## Facts

- Johnnie Wayne Wilson and Linda Lou Wilson filed a joint Chapter 7 petition on February 15, 2012.
- On the same day, Mr. Wilson filed a statement of intention indicating he wanted to reaffirm a debt secured by his vehicle, a 2001 Dodge Caravan.
- Mr. Wilson timely entered into a reaffirmation agreement with the secured creditor, CSC Logic, and asked the bankruptcy court to approve the agreement.
- The reaffirmation agreement proposed reaffirming approximately $2,040.19 at 9.54% interest, payable in 13 monthly payments of $169.05.
- The Wilsons’ schedules reflected that their monthly expenses exceeded monthly income by $158.
- Mr. Wilson stated he could make the reaffirmation payments because his son would help him make the payment.
- The vehicle was scheduled at a value of about $1,217.00, substantially less than the reaffirmed balance; it had been purchased for $7,398.37.
- At the reaffirmation hearing, Mr. Wilson’s attorney appeared and stated on the record that he did not approve the reaffirmation agreement and would not provide the attorney certification.
- Counsel urged the court to allow a “ride-through” so Mr. Wilson could keep the vehicle and continue making regular payments without an enforceable reaffirmation agreement, arguing that Mr. Wilson was current and needed the vehicle to transport Mrs. Wilson to medical appointments.
- The chapter 7 trustee filed a report of no distribution after the meeting of creditors.

## Issues

1. Whether the court should approve a Chapter 7 reaffirmation agreement for secured vehicle debt when the debtor’s budget shows a monthly deficit, the presumption of undue hardship arises, and debtor’s counsel refuses to certify the agreement.
2. Whether the court can or should permit a “ride-through” (retain-and-pay) allowing the debtor to keep the vehicle and continue paying without an approved reaffirmation agreement.

## Decision

- The court denied the motion to approve the reaffirmation agreement.
- The court found that the debtor’s schedules triggered the statutory presumption of undue hardship and that the debtor did not sufficiently rebut it with dependable support.
- The court concluded the reaffirmation was not in the debtor’s best interest and would impose an undue hardship, including because the debtor showed a deficit budget and relied on voluntary assistance from his son.
- The court declined to grant a court-created ride-through as an alternative remedy; to the extent a ride-through might occur in practice, it would depend on the creditor’s forbearance rather than a judicial order.

## Legal Principles

- Reaffirmation agreements are enforceable only if the requirements of 11 U.S.C. § 524 are satisfied, and the court applies those requirements strictly to protect debtors from improvident reaffirmations.
- When an attorney does not certify a reaffirmation agreement, the court must independently determine whether the agreement is in the debtor’s best interest and does not impose an undue hardship. 11 U.S.C. § 524(c)(6)(A).
- A presumption of undue hardship arises when the debtor’s income minus expenses is insufficient to make the reaffirmed payment, and the debtor must rebut the presumption with a satisfactory written showing. 11 U.S.C. § 524(m).
- A debtor’s reliance on informal, nonbinding third-party contributions (such as voluntary help from a family member) may be too uncertain to establish ability to perform and may fail to rebut undue-hardship concerns.
- Post-BAPCPA, the Bankruptcy Code does not require a bankruptcy court to approve an otherwise improper reaffirmation agreement simply to facilitate a retain-and-pay outcome, and the court generally will not order a creditor to accept a ride-through arrangement.

## Conclusion

In In re Wilson, the bankruptcy court refused to approve a debtor’s proposed reaffirmation of a car loan because the debtors’ schedules showed a monthly deficit that triggered a presumption of undue hardship, and the debtor’s explanation—voluntary help from his son—did not provide a reliable basis to find the agreement workable or in the debtor’s best interest, especially where counsel would not certify it. The court also declined to grant a judicially mandated ride-through, explaining that any retain-and-pay result would depend on the creditor’s choice rather than a court order.


In re Wilson, 2012 WL 2411918 (2012)