## Facts

- Darlene M. Bassett financed consumer goods through a secured loan from American General Finance, Inc. (Finance).
- Bassett later filed a voluntary Chapter 7 bankruptcy petition.
- Before discharge, Bassett signed a two-page reaffirmation agreement covering Finance’s debt.
- The agreement included the statutory rescission notice language, but it appeared in ordinary type and was placed near other preprinted statements, including an all-caps statement that Bassett was not legally obligated to sign.
- After discharge, Bassett made payments for several months, then stopped.
- Finance sent collection letters seeking payment.
- Bassett reopened her bankruptcy case and filed a putative class action alleging the reaffirmation agreement was unenforceable and that Finance’s collection efforts violated bankruptcy protections and other laws.

## Issues

1. Whether the reaffirmation agreement failed 11 U.S.C. § 524(c)(2)(A) because the rescission notice was not “clear and conspicuous,” rendering the agreement unenforceable.
2. Whether 11 U.S.C. § 524 implies a private right of action for damages for violation of the discharge injunction.
3. Whether Bassett could proceed on state-law and Truth in Lending Act claims based on the reaffirmation agreement and post-discharge collection efforts.

## Decision

- The Ninth Circuit held the reaffirmation agreement was unenforceable because it did not satisfy § 524(c)(2)(A)’s “clear and conspicuous” rescission-notice requirement.
- The court affirmed that § 524 does not create an implied private right of action; discharge violations are addressed through the bankruptcy court’s contempt authority.
- The court affirmed dismissal of Bassett’s state-law and TILA claims.
- The court left available, on remand, remedies premised on contempt and related bankruptcy enforcement mechanisms consistent with the BAP’s disposition.

## Legal Principles

- A reaffirmation agreement is enforceable only if it strictly complies with 11 U.S.C. § 524(c), including a “clear and conspicuous” statement of the debtor’s statutory right to rescind.
- “Conspicuous” is assessed contextually, asking whether the notice would attract the attention of a reasonable person, considering typography, placement, contrast, and surrounding language.
- If a reaffirmation agreement does not comply with § 524(c), the underlying debt is discharged and cannot be collected as a post-discharge obligation.
- The Bankruptcy Code does not imply a stand-alone private damages action under § 524 for discharge injunction violations; enforcement proceeds through contempt and related bankruptcy remedies.
- State-law and TILA theories tied to an invalid reaffirmation and discharge-collection conduct may be dismissed where the pleaded claims do not provide a viable basis for relief in light of the bankruptcy enforcement scheme.

## Conclusion

The Ninth Circuit invalidated a reaffirmation agreement because the required rescission notice was not presented conspicuously, confirmed that § 524 does not authorize an implied private damages action, and held that post-discharge enforcement is handled through bankruptcy contempt and related remedies rather than separate federal or state-law causes of action.


Am. Gen. Fin., Inc. v. Bassett (In re Bassett), 285 F.3d 882 (9th Cir. 2002)