Conditions of use · Every effort has been made to
reproduce the code accurately. However there could be errors which would
change the effect of the code. Permission to use these materials is given
only on the condition that the user will be solely responsible for verifying the
accuracy of the information contained herein.x
Text size · You may adjust the size of the text from
your browser's control bar: View, Text Size.
Printing · If the top menu bar stays at the top of the
window as you scroll in your browser, return the browser to the top of the page
before printing or the menu bar may obscure some text. You may print
selected pages of the web page by printing from File, Page Preview
instead of Print. More printing
tips.
Annotations · We have added notes linking to cases and
other information to some sections of the code. You may chose to
or
the annotations.
Redline Display · The Bankruptcy Code
shown is as amended by The Bankruptcy Abuse Prevention and Consumer
Protection Act of 2005. You may choose to or
the redline version showing the changes made by the act.
Link to the Code · You may link your web page directly
to this version of the code, or to any subsection. More link
information.
TITLE 11.
BANKRUPTCY · UNITED STATES CODE
Chapter 5.
Creditors, the Debtor and the Estate
Subchapter II. Debtor's Duties and Benefits
11
USC § 524. Effect of discharge
(a) A discharge in a case under this title--
(1) voids any judgment at any time obtained, to
the extent that such judgment is a determination of the personal liability
of the debtor with respect to any debt discharged under section
727, 944,
1141,
1228,
or 1328
of this title, whether or not discharge of such debt is waived;
(2) operates as an injunction against the
commencement or continuation of an action, the employment of process, or an
act, to collect, recover or offset any such debt as a personal liability of
the debtor, whether or not discharge of such debt is waived; and
(3) operates as an injunction against the
commencement or continuation of an action, the employment of process, or an
act, to collect or recover from, or offset against, property of the debtor
of the kind specified in section
541(a)(2) of this title that is acquired after the commencement of the
case, on account of any allowable community claim, except a community claim
that is excepted from discharge under
section 523, 1228(a)(1),
or 1328(a)(1),
or that would be so excepted, determined in accordance with the
provisions of sections
523(c) and 523(d)
of this title, in a case concerning the debtor's spouse commenced on the
date of the filing of the petition in the case concerning the debtor,
whether or not discharge of the debt based on such community claim is
waived.
(b) Subsection
(a)(3) of this section does not apply if--
(1)
(A) the debtor’s spouse is a debtor in a
case under this title, or a bankrupt or a debtor in a case under the
Bankruptcy Act, commenced within six years of the date of the filing of
the petition in the case concerning the debtor; and
(B) the court does not grant the debtor’s
spouse a discharge in such case concerning the debtor’s spouse; or
(2)
(A) the court would not grant the debtor’s
spouse a discharge in a case under chapter
7 of this title concerning such spouse commenced on the date of the
filing of the petition in the case concerning the debtor; and
(B) a determination that the court would not
so grant such discharge is made by the bankruptcy court within the time
and in the manner provided for a determination under section
727 of this title of whether a debtor is granted a discharge.
(c) An agreement between a holder of a claim and the
debtor, the consideration for which, in whole or in part, is based on a debt
that is dischargeable in a case under this title is enforceable only to any
extent enforceable under applicable nonbankruptcy law, whether or not
discharge of such debt is waived, only if--
(1) such agreement was made before the granting
of the discharge under section
727, 1141,
1228,
or 1328
of this title;
(2) the debtor received the
disclosures described in subsection
(k) at or before the time at which the debtor signed the agreement;
(3) such agreement has been filed with the court and, if applicable,
accompanied by a declaration or an affidavit of the attorney that
represented the debtor during the course of negotiating an agreement under
this subsection, which states that--
(A) such agreement represents a fully
informed and voluntary agreement by the debtor;
(B) such agreement does not impose an undue
hardship on the debtor or a dependent of the debtor; and
(C) the attorney fully advised the debtor of
the legal effect and consequences of--
(i) an agreement of the kind specified in this subsection; and
(ii) any default under such an agreement;
(4) the debtor has not rescinded such agreement
at any time prior to discharge or within sixty days after such agreement is
filed with the court, whichever occurs later, by giving notice of rescission
to the holder of such claim;
(5) the provisions of subsection
(d) of this section have been complied with; and
(6)
(A) in a case concerning an individual who
was not represented by an attorney during the course of negotiating an
agreement under this subsection, the court approves such agreement as--
(i) not imposing an undue hardship on the debtor or a dependent of
the debtor; and
(ii) in the best interest of the debtor.
(B) Subparagraph (A) shall not apply to the
extent that such debt is a consumer debt secured by real property.
(d) In a case concerning an individual, when the court
has determined whether to grant or not to grant a discharge under section
727, 1141,
1228,
or 1328
of this title, the court may hold a hearing at which the debtor shall appear
in person. At any such hearing, the court shall inform the debtor that a
discharge has been granted or the reason why a discharge has not been granted.
If a discharge has been granted and if the debtor desires to make an agreement
of the kind specified in subsection
(c) of this section and was not represented by an attorney during the
course of negotiating such agreement, then the court shall hold a hearing at
which the debtor shall appear in person and at such hearing the court shall--
(1) inform the debtor--
(A) that such an agreement is not required
under this title, under nonbankruptcy law, or under any agreement not made
in accordance with the provisions of subsection
(c) of this section; and
(B) of the legal effect and consequences
of--
(i) an agreement of the kind specified in subsection
(c) of this section; and
(ii) a default under such an agreement; and
(2) determine whether the agreement that the
debtor desires to make complies with the requirements of subsection (c)(6)
of this section, if the consideration for such agreement is based in whole
or in part on a consumer debt that is not secured by real property of the
debtor.
(e) Except as provided in subsection
(a)(3) of this section, discharge of a debt of the debtor does not affect
the liability of any other entity on, or the property of any other entity for,
such debt.
(f) Nothing contained in subsection
(c) or (d)
of this section prevents a debtor from voluntarily repaying any debt.
(g)
(1)
(A) After notice and hearing, a court that
enters an order confirming a plan of reorganization under chapter 11 may
issue, in connection with such order, an injunction in accordance with
this subsection to supplement the injunctive effect of a discharge under
this section.
(B) An injunction may be issued under
subparagraph (A) to enjoin entities from taking legal action for the
purpose of directly or indirectly collecting, recovering, or receiving
payment or recovery with respect to any claim or demand that, under a plan
of reorganization, is to be paid in whole or in part by a trust described
in paragraph (2)(B)(i), except such legal actions as are expressly allowed
by the injunction, the confirmation order, or the plan of reorganization.
(2)
(A) Subject to subsection
(h), if the requirements of subparagraph (B) are met at the time an
injunction described in paragraph (1) is entered, then after entry of such
injunction, any proceeding that involves the validity, application,
construction, or modification of such injunction, or of this subsection
with respect to such injunction, may be commenced only in the district
court in which such injunction was entered, and such court shall have
exclusive jurisdiction over any such proceeding without regard to the
amount in controversy.
(B) The requirements of this subparagraph
are that--
(i) the injunction is to be implemented
in connection with a trust that, pursuant to the plan of
reorganization--
(I) is to assume the liabilities of a debtor which at the time of
entry of the order for relief has been named as a defendant in
personal injury, wrongful death, or property-damage actions seeking
recovery for damages allegedly caused by the presence of, or exposure
to, asbestos or asbestos-containing products;
(II) is to be funded in whole or in part by the securities of 1 or
more debtors involved in such plan and by the obligation of such
debtor or debtors to make future payments, including dividends;
(III) is to own, or by the exercise of rights granted under such
plan would be entitled to own if specified contingencies occur, a
majority of the voting shares of--
(aa) each such debtor;
(bb) the parent corporation of each such debtor; or
(cc) a subsidiary of each such debtor that is also a debtor; and
(IV) is to use its assets or income to pay claims and demands; and
(ii) subject to subsection
(h), the court determines that--
(I) the debtor is likely to be subject to substantial future
demands for payment arising out of the same or similar conduct or
events that gave rise to the claims that are addressed by the
injunction;
(II) the actual amounts, numbers, and timing of such future demands
cannot be determined;
(III) pursuit of such demands outside the procedures prescribed by
such plan is likely to threaten the plan’s purpose to deal equitably
with claims and future demands;
(IV) as part of the process of seeking confirmation of such plan--
(aa) the terms of the injunction proposed to be issued under
paragraph (1)(A), including any provisions barring actions against
third parties pursuant to paragraph (4)(A), are set out in such plan
and in any disclosure statement supporting the plan; and
(bb) a separate class or classes of the claimants whose claims
are to be addressed by a trust described in clause (i) is
established and votes, by at least 75 percent of those voting, in
favor of the plan; and
(V) subject to subsection
(h), pursuant to court orders or otherwise, the trust will operate
through mechanisms such as structured, periodic, or supplemental
payments, pro rata distributions, matrices, or periodic review of
estimates of the numbers and values of present claims and future
demands, or other comparable mechanisms, that provide reasonable
assurance that the trust will value, and be in a financial position to
pay, present claims and future demands that involve similar claims in
substantially the same manner.
(3)
(A) If the requirements of paragraph (2)(B)
are met and the order confirming the plan of reorganization was issued or
affirmed by the district court that has jurisdiction over the
reorganization case, then after the time for appeal of the order that
issues or affirms the plan—
(i) the injunction shall be valid and
enforceable and may not be revoked or modified by any court except
through appeal in accordance with paragraph (6);
(ii) no entity that pursuant to such
plan or thereafter becomes a direct or indirect transferee of, or
successor to any assets of, a debtor or trust that is the subject of the
injunction shall be liable with respect to any claim or demand made
against such entity by reason of its becoming such a transferee or
successor; and
(iii) no entity that pursuant to such
plan or thereafter makes a loan to such a debtor or trust or to such a
successor or transferee shall, by reason of making the loan, be liable
with respect to any claim or demand made against such entity, nor shall
any pledge of assets made in connection with such a loan be upset or
impaired for that reason;
(B) Subparagraph (A) shall not be construed
to--
(i) imply that an entity described in
subparagraph (A)(ii) or (iii) would, if this paragraph were not
applicable, necessarily be liable to any entity by reason of any of the
acts described in subparagraph (A);
(ii) relieve any such entity of the
duty to comply with, or of liability under, any Federal or State law
regarding the making of a fraudulent conveyance in a transaction
described in subparagraph (A)(ii) or (iii); or
(iii) relieve a debtor of the
debtor’s obligation to comply with the terms of the plan of
reorganization, or affect the power of the court to exercise its
authority under sections
1141 and 1142
to compel the debtor to do so.
(4)
(A)
(i) Subject to subparagraph (B), an
injunction described in paragraph (1) shall be valid and enforceable
against all entities that it addresses.
(ii) Notwithstanding the provisions of
section
524(e), such an injunction may bar any action directed against a
third party who is identifiable from the terms of such injunction (by
name or as part of an identifiable group) and is alleged to be directly
or indirectly liable for the conduct of, claims against, or demands on
the debtor to the extent such alleged liability of such third party
arises by reason of--
(I) the third party’s ownership of a financial interest in the
debtor, a past or present affiliate of the debtor, or a predecessor in
interest of the debtor;
(II) the third party’s involvement in the management of the
debtor or a predecessor in interest of the debtor, or service as an
officer, director or employee of the debtor or a related party;
(III) the third party’s provision of insurance to the debtor or a
related party; or
(IV) the third party’s involvement in a transaction changing the
corporate structure, or in a loan or other financial transaction
affecting the financial condition, of the debtor or a related party,
including but not limited to--
(aa) involvement in providing financing (debt or equity), or
advice to an entity involved in such a transaction; or
(bb) acquiring or selling a financial interest in an entity as
part of such a transaction.
(iii) As used in this subparagraph,
the term “related party” means--
(I) a past or present affiliate of the debtor;
(II) a predecessor in interest of the debtor; or
(III) any entity that owned a financial interest in--
(aa) the debtor;
(bb) a past or present affiliate of the debtor; or
(cc) a predecessor in interest of the debtor.
(B) Subject to subsection
(h), if, under a plan of reorganization, a kind of demand described in
such plan is to be paid in whole or in part by a trust described in
paragraph (2)(B)(i) in connection with which an injunction described in
paragraph (1) is to be implemented, then such injunction shall be valid
and enforceable with respect to a demand of such kind made, after such
plan is confirmed, against the debtor or debtors involved, or against a
third party described in subparagraph (A)(ii), if--
(i) as part of the proceedings leading
to issuance of such injunction, the court appoints a legal
representative for the purpose of protecting the rights of persons that
might subsequently assert demands of such kind, and
(ii) the court determines, before
entering the order confirming such plan, that identifying such debtor or
debtors, or such third party (by name or as part of an identifiable
group), in such injunction with respect to such demands for purposes of
this subparagraph is fair and equitable with respect to the persons that
might subsequently assert such demands, in light of the benefits
provided, or to be provided, to such trust on behalf of such debtor or
debtors or such third party.
(5) In this subsection, the term “demand”
means a demand for payment, present or future, that--
(A) was not a claim during the proceedings
leading to the confirmation of a plan of reorganization;
(B) arises out of the same or similar
conduct or events that gave rise to the claims addressed by the injunction
issued under paragraph (1); and
(C) pursuant to the plan, is to be paid by a
trust described in paragraph (2)(B)(i).
(6) Paragraph (3)(A)(i) does not bar an action
taken by or at the direction of an appellate court on appeal of an
injunction issued under paragraph (1) or of the order of confirmation that
relates to the injunction.
(7) This subsection does not affect the operation
of section
1144 or the power of the district court to refer a proceeding under section
157 of title 28 or any reference of a proceeding made prior to the date
of the enactment of this subsection.
(h) Application to Existing Injunctions.-- For
purposes of subsection
(g)--
(1) subject to paragraph (2), if an injunction of
the kind described in subsection (g)(1)(B) was issued before the date of the
enactment of this Act, as part of a plan of reorganization confirmed by an
order entered before such date, then the injunction shall be considered to
meet the requirements of subsection (g)(2)(B) for purposes of subsection
(g)(2)(A), and to satisfy subsection (g)(4)(A)(ii), if--
(A) the court determined at the time the
plan was confirmed that the plan was fair and equitable in accordance with
the requirements of section 1129 (b);
(B) as part of the proceedings leading to
issuance of such injunction and confirmation of such plan, the court had
appointed a legal representative for the purpose of protecting the rights
of persons that might subsequently assert demands described in subsection
(g)(4)(B) with respect to such plan; and
(C) such legal representative did not object
to confirmation of such plan or issuance of such injunction; and
(2) for purposes of paragraph (1), if a trust
described in subsection (g)(2)(B)(i) is subject to a court order on the date
of the enactment of this Act staying such trust from settling or paying
further claims--
(A) the requirements of subsection (g)(2)(B)(ii)(V)
shall not apply with respect to such trust until such stay is lifted or
dissolved; and
(B) if such trust meets such requirements on
the date such stay is lifted or dissolved, such trust shall be considered
to have met such requirements continuously from the date of the enactment
of this Act.
(i) The willful failure of a creditor to credit
payments received under a plan confirmed under this title, unless the order
confirming the plan is revoked, the plan is in default, or the creditor has
not received payments required to be made under the plan in the manner
required by the plan (including crediting the amounts required under the
plan), shall constitute a violation of an injunction under subsection (a)(2)
if the act of the creditor to collect and failure to credit payments in the
manner required by the plan caused material injury to the debtor.
(j) Subsection
(a)(2) does not operate as an injunction against an act by a creditor that
is the holder of a secured claim, if--
(1) such creditor retains a security interest in
real property that is the principal residence of the debtor;
(2) such act is in the ordinary course of
business between the creditor and the debtor; and
(3) such act is limited to seeking or obtaining
periodic payments associated with a valid security interest in lieu of
pursuit of in rem relief to enforce the lien.
(k)
(1) The disclosures required under subsection
(c)(2) shall consist of the disclosure statement described in paragraph
(3), completed as required in that paragraph, together with the agreement
specified in subsection (c), statement, declaration, motion and order
described, respectively, in paragraphs (4) through (8), and shall be the
only disclosures required in connection with entering into such agreement.
(2) Disclosures made under paragraph (1) shall be
made clearly and conspicuously and in writing. The terms "Amount
Reaffirmed" and "Annual Percentage Rate" shall be disclosed
more conspicuously than other terms, data or information provided in
connection with this disclosure, except that the phrases "Before
agreeing to reaffirm a debt, review these important disclosures" and
"Summary of Reaffirmation Agreement" may be equally conspicuous.
Disclosures may be made in a different order and may use terminology
different from that set forth in paragraphs (2) through (8), except that the
terms "Amount Reaffirmed" and "Annual Percentage Rate"
must be used where indicated.
(3) The disclosure statement required under this
paragraph shall consist of the following:
(A) The statement: "Part A: Before
agreeing to reaffirm a debt, review these important disclosures:";
(B) Under the heading "Summary of
Reaffirmation Agreement", the statement: "This Summary is made
pursuant to the requirements of the Bankruptcy Code";
(C) The "Amount Reaffirmed", using
that term, which shall be--
(i) the total amount of debt that the
debtor agrees to reaffirm by entering into an agreement of the kind
specified in subsection
(c), and
(ii) the total of any fees and costs
accrued as of the date of the disclosure statement, related to such
total amount.
(D) In conjunction with the disclosure of
the "Amount Reaffirmed", the statements--
(i) "The amount of debt you have
agreed to reaffirm"; and
(ii) "Your credit agreement may
obligate you to pay additional amounts which may come due after the date
of this disclosure. Consult your credit agreement.".
(E) The "Annual Percentage Rate",
using that term, which shall be disclosed as--
(i) if, at the time the petition is
filed, the debt is an extension of credit under an open end credit plan,
as the terms "credit" and "open end credit plan" are
defined in section 103 of the Truth
in Lending Act, then--
(I) the annual percentage rate determined under paragraphs (5) and
(6) of section 127(b) of the Truth in Lending Act, as applicable, as
disclosed to the debtor in the most recent periodic statement prior to
entering into an agreement of the kind specified in subsection
(c) or, if no such periodic statement has been given to the debtor
during the prior 6 months, the annual percentage rate as it would have
been so disclosed at the time the disclosure statement is given to the
debtor, or to the extent this annual percentage rate is not readily
available or not applicable, then
(II) the simple interest rate applicable to the amount reaffirmed
as of the date the disclosure statement is given to the debtor, or if
different simple interest rates apply to different balances, the
simple interest rate applicable to each such balance, identifying the
amount of each such balance included in the amount reaffirmed, or
(III) if the entity making the disclosure elects, to disclose the
annual percentage rate under subclause (I) and the simple interest
rate under subclause (II); or
(ii) if, at the time the petition is
filed, the debt is an extension of credit other than under an open end
credit plan, as the terms "credit" and "open end credit
plan" are defined in section 103 of the Truth in Lending Act,
then--
(I) the annual percentage rate under section 128(a)(4) of the Truth
in Lending Act, as disclosed to the debtor in the most recent
disclosure statement given to the debtor prior to the entering into an
agreement of the kind specified in subsection (c) with respect to the
debt, or, if no such disclosure statement was given to the debtor, the
annual percentage rate as it would have been so disclosed at the time
the disclosure statement is given to the debtor, or to the extent this
annual percentage rate is not readily available or not applicable,
then
(II) the simple interest rate applicable to the amount reaffirmed
as of the date the disclosure statement is given to the debtor, or if
different simple interest rates apply to different balances, the
simple interest rate applicable to each such balance, identifying the
amount of such balance included in the amount reaffirmed, or
(III) if the entity making the disclosure elects, to disclose the
annual percentage rate under (I) and the simple interest rate under
(II).
(F) If the underlying debt transaction was
disclosed as a variable rate transaction on the most recent disclosure
given under the Truth in Lending Act, by stating "The interest rate
on your loan may be a variable interest rate which changes from time to
time, so that the annual percentage rate disclosed here may be higher or
lower.".
(G) If the debt is secured by a security
interest which has not been waived in whole or in part or determined to be
void by a final order of the court at the time of the disclosure, by
disclosing that a security interest or lien in goods or property is
asserted over some or all of the debts the debtor is reaffirming and
listing the items and their original purchase price that are subject to
the asserted security interest, or if not a purchase-money security
interest then listing by items or types and the original amount of the
loan.
(H) At the election of the creditor, a
statement of the repayment schedule using 1 or a combination of the
following--
(i) by making the statement: "Your
first payment in the amount of $XXX is due on XXX but the future payment
amount may be different. Consult your reaffirmation agreement or credit
agreement, as applicable.", and stating the amount of the first
payment and the due date of that payment in the places provided;
(ii) by making the statement:
"Your payment schedule will be:", and describing the repayment
schedule with the number, amount, and due dates or period of payments
scheduled to repay the debts reaffirmed to the extent then known by the
disclosing party; or
(iii) by describing the debtor's
repayment obligations with reasonable specificity to the extent then
known by the disclosing party.
(I) The following statement: "Note:
When this disclosure refers to what a creditor 'may' do, it does not use
the word 'may' to give the creditor specific permission. The word 'may' is
used to tell you what might occur if the law permits the creditor to take
the action. If you have questions about your reaffirming a debt or what
the law requires, consult with the attorney who helped you negotiate this
agreement reaffirming a debt. If you don't have an attorney helping you,
the judge will explain the effect of your reaffirming a debt when the
hearing on the reaffirmation agreement is held.".
(J)
(i) The following additional
statements:
"Reaffirming a debt is a serious financial decision. The law
requires you to take certain steps to make sure the decision is in
your best interest. If these steps are not completed, the
reaffirmation agreement is not effective, even though you have signed
it.
"1. Read the disclosures in this Part A carefully. Consider
the decision to reaffirm carefully. Then, if you want to reaffirm,
sign the reaffirmation agreement in Part B (or you may use a separate
agreement you and your creditor agree on).
"2. Complete and sign Part D and be sure you can afford to
make the payments you are agreeing to make and have received a copy of
the disclosure statement and a completed and signed reaffirmation
agreement.
"3. If you were represented by an attorney during the
negotiation of your reaffirmation agreement, the attorney must have
signed the certification in Part C.
"4. If you were not represented by an attorney during the
negotiation of your reaffirmation agreement, you must have completed
and signed Part E.
"5. The original of this disclosure must be filed with the
court by you or your creditor. If a separate reaffirmation agreement
(other than the one in Part B) has been signed, it must be attached.
"6. If you were represented by an attorney during the
negotiation of your reaffirmation agreement, your reaffirmation
agreement becomes effective upon filing with the court unless the
reaffirmation is presumed to be an undue hardship as explained in Part
D.
"7. If you were not represented by an attorney during the
negotiation of your reaffirmation agreement, it will not be effective
unless the court approves it. The court will notify you of the hearing
on your reaffirmation agreement. You must attend this hearing in
bankruptcy court where the judge will review your reaffirmation
agreement. The bankruptcy court must approve your reaffirmation
agreement as consistent with your best interests, except that no court
approval is required if your reaffirmation agreement is for a consumer
debt secured by a mortgage, deed of trust, security deed, or other
lien on your real property, like your home.
"Your right to rescind (cancel) your reaffirmation agreement.
You may rescind (cancel) your reaffirmation agreement at any time
before the bankruptcy court enters a discharge order, or before the
expiration of the 60-day period that begins on the date your
reaffirmation agreement is filed with the court, whichever occurs
later. To rescind (cancel) your reaffirmation agreement, you must
notify the creditor that your reaffirmation agreement is rescinded (or
canceled).
"What are your obligations if you reaffirm the debt? A
reaffirmed debt remains your personal legal obligation. It is not
discharged in your bankruptcy case. That means that if you default on
your reaffirmed debt after your bankruptcy case is over, your creditor
may be able to take your property or your wages. Otherwise, your
obligations will be determined by the reaffirmation agreement which
may have changed the terms of the original agreement. For example, if
you are reaffirming an open end credit agreement, the creditor may be
permitted by that agreement or applicable law to change the terms of
that agreement in the future under certain conditions.
"Are you required to enter into a reaffirmation agreement by
any law? No, you are not required to reaffirm a debt by any law. Only
agree to reaffirm a debt if it is in your best interest. Be sure you
can afford the payments you agree to make.
"What if your creditor has a security interest or lien? Your
bankruptcy discharge does not eliminate any lien on your property. A
"lien" is often referred to as a security interest, deed of
trust, mortgage or security deed. Even if you do not reaffirm and your
personal liability on the debt is discharged, because of the lien your
creditor may still have the right to take the security property if you
do not pay the debt or default on it. If the lien is on an item of
personal property that is exempt under your State's law or that the
trustee has abandoned, you may be able to redeem the item rather than
reaffirm the debt. To redeem, you make a single payment to the
creditor equal to the current value of the security property, as
agreed by the parties or determined by the court.".
(ii) In the case of a reaffirmation
under subsection (m)(2), numbered paragraph 6 in the disclosures
required by clause (i) of this subparagraph shall read as follows:
"6. If you were represented by an attorney during the
negotiation of your reaffirmation agreement, your reaffirmation
agreement becomes effective upon filing with the court.".
(4) The form of such agreement required under
this paragraph shall consist of the following:
"Part B: Reaffirmation Agreement. I (we) agree to reaffirm the
debts arising under the credit agreement described below.
"Brief description of credit agreement:
"Description of any changes to the credit agreement made as part
of this reaffirmation agreement:
"Signature: Date:
"Borrower:
"Co-borrower, if also reaffirming these debts:
"Accepted by creditor:
"Date of creditor acceptance:".
(5) The declaration shall consist of the
following:
(A) The following certification:
"Part C: Certification by Debtor's Attorney (If Any).
"I hereby certify that (1) this agreement represents a fully
informed and voluntary agreement by the debtor; (2) this agreement does
not impose an undue hardship on the debtor or any dependent of the
debtor; and (3) I have fully advised the debtor of the legal effect and
consequences of this agreement and any default under this agreement.
"Signature of Debtor's Attorney: Date:".
(B) If a presumption of undue hardship has
been established with respect to such agreement, such certification shall
state that in the opinion of the attorney, the debtor is able to make the
payment.
(C) In the case of a reaffirmation agreement
under subsection (m)(2), subparagraph (B) is not applicable.
(6)
(A) The statement in support of such
agreement, which the debtor shall sign and date prior to filing with the
court, shall consist of the following:
"Part D: Debtor's Statement in Support of Reaffirmation
Agreement.
"1. I believe this reaffirmation agreement will not impose an
undue hardship on my dependents or me. I can afford to make the payments
on the reaffirmed debt because my monthly income (take home pay plus any
other income received) is $XXX, and my actual current monthly expenses
including monthly payments on post-bankruptcy debt and other
reaffirmation agreements total $XXX, leaving $XXX to make the required
payments on this reaffirmed debt. I understand that if my income less my
monthly expenses does not leave enough to make the payments, this
reaffirmation agreement is presumed to be an undue hardship on me and
must be reviewed by the court. However, this presumption may be overcome
if I explain to the satisfaction of the court how I can afford to make
the payments here: XXX.
"2. I received a copy of the Reaffirmation Disclosure Statement
in Part A and a completed and signed reaffirmation agreement.".
(B) Where the debtor is represented by an
attorney and is reaffirming a debt owed to a creditor defined in section
19(b)(1)(A)(iv) of the Federal Reserve Act, the statement of support of
the reaffirmation agreement, which the debtor shall sign and date prior to
filing with the court, shall consist of the following:
"I believe this reaffirmation agreement is in my financial
interest. I can afford to make the payments on the reaffirmed debt. I
received a copy of the Reaffirmation Disclosure Statement in Part A and
a completed and signed reaffirmation agreement.".
(7) The motion that may be used if approval of
such agreement by the court is required in order for it to be effective,
shall be signed and dated by the movant and shall consist of the following:
"Part E: Motion for Court Approval (To be completed only if the
debtor is not represented by an attorney.). I (we), the debtor(s), affirm
the following to be true and correct:
"I am not represented by an attorney in connection with this
reaffirmation agreement.
"I believe this reaffirmation agreement is in my best interest
based on the income and expenses I have disclosed in my Statement in
Support of this reaffirmation agreement, and because (provide any
additional relevant reasons the court should consider):
"Therefore, I ask the court for an order approving this
reaffirmation agreement.".
(8) The court order, which may be used to approve
such agreement, shall consist of the following:
"Court Order: The court grants the debtor's motion and approves
the reaffirmation agreement described above.".
(l) Notwithstanding any other provision of this title
the following shall apply:
(1) A creditor may accept payments from a debtor
before and after the filing of an agreement of the kind specified in subsection
(c) with the court.
(2) A creditor may accept payments from a debtor
under such agreement that the creditor believes in good faith to be
effective.
(3) The requirements of subsections
(c)(2) and (k)
shall be satisfied if disclosures required under those subsections are given
in good faith.
(m)
(1) Until 60 days after an agreement of the kind
specified in subsection
(c) is filed with the court (or such additional period as the court,
after notice and a hearing and for cause, orders before the expiration of
such period), it shall be presumed that such agreement is an undue hardship
on the debtor if the debtor's monthly income less the debtor's monthly
expenses as shown on the debtor's completed and signed statement in support
of such agreement required under subsection
(k)(6)(A) is less than the scheduled payments on the reaffirmed debt.
This presumption shall be reviewed by the court. The presumption may be
rebutted in writing by the debtor if the statement includes an explanation
that identifies additional sources of funds to make the payments as agreed
upon under the terms of such agreement. If the presumption is not rebutted
to the satisfaction of the court, the court may disapprove such agreement.
No agreement shall be disapproved without notice and a hearing to the debtor
and creditor, and such hearing shall be concluded before the entry of the
debtor's discharge.
(2) This subsection does not apply to
reaffirmation agreements where the creditor is a credit union, as defined in
section 19(b)(1)(A)(iv) of the Federal Reserve Act.
[Rev. 5-10-05]
|
|