Bankr. E.D.N.C.: In Bowden- Ride-Through following Reaffirmation without Attorney Certification


Debtor filed a reaffirmation agreement with Ally for a vehicle with the bankruptcy court, despite showing that her monthly income minus monthly expenses resulted in a negative net income, indicating a presumption of undue hardship. The reaffirmation stated that the Debtor intended to adjust her expenses to afford the car payments. The Debtor’s attorney did not complete the certification in the reaffirmation that there was no undue hardship. Due to the absence of the attorney certification, the bankruptcy court set the reaffirmation for hearing. Ally neither filed a proof of claim in the case, appeared at the reaffirmation hearing, nor responded to the eventual motion by the Debtor to declare the reaffirmation unenforceable.

The bankruptcy court found as follows:

(1) Ally did not file a proof of claim and thus does not have an allowed claim, and likewise cannot assert a claim for the “purchase price” of the vehicle, rendering 11 U.S.C. § 521(a)(6) inapplicable.
(2) The debtor timely complied with § 521(a)(2), by filing a statement of intention indicating that she would retain the vehicle on the same day that she filed her petition, and also entered into a reaffirmation agreement which was filed with the court ten days after the first date set for her meeting of creditors.
(3) Accordingly, the provisions of §§ 362(h) and 521(d), both of which are triggered by a debtor’s failure to take the actions identical to those required under § 521(a)(2), are not applicable- the stay is not terminated and a creditor is prohibited from enforcing an ipso facto clause which may be contained in the underlying agreement.
(4) Finally, the debtor is represented by an attorney, and § 524(c)(6)(A) only applies “in a case
concerning an individual who was not represented by an attorney during the course of negotiating
an agreement under this subsection.”

If the attorney certification is not complete, there is no enforceable reaffirmation agreement, because the plain language of the statute requires strict compliance.


The Bankruptcy Court, in Footnote 2 states that it believes that the local rules should require debtors’ attorneys to “to represent their clients in the negotiation of reaffirmation agreements.” (Emphasis added.) Representing a debtor in the “negotiation of reaffirmation agreements” is an important distinction from the Middle District Local Rule 2090-1(c)(4) which requires the broader “representation”. The narrower phrase “negotiation of reaffirmation agreements”, as used in 11 U.S.C. § 524(c)(3), allows the debtors’ attorney to assist with the reaffirmation, without forcing the debtors’ attorney to either certify that there is no undue hardship or refuse to file a reaffirmation, thereby likely costing the debtors their vehicle. The Western District in Local Rule 4008-1(d) seems to reach a reasonable accommodation by requiring the debtors’ attorney to sign the certification only if it can be done in “good conscience and within the bounds of Bankruptcy Rule 9011.”

It should also be noted, that even though Proofs of Claim are not solicited by the Trustee in Chapter 7 cases unless there are assets to distribute, secured creditors can nonetheless file Proofs of Claim and short-circuit much of this “back-door ride through.” It is not inconceivable that this is actually intended, since if Proofs of Claim were filed by car creditors, Trustees would have a greater ability to spot avoidable preferential liens, thereby occasionally obtaining increased assets for the benefit of creditors. This would in effect mean that if a secured creditor wanted to retain personal liability against the debtor, it would have to show its hand.

For a copy of the opinion, please see:

Bowden- Ride-Through following Reaffirmation without Attorney Certification.pdf


1. Bachelor of Arts degree in English Literature from Washington University, 1993. 2. Juris Doctor degree from George Washington University, 1996. Admissions to Practice of Law: North Carolina Bar, 1996. Federal District Courts for the Eastern and Middle Districts of North Carolina. Specialty Certification: North Carolina State Bar: Certified as a Specialist in Consumer Bankruptcy. Areas of Practice: Practice limited to consumer and business debtor bankruptcy law, 1998 to present. Memberships: National Association of Consumer Bankruptcy Attorneys (NACBA). North Carolina Academy of Trial Lawyers (NCATL). North Carolina Bar Association, Bankruptcy Section. Lectures prepared and presented: North Carolina Academy of Trial Lawyers seminar on bankruptcy; Topic: Counseling the Consumer Debtor Prior to Court - C.Y.A. Forms to Help 'Gird They Loins'; 2001. Middle District Bankruptcy Seminar; Topic: Preparing Chapter 13 Plans; 2002. NACBA National Convention; Topic: Efficient Office Practices; 2003. NACBA National Convention; Topic: Chapter 7 vs. Chapter 13 Debates; 2004. Middle District Bankruptcy Seminar; Topic: Chapter 7 & 13 Hot Issues; 2004. Positions held: NACBA National Convention; Convention Chair; 2008. NACBA National Convention; Panel Moderator: Topic: Basic Bankruptcy Issues; 2008. NACBA National Convention; Panel Moderator; Topic: Chapter 13-Disposable Income and Other Issues; 2007. NACBA National Convention; Panel Moderator; Topic: Representing Members of the Military and Their Families; 2007. NACBA, Member of National Board of Directors, 2006 to present. NCATL, Chair of the Bankruptcy Section, 2003 to 2007. NACBA, Chair of the North Carolina Section, 2003 to 2007. NC Bar Association, Bankruptcy Section, Bankruptcy Council Member, 2004 to present.

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