Chris Mowrey

IN THE UNITED STATES BANKRUPTCY COURT·
FOR THE DISTRICT OF WYOMING
In re 	)
)
CHRlS MOWREY, 	) 	Case No. 09-21080
) 	Chapter 7
Debtor. 	)
MEMORANDUM OPINION ON DEBTOR FOR 2002 KIA
This matter came before the Court for a telephonic hearing on January 7,2010
regarding three Reaffirmation Agreements entered into between the Debtor and First
Educational Credit Union. After the conclusion of the hearing, review of the file,
considering the arguments of the parties, and reconsideration of the facts and law, the
court finds that approval of the reaffirmation agreements is denied. Chris Mowrey
("Debtor") represented himself. Donna Eschardies participated on behalf of First
Educational Federal Credit Union ("Credit Union").
The Debtor filed motions for approval of three reaffirmation agreements executed
between himself and the Credit Union under 11 U .S.C. §524(d). The Court combines all
three for purposes of discussion. The terms of each agreement are listed:
Total amount
to be
reaffirmed
Monthly
payment
amount
Number of
payments
Interest
Rate
Collateral - Description
and value
(1) 	$3,140.37 	$244.39 	14 	5.4% 	2002 Kia -listed with a
value of$I,500 on
Schedule B
(2) 	$4,759.36 	$184.03 	31 	12.25% 	Personal loan with cross
collateral clause on Kia
(3) 	$1,471.61 	$45.00 	Not stated 	12.0% 	Credit Card with cross
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Icollateral clause on Kia
The Debtor lists the 2002 Kia on his Schedule B. He does not list any secured
creditors on Schedule D. Although the Debtor signed the form, he did not complete the
Chapter 7 Individual Debtor's Statement of Intention. The Debtor reported at the hearing,
that he has been employed at All State Insurance Company since October 12,2009.
Debtor's net pay is between $1,400 - $1,500 per month. Debtor reports that he lives with
his girl friend, and between them, they have four dependants. The 2002 Kia is the
Debtor's only vehicle. The Debtor reports that his monthly expenses on Schedule J are
$3,837.00.
Ms. Eschardies reported to the Court that the Debtor is current on the monthly
payments on all three loans and any time that there was a problem, the Debtor has made
arrangements with the Credit Union.
Discussion
Under 11 U.S.C. §524(c), a debtor is allowed to reaffirm a debt that would
otherwise be dischargeable unless it would pose an undue hardship on the debtor. For a
reaffirmation agreement to be enforceable, the agreement must satisfY the requirement of
11 U.S.C. 524(c), which includes the requirement that if the debtor is not represented by
an attorney, the court must hold a hearing to inform the debtor that the reaffirmation
agreement is not required and describe the legal consequence. If the court concludes that
the reaffirmation is not in the best interests of the debtor or poses an under hardship, the
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Court may deny a reaffinnation agreement.
Section 524(k) is a new subsection of §524 added by BAPCPA 1. It sets out
mandatory components of a reaffinnation agreement, which must be filed with the court
in order for the reaffinnation agreement to be enforceable. One component requires that
the following be included in the reaffinnation agreement: "Complete and sign Part D and
be sure you can afford to make the payments you are agreeing to make and have received
a copy of the disclosure statement and a completed and signed reaffinnation agreement."
Another component states: "If you are not represented by an attorney during the
negotiation of your reaffinnation agreement, you must have completed and signed Part
E." Parts D and E are not completed on any of the three reaffinnation agreements before
the Court for consideration.
Under 11 U.S.C. 524(m)(l), if a bankruptcy debtor's expenses exceed his income a
reaffinnation agreement is presumed to create an under hardship. Ifthe presumption is
rebutted, the agreement may be approved. If the presumption is not rebutted to the
satisfaction of the court, the court has the discretion to not approve the reaffinnation
agreement. 2 	The Oklahoma Bankruptcy Court held that "Courts should not be in the
business of approving reaffinnation agreements where the debt is something the Debtor
cannot afford."3
lBankruptcy Abuse Prevention and Consumer Protection Act of2005.
2In re Stillwell, 348 B.R 578 (Bankr. N.D. Okla. 2006).
3In re Byers, 2009 Bankr. LEXIS 232, (N.D. Iowa, February 11,2009).
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It is apparent to this Court, based on the statements of the parties, that the Debtor
has not rebutted the presumption of undue hardship in reaffirming these debts. His
income is substantially less than the amount of his expenses. The 2002 Kia's value is
substantially less than the amount of debt against it. When taking into consideration that
the three agreements total a repayment of approximately $12,500 for a vehicle valued at
$1,500, the Court cannot find that approval of the reaffirmation agreements are in the
Debtor's best interest.
Court approval of a reaffirmation agreement is not a required element under 11
U.S.C. §521(a)(6)(A). Entering into a reaffirmation agreement is all that is required ofa
debtor. 	While the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005
has done away with simple "ride through" in bankruptcy, it has not entirely eliminated the
possibility that a debtor can "ride through" a bankruptcy and retain possession of secured
personal property. Under the limited circumstances where a debtor complies will the
requirements under 11 U.S.C. §§ 521k and 362(h), the debtor can ride through the
bankruptcy notwithstanding a bankruptcy court's refusal to approve a reaffirmation
agreement. Bankruptcy ipso [acto clauses remain in effect and the Credit Union is
prohibited from declaring the contract in default by virtue of the Debtor's insolvency or
bankruptcy. So long as the Debtor adheres to the terms of the contract, the Debtor is
entitled to remain in possession of the vehicle regardless of the Court's approval or
refusal to approve the reaffirmation agreement. In the event that the vehicle is
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repossessed the Debtor would not be personally liable for any deficiency.4
THEREFORE IT IS ORDERED that the approval of reaffinnation agreement
between the Debtor and the Creditor Union, regarding the amount of$3,140.37 is denied.
DATED this ~day of January, 2010.
By the Court
Service to:
Chris Mowrey
First Educational Federal Credit
Union! Attn: Donna Eschardies
4In re Openshaw, Case No. 06C-24120, 2007 Bankr. LEXIS 3489, (Bankr, D. Ut, March
12,2007)
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