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In re Milby (Case No. 07-71553) 6/16/2008

Debtor sought a ruling that he performed obligations under sections 521(a) and 362(h) or, alternatively, for approval of two reaffirmation agreements with State Farm regarding two auto loan debts.  Counsel did not represent the debtor in the negotiation of the reaffirmation agreements and did not execute Part C of the agreements as debtor's budget clearly indicated that there was a presumption of undue hardship. Knowing he could not achieve reaffirmation, but as he was current on his monthly payments, he sought a ruling that he complied with all statutory obligations for reaffirmation in order to restrain State Farm post-discharge from exercising its contractual rights and its state law remedies unless he defaulted.  Court held that it did not have subject matter jurisdiction to determine that debtor performed under sections 362(h) and 521(a) solely for purposes of determining that section 521(d) was not applicable and that State Farm was restrained by the post-discharge injunction from declaring the note and security agreement in default as a result of the ipso facto clause.  However, even if subject matter jurisdiction attached, the debtor did not enter into the reaffirmation agreements in good faith but solely for the purpose of satisfying the statutory requirements necessary to restrain State Farm from exercising its ipso facto clause post-discharge.  Therefore, Court denied approval of the reaffirmation agreements and dismissed his motion for a ruling that he performed under sections 362(h) and 521(a).

Date: 
Monday, June 16, 2008
Category: 
Jurisdiction
Reaffirmation
Chapter: 
7