What if the agreement was signed by all parties (lender, borrower and perhaps the attorney) but not filed in court prior to the bankruptcy discharge? The law says "The court may, at any time and in its discretion, enlarge the time to file a reaffirmation agreement." Counsel can file a motion asking for additional time. In my experience judges grant these requests.
Agreement Not Signed, Discharge Expected Soon
What if the reaffirmation is not signed and the discharge is expected tomorrow? Counsel can file a motion to enlarge the time to file a reaffirmation and rest assured the discharge will not be entered if the motion is pending. Usually, the parties only need a day or two to get the reaffirmation filed. That means counsel can request additional time to file the reaffirmation and actually file the reaffirmation before the court has a chance to rule on the motion. The motion will be moot once the reaffirmation is filed.
Agreement Contemplated But Not Signed, Discharge Entered
What if the reaffirmation was contemplated but not signed by all parties (lender, borrower and perhaps the attorney) before entry of the discharge? Often, after discharge the debtor is told by a lender that he/she "needed to sign a reaffirmation" and the debtor is asked to contact counsel. The law requires a reaffirmation be "made" before entry of the discharge. The law gives the court latitude to allow late filing of a reaffirmation. The distinction between when a reaffirmation is "made" and when it is filed is unresolved by the statutes. Generally courts consider a reaffirmation made if it appears the parties reached an agreement prior to discharge. Factors to consider: did the Statement of Intentions indicate the intent to reaffirm? Was a reaffirmation prepared prior to discharge? Did the creditor execute the reaffirmation prior to discharge? Did the debtor(s) execute the reaffirmation prior to discharge?
Agreement Not Contemplated, Discharge Entered
In this situation, nobody considered reaffirmation prior to the discharge being entered. This might occur if the debtor intended to surrender the collateral initially but due to a change in circumstances (i.e. found a job) is able to afford the payments. This is the most difficult scenario for the debtor(s) and counsel. Counsel should consider a motion to vacate the discharge so the agreement can be made and filed, thereafter the clerk of court would need to re-issue a discharge. The courts are split on whether the statutes and rules allow the court to vacate a discharge for this purpose. Counsel should also carefully review the flawed wording of Bankruptcy Code section 524(d) which appears to allow the court to approve a reaffirmation after discharge if the debtor was not represented by counsel in negotiation of the reaffirmation.
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