaves
that issue to applicable nonbankruptcy law. 	There are likely to
be serious questions under nonbankruptcy law about whether
repossession from a debtor who is current in payments is in good
faith, whether a creditor has waived a default by accepting later
payments, or whether other provisions of state law would prohibit
repossession.”). 	Whether District of Columbia law would bar
enforcement of an ipso facto clause when the debtor is current on
payments is an issue the debtor could raise in the Superior Court
for the District of Columbia. 	The District of Columbia does not
appear to have enacted the statutory provision that Kansas had
adopted in In re Rowe.
5
bankruptcy unaffected. 	See Dewsnup v. Timm, 502 U.S. 410, 417
(1992). Regardless of what a judge might think regarding whether
the goal of the debtor having a fresh start would be advanced by
making ipso facto clauses unenforceable postdischarge, any
alteration of nonbankruptcy law entitlements by reason of the
filing of a bankruptcy case is a policy task for Congress, not
the court. 	Butner v. United States, 440 U.S. 48 (1979). 	An
effective reaffirmation agreement, therefore, may be necessary to
be absolutely certain that the creditor will not invoke an ipso
facto clause once the automatic stay terminates under 11 U.S.C.
§ 362(c)(1) and (2). 3 	But, as noted above, even if the debt is
not reaffirmed, GMAC might decide not to enforce any ipso facto
clause.
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6	O:\TEEL\Order Forms\Reaffirmation Agreement - Failure of Agreement to Explain Variance of Part D with Schedules I and J_v3.wpd
III
In accordance with the foregoing, it is
ORDERED that within 21 days after the date of entry of this
order, the debtor shall file an amended reaffirmation agreement,
either explaining the $119.00 difference, or, if the difference
is not explained, acknowledging the presumption of undue hardship
and explaining why the debtor believes the presumption of undue
hardship should be treated as rebutted. 	It is further
ORDERED that if the reaffirmation agreement is not timely
amended, the reaffirmation agreement will be stricken and the
clerk will be instructed that there is no longer any reason to
delay entry of a discharge.
[Signed and dated above.]
Copies to: Debtor; Debtor’s attorney; Chapter 7 Trustee; Office
of United States Trustee.
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