Bankruptcy

Unexpected Compassion in Bankruptcy Court. Vacating Reaffirmation Hearings on Cars!

By Joseph McDaniel, Esq.

The reason is obvious. Everybody there has an excellent reason to make a Pity Pitch, and if everybody can make the same sort of argument, that specific argument will mean less to the people at whom it is directed. They develop a resistance when they've heard it all before.

In addition, the system has been re-designed, after the 2005 Amendments (the "BARF" Act), to eliminate the risk that a human might feel or manifest compassion ("my job is only to calculate ____________: after that it goes to Jerry, for action. I have no discretion in deciding a result at all. It's all numbers.").

But they forgot the Judges! And apparently there is compassion left buried there.

I went to a reaffirmation hearing recently for unrepresented debtors. I must have taken a wrong turn, or I was disoriented because of my advanced age. For whatever reason, I was there.

And I got to watch a remarkable demonstration of compassion from a Bankruptcy Judge I won't embarrass by name.

But he heard about thirty motions for reaffirmation on automobiles in bankruptcy cases involving unrepresented debtors, and he vacated all of them.

Here's what I think is going on in the area of automobile reaffirmations in Arizona.

There's a nifty opinion entitled In re Moustafi, Ch. 7 Case No. 4-07-00407-EWH, 2007 Bankr. LEXIS 1925 (Bankr. D. Ariz. June 4, 2007), and in that opinion, the Judge said, more or less, the debtor tried to get a reaffirmation approved. That's good enough. So even though the reaffirmation wasn't approved, the debtor gets to keep the car as long as payments are current.

Are you confused? Well, you certainly should be!

Here's some history that may help.

Prior to the "BARF ACT" 2005 Amendments to the Bankruptcy Code, a debtor in Arizona could keep a car simply by making payments.

But BARF modified section 521(a) of the Code so that Section 521(a) of the Bankruptcy Code merely requires the debtor to "take steps to act on an intention to either retain or surrender."

So IF a debtor wants to keep a car, and IF the debtor files a reaffirmation agreement timely, and IF the Bankruptcy Judge, FOR WHATEVER REASON, vacates or denies the hearing on the reaffirmation agreement, THEN PROBABLY the debtor gets to keep the car IF the debtor stays current, MAYBE.

Got it?

Yeah, I know. Confusing.

Here's another discussion of the cases and the doctrines and the outcomes, which is in a nifty Georgia Bankruptcy Law Blog.

NOTHING HERE CONSTITUTES LEGAL ADVICE RE A CHAPTER 7, CHAPTER 13, CHAPTER 11, OR CHAPTER 12. FIND AN ARIZONA BANKRUPTCY LAWYER WHO IS BOARD CERTIFIED IN BANKRUPTCY LAW, AV RATED, AVVO 10 RATED, ON SUPERLAWYERS, OR JUST VERY EXPERIENCED AND A FORMER CHAIR OF SOME BANKRUPTCY SECTION OR COMMITTEE. NOTHING HERE MAY BE USED AS LEGAL ADVICE IN CONNECTION WITH ANY BANKRUPTCY, WHETHER THAT BANKRUPTCY IS IN PHOENIX, GLENDALE, TEMPE, MESA, SCOTTSDALE, OR ANYWHERE ELSE.

Full post as published by Arizona Bankruptcy Attorney Blog on February 22, 2010 (boomark / email).