## Facts

- David Douglas Jones and Kirsten M. Jones bought a vehicle under a retail installment contract granting DaimlerChrysler Financial Services Americas, LLC a perfected security interest.
- The contract contained an ipso facto clause treating a bankruptcy filing as an event of default.
- David Jones filed a Chapter 7 petition and filed a statement of intention indicating he would “continue payments,” but he did not elect redemption or reaffirmation.
- The first meeting of creditors occurred on June 16, 2006; Jones did not redeem the vehicle or enter a reaffirmation agreement within the statutory 45-day period (ending July 31, 2006).
- After the deadline, Jones made only one payment (August 28, 2006).
- DaimlerChrysler sought and obtained relief confirming termination of the automatic stay and then repossessed the vehicle under the bankruptcy-default provision.
- The Joneses filed an adversary proceeding asserting that Jones could keep the vehicle by staying current (a “ride-through” approach) and that repossession violated federal bankruptcy law and state law.

## Issues

1. Whether, after BAPCPA, a Chapter 7 debtor may retain consumer personal property collateral by staying current without redeeming or reaffirming (the “ride-through” option).
2. Whether, after the debtor fails to timely redeem or reaffirm and the stay terminates under the Bankruptcy Code, the secured creditor may repossess under an ipso facto default clause and applicable state law.

## Decision

- The Fourth Circuit affirmed the district court’s reversal of the bankruptcy court.
- The court held that BAPCPA eliminated ride-through for Chapter 7 debtors seeking to retain personal property securing a consumer debt.
- Because Jones did not timely redeem or reaffirm as required by §§ 521(a)(2), 521(a)(6), and 362(h), the stay terminated and the vehicle ceased to be property of the estate.
- After stay termination, DaimlerChrysler could enforce its security interest under nonbankruptcy law, including repossession based on the bankruptcy-default clause as permitted by West Virginia law.

## Legal Principles

- Post-BAPCPA, an individual Chapter 7 debtor retaining personal property securing a consumer debt must timely perform one of the Code’s retention options (reaffirmation or redemption) or surrender the collateral.
- A statement of intention to “continue payments” does not satisfy the statutory scheme when the debtor does not timely redeem or reaffirm.
- Under 11 U.S.C. § 362(h) and § 521(a)(6), the debtor’s failure to timely comply results in termination of the automatic stay as to the collateral and removal of the collateral from the estate.
- Once the stay terminates and the estate’s interest ends, a secured creditor may pursue state-law and contract remedies, including enforcement of an ipso facto default provision, unless independently barred by law.

## Conclusion

The Fourth Circuit held that BAPCPA forecloses ride-through for a Chapter 7 debtor retaining consumer personal property collateral; when the debtor fails to timely redeem or reaffirm, the stay terminates and the creditor may repossess under its contract and state law.


In re Jones, 591 F.3d 308 (4th Cir. 2010)