456 B.R. 220
Bankr. E.D. Pa.2011Background
- Debtor filed Chapter 7 in December 2008 and received a discharge in March 2009.
- In January 2010 Debtor moved to reopen to avoid judicial liens and modify mortgage loans; liens were avoided but no modification occurred; case closed April 2010.
- In July 2011 Debtor moved to reopen again to modify two Citizens Bank mortgages and pursue a HAMP modification due to unaffordable payments.
- Citizens requires personal liability reaffirmation as a condition to modification; Debtor seeks to reaffirm to enable restructuring.
- Court must determine whether reopening for reaffirmation post-discharge is permissible under § 350 and § 524(c).
- Court notes the HAMP directive allowing post-bankruptcy modification without reaffirmation and questions reliance on reaffirmation as a precondition.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| May the debtor reopen a Chapter 7 case to reaffirm a discharged debt? | Bellano seeks relief to reaffirm to enable modification. | Reaffirmation post-discharge not permitted by the Bankruptcy Code and case law. | Denied; post-discharge reaffirmation reopening not allowed. |
| Is a post-discharge reaffirmation agreement enforceable under § 524(c)? | Reaffirmation is necessary to obtain a HAMP modification and relief. | § 524(c) requires strict pre-discharge compliance and formal filing; post-discharge reaffirmation is generally invalid. | Denied; strict compliance with § 524(c) not satisfied. |
| Does the HAMP program permit modification without a reaffirmation? | Reaffirmation should not be required; HAMP permits post-bankruptcy modification. | Bankruptcy process and lender requirements must be followed; reaffirmation may be required. | HAMP eligibility exists without reaffirmation; no need to reopen. |
Key Cases Cited
- In re Lee, 356 B.R. 177 (Bankr.N.D. W. Va. 2006) (pertains to grounds for reopening a case under § 350)
- In re Cloninger, 209 B.R. 125 (Bankr.E.D. Ark. 1997) (burden on movant and discretion in reopening)
- Apex Oil Co. v. Sparks, 406 F.3d 538 (8th Cir. 2005) (equitable powers limited by the Bankruptcy Code)
- In re Shondel, 950 F.2d 1301 (7th Cir. 1991) (reaffirmation context and signals of discretionary authority)
- In re Stewart, 355 B.R. 636 (Bankr. N.D. Ohio 2006) (post-discharge reaffirmation not favored; statutory language controlling)
- In re Bennett, 298 F.3d 1059 (9th Cir. 2002) (strict compliance with § 524(c) is required)
- Norwest Bank Worthington v. Ahlers, 485 U.S. 197 (1988) (equitable powers must align with the Bankruptcy Code)