Opinion
Case No. 08-41521
5-11-2009
IN RE: CHRISTY LYNNE GOODMAN, Chapter 7,
ORDER WITH REGARD TO REAFFIRMATION AGREEMENT
The debtor in this case wants to reaffirm a debt of some $37,000 owed to DamilerChrysler Financial Services Americas, LLC ("DaimlerChrysler"), on a 2007 Jeep Liberty, originally purchased for $41,904, which now has a "clean retail" value of about $12,500 according to information from the NADA website. The repayment schedule calls for 66 more payments in the amount of $558.72 each. The interest rate is 13.14 percent.
http://www.nadaguides.com.
In Part D of the Reaffirmation Agreement ("Debtor's Statement in Support of Reaffirmation Agreement"), the Debtor states that she has monthly income of $2,198 and actual monthly expenses of $2,188, leaving only $10 to make the required payments. She states, however, that she can afford to make the payments because her mother, who is also obligated on the debt, will make up the difference.
The Debtor is represented by an attorney in this case, but the attorney declined to make the certifications that 11 U.S.C. § 524(c)(3) requires. Thus, this condition to enforceability of the agreement under § 524(c) does not exist.
If a debtor is not represented by an attorney during the course of negotiating a reaffirmation agreement, the condition to its enforceability is that the court approve the agreement as "(i) not imposing an undue hardship on the debtor . . .[and] (ii) in the best interest of the debtor." 11 U.S.C. § 524(c)(6)(A). It is clear from the hearing that the debtor's lawyer represented the Debtor in connection with negotiation of the reaffirmation agreement but declined to provide the required certification for reasons that, properly, she did not disclose, given her duty of maintaining the confidences of her client and the protections of the attorney-client privilege. In this regard, the Court is satisfied that the Debtor's lawyer properly fulfilled her professional responsibilities to represent the Debtor in all aspects of this case, including counseling with regard to the proposed reaffirmation agreement. Thus, this is not a case in which a debtor's lawyer attempts to exclude reaffirmation matters from the scope of the bankruptcy representation.
See In re Egwim, 291 B.R. 559 (Bankr. N.D. Ga. 2003).
The question here is whether the Court may even consider approving the proposed reaffirmation agreement in view of the fact that her lawyer represented her at least with regard to advising her about it, continues to represent her in the case, but refused to provide the required certification. The answer must be affirmative because the lawyer's certification necessarily cannot be the only way for a debtor with a lawyer to enter into an enforceable reaffirmation agreement.
In the final analysis, it is the client, not the lawyer, who makes the decision about reaffirmation. So a debtor must have the opportunity to seek to enter into an enforceable reaffirmation agreement notwithstanding her lawyer's decision not to sign the certification based on the lawyer's professional judgment that it is not in her best interest or for other valid reasons. And the debtor's lawyer, who ordinarily has a duty to represent a consumer debtor in all aspects of a bankruptcy case, need not seek to withdraw from representation in the case (in which her services may still be required with regard to other matters) so that the debtor can become unrepresented so that she can pursue an enforceable reaffirmation agreement. Indeed, the lawyer's professional responsibilities actually require the lawyer to represent the debtor in connection with reaffirmation matters.
So withdrawal, even partial withdrawal, is problematic if the lawyer's professional responsibilities require her to represent the client in the case to achieve an objective that the client has a right to seek but the lawyer recommends against it. Requiring a lawyer to withdraw before permitting the debtor to seek the court's approval for a reaffirmation agreement makes no sense. Thus, the Court concludes that, if a lawyer fulfills his professional duty to represent the debtor with regard to reaffirmation but concludes that she cannot make the required certification, the lawyer's client may seek the Court's approval of the reaffirmation agreement in the same manner she could if she did not have a lawyer. In effect, the lawyer withdraws from representing the client with regard to the required certification but still represents the debtor in the case. Because the lawyer's duty is to assist her client in achieving lawful objectives and because the lawyer continues to represent the debtor in the case, the lawyer's duty when she cannot make the required certification is to assist the debtor in bringing the proposed reaffirmation before the Court for resolution and to appear at the hearing to present (but not necessarily advocate) the position of the client..
The Court, therefore, will proceed to determine whether to approve the proposed reaffirmation agreement pursuant to 11 U.S.C.A. § 524(c)(6). Given the debtor's financial circumstances (particularly the fact that she cannot afford to make the payments on her own) and the substantial amount by which the debt secured by the subject vehicle exceeds its value, the Court cannot conclude that the reaffirmation agreement is in the best interests of the debtor.
The Court understands that the Debtor wants to protect her mother who is also obligated on this debt. The Court points out that a debtor may voluntarily repay any debt. 11 U.S.C.A. § 524(f). Thus, the debtor may voluntarily continue to make payments and DaimlerChrysler may continue to accept them and apply them to the debt.
It is, therefore, ORDERED and ADJUDGED that approval of the Reaffirmation Agreement be, and it hereby is, DENIED. Notwithstanding such denial, the Debtor may voluntarily make payments on the debt, DaimlerChrsyler may accept such payments, and DamilerChrysler may contact the Debtor from time to time as appropriate with regard to matters concerning its collateral and the debt other than enforcement or collection of it as a personal liability of the Debtor.