CASE NO. 06-00216-5-ATS.United States Bankruptcy Court, E.D. North Carolina, Raleigh Division.
June 21, 2006
ORDER REGARDING REAFFIRMATION AGREEMENT
THOMAS SMALL, Chief Judge
On April 26, 2006, the court held a hearing to consider the reaffirmation agreement between the debtor, Gloria Phillips Efird, and Nissan Motor Acceptance Corporation (“NMAC”). The agreement, which reaffirms Ms. Efird’s debt secured by a 2003 Nissan Sentra, was not signed by the creditor. The court instructed Ms. Efird to refile the agreement once it has been signed by NMAC, but no new agreement has been filed.
Because the reaffirmation agreement has not been signed by the creditor, it is unenforceable and the court need take no further action. Because of potential confusion over the meaning of an unenforceable reaffirmation agreement, however, the court offers the following observations.
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Prior to the enactment of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (“BAPCPA”), debtors were not required to enter into reaffirmation agreements to retain their vehicles, so long as they remained current with their payments. BAPCPA changed the rules, and at first blush appeared to require debtors to reaffirm the debts or redeem the collateral to keep their vehicles in all circumstances. A closer look at the statutes revealed that debtors are required to, within specified periods of time, (a) state their intention to reaffirm a debt and (b) enter into the reaffirmation agreement, failing which the automatic stay will lift. See In re Donald, ___ B.R. ___, Case No. 06-00100-5-ATS (Bankr. E.D.N.C. June 12, 2006).
What the statute does not address is what happens when the debtors comply with the requirements, but the reaffirmation agreements remain unenforceable for reasons beyond the debtors’ control. Donald suggests that in these cases, creditors may not take actions to repossess the collateral so long as debtors are current in their payments. That suggestion may be relevant in this case.
In addition, it appears that Ms. Efird has offered to reaffirm her debt on the same terms as the original contract, yet the creditor has failed to sign the agreement. Accordingly, 11 U.S.C. § 362(h)(1)(B) may apply. Section 362(h)(1)(B) provides that the stay is not terminated as a result of the debtor’s failure to reaffirm a debt where
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the debtor has offered to reaffirm on the original contract terms and the creditor refuses to agree to the reaffirmation on such terms.
Because the reaffirmation agreement has not been signed by NMAC, it is unenforceable, and the court will take no further action.
SO ORDERED.