In re Noble
Decision Date | 25 May 1995 |
Docket Number | Bankruptcy No. 95-30501,95-30936. |
Citation | 182 BR 854 |
Court | U.S. Bankruptcy Court — Western District of Washington |
Parties | In re Leslie A. and Loralee K. NOBLE, Debtors. In re Cecil Harless BAILEY III and Pamela Gayle Rike-Bailey, Debtors. |
DECISION ON REAFFIRMATION AGREEMENTS
Debtors Leslie and Loralee Noble and Pamela Rike-Bailey, unrepresented in their bankruptcy cases, have signed reaffirmation agreements with GreenTree Financial Corporation ("GreenTree") and General Motors Acceptance Corporation ("GMAC"), respectively. The agreements were filed and set for approval hearings, and the Debtors appeared.
Section 524(c) of the Bankruptcy Code1 provides:
The Nobles proposed to make monthly payments of $408.38 to GreenTree on an obligation of $36,320.88 secured by their manufactured home, valued at $39,500.00 in their schedules. The last two paragraphs of the reaffirmation agreement before the signature lines read:
Ms. Rike-Bailey proposed to reaffirm an obligation of $10,383.89, secured by a 1989 Ford Van. She agreed to make monthly payments of $369.12 to GMAC. The van was not separately valued in the schedules (it is one of three vehicles listed for a total value of $12,092.92: the others are a 1985 Mercury Lynx and a 1979 Honda Goldwing), but GMAC's claim is shown as fully secured on Schedule D. Although theirs is a joint case, Mr. Bailey did not sign, nor did he appear at the hearing. The first paragraph of text in the Rike-Bailey/GMAC agreement reads:
NOTICE: THE OBLIGATION ASSIGNED TO GENERAL MOTORS ACCEPTANCE CORPORATION DESCRIBED BELOW IS DISCHARGEABLE UNDER APPLICABLE BANKRUPTCY LAWS. YOU ARE NOT LEGALLY OBLIGATED TO REAFFIRM SUCH OBLIGATION; AND IF YOU REAFFIRM SUCH OBLIGATION, YOUR LIABILITY ON SUCH OBLIGATION WILL BE FULLY RESTORED AND ENFORCEABLE IN ACCORDANCE WITH ITS TERMS.
No other part of the text is set off in contrasting type, size, or color, and there is no statement to the effect that the agreement is not required.
The Ninth Circuit Bankruptcy Appellate Panel concisely articulated the pertinent law in a recent decision:
In re Getzoff, 180 B.R. 572 (9th Cir. BAP 1995).
The statutory requirements for enforce-ability are:
A reaffirmation agreement is enforceable only if: (1) the agreement was made in advance of the debtor\'s discharge; (2) the agreement contains a clear and conspicuous statement advising the debtor that the agreement may be rescinded at any time prior to discharge or within sixty days after the agreement is filed with the court, whichever occurs later; (3) the agreement has been filed with the court; (4) the debtor has not rescinded the agreement; (5) the debtor has been warned by the bankruptcy judge as to the effects of the agreement; (6) the court finds that the agreement does not impose an undue hardship on the debtor; and (7) the court finds that the agreement is in the debtor\'s best interest. 11 U.S.C. § 524(c)(1)-(6); In re Ellis, 103 B.R. 977, 980-981 (Bankr. N.D.Ill.1989); In re Hitt, 137 B.R. 401, 403 (Bankr.D.Mont.1992). These statutory requirements exist to prevent debtors from being coerced into signing reaffirmation agreements and to enable them to be fully aware of the consequences of the agreement. In re Smurzynski, 72 B.R. 368, 371 (Bankr.N.D.Ill.1987).
In re Johnson, 148 B.R. 532, 539 (Bankr. N.D.Ill.1992).
In each of these cases, I concluded at the reaffirmation hearing that I could make the predicate findings that the agreements did not impose undue hardships on the Debtors, and were in their best interest, if the reaffirmations themselves meet the statutory requirements. However, as noted by the Appellate Panel in Getzoff, strict compliance with § 524 is a prerequisite to the enforce-ability of a reaffirmation agreement. No useful purpose would be served, and much mischief created, if I were to approve an unenforceable agreement.
Respecting the two reaffirmations here at issue:
The question thus presented is whether the Noble/GreenTree agreement's "reaffirmation is not required" paragraph is clear and conspicuous. As GreenTree had no representative at the reaffirmation hearing, I requested it by letter to submit any authority it relied upon to show the agreement's compliance with § 524(c)(2)(B). GreenTree did not respond.
Before what is now paragraph (B) was added to § 524(c) by § 103 of the Bankruptcy Reform Act of 1994, Pub.L. 103-394, what is now paragraph (A) was the entire section, and there were cases addressing the "clear and conspicuous" notice of rescission requirement, generally involving agreements lacking any rescission language at all, e.g., In re Minor, 115 B.R. 690, 694 (D.Colo.1990); In re Perryman, 111 B.R. 227, 230 (Bankr.Ed. Ark.1990). Those cases do not address what "clear and conspicuous", undefined in the Bankruptcy Code, require.
Construing a statute, courts:
Must begin with the plain meaning of its language. Pennsylvania Public Welfare Dept. v. Davenport, 495 U.S. 552, 557, 110 S.Ct. 2126, 2130, 109 L.Ed.2d 588 (1990). Where statutory language is unambiguous the judicial inquiry is complete. Connecticut Nat. Bank v. Germain, 503 U.S. 249, 252-54, 112 S.Ct. 1146, 1149, 117 L.Ed.2d 391 (1992). . . . When the statutory scheme is coherent and consistent, there generally is no need for a court to inquire beyond the plain language. United States v. Ron Pair Enterp., Inc., 489 U.S. 235, 240-41, 109 S.Ct. 1026, 1029-30, 103 L.Ed.2d 290 (1988).
In re Bonner Mall Partnership, 2 F.3d 899, 908 (9th Cir.1993), motion to vacate denied and dismissed as moot sub nom. U.S. Bancorp Mortgage Co. v. Bonner Mall Partnership, ___ U.S. ___...
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