In re Farmer, Bankruptcy No. 80-487-BK-J-GP.
| Decision Date | 18 August 1981 |
| Docket Number | Bankruptcy No. 80-487-BK-J-GP. |
| Citation | 13 BR 319 |
| Parties | In re Charlie Randall FARMER, Linda Farmer, Debtors. |
| Court | U.S. Bankruptcy Court — Middle District of Florida |
Michael May, DeLand, Fla., for debtors.
Raymond J. Rotella, Orlando, Fla., for Southeast Bank of New Smyrna.
ORDER DENYING DEBTORS' APPLICATION FOR APPROVAL OF A REAFFIRMATION AGREEMENT
The debtors have applied to the Court for approval of a reaffirmation agreement between themselves and the Southeast Bank of New Smyrna. Pursuant to § 524(c) of the Bankruptcy Code, before the Court can approve the reaffirmation of this debt, it must find, inter alia, that reaffirmation of the debt would be in the best interest of the debtors. Upon examination of the debtors and the application, the Court is unable to so find. The debtors have stated that they are current in their payments to the Bank, and the Court notes that the application seeks the reaffirmation of the debt in the amount of $12,310.00, and that the value of the property securing the debt, according to the debtors' A-2 schedule, is $10,500.00.
The creditor has sought to present testimony and argument on behalf of the application. The Court finds that the creditor has no standing in this regard. Local Rule 4004 states that only the debtor may apply to the Court for approval of a reaffirmation agreement. See In re Newsome, 3 B.R. 626, 1 C.B.C.2d 1000 (Bkrtcy., W.D.Va. 1980). The fact that it is the creditor and not the debtor which is vigorously pressing forward this application shows in whose interest reaffirmation would be. The Court takes judicial notice that banks are not eleemosynary institutions.
Refusing to be silenced, counsel for the creditor has stated that the contract has been declared in default pursuant to an "insecurity clause." It is the Court's belief that once the underlying debt has been discharged, the naked security agreement is in the nature of an executory contract with obligations remaining on both sides: in consideration for regular payments the creditor agrees not to exercise its right of repossession or foreclosure. Ipso facto bankruptcy clauses are declared void under § 365(e) of the Bankruptcy Code, and the creditor will not be permitted to achieve the same result under the guise of an insecurity clause.
The debtors admit that the principal reason they agreed to the reaffirmation was because they do not have the funds to contest a state court...
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