Reaffirmation–You can Run but You Can’t Hide

Section 521(2)(C) of the Bankruptcy Code provides that “nothing in [§ 521(2)(A) or (B)] shall alter the debtor’s or the trustee’s rights” with regard to the relevant collateral. Accordingly, in fashioning remedies for non-compliance with § 521(2)(B), the rights of a debtor in collateral should not be altered to either the detriment or the benefit of the debtor.  See DeJournette, 222 B.R. at 94.  A corollary to this conclusion is that § 521(2) should also not be construed or enforced in a manner that beneficially or detrimentally alters the rights of a secured creditor.  Granting a motion to compel after expiration of the forty-five (45) daytime period allowed under § 521(2)(B) has the effect of allowing additional time to debtors who are not performing the duties required of them under the Bankruptcy Code.  In re Donnell, 234 BR 567 (D. N.H. 1999).

Furthermore, in New Hampshire at least, cases indicate that the Court does not intend to routinely grant motions to compel as an aid to secured creditors seeking to avoid repossession and liquidation of collateral from debtors failing to perform their intention under § 521(2)(B).  If the secured creditor wishes to exercise the rights it is entitled to under the provisions of Title 11, it should seek relief from the automatic stay under § 362.  A motion for relief under § 362(d) will ensure that the rights of the secured creditor as well as the interests of the bankruptcy estate, trustee and the debtor are considered and acted upon in an expedited manner that will result in the creditor obtaining an effective remedy if it establishes a right to such relief.

Although not directly on point, in In re Mollison, Retired Massachusetts Judge Boroff provided a good analysis of the operation of 521 and when the automatic termination is effective.  In re Mollison, 463 BR 169, (D. Mass, W.D., 1-6-12).