Opinion
No. 79-1485 C
February 25, 1980
Bankruptcy Reform Act — Reaffirmation of Debts — Best Interests of Debtor
Reaffirmation of the debtors' obligation was found not to be in their best interests under Section 524(c). The reaffirmation was not necessary for the preservation of the collateral — a motor home — as the debtors were current on their contractual obligation, and the effect of reaffirmation would be a potentially nondischargeable debt should the debtors default. Accordingly, the reaffirmation agreement was not approved by the court. See Sec. 524(c) at ¶ 9241.
[Digest of Opinion]
The debtors sought to obtain an approval of an agreement to reaffirm a debt to the creditor. The loan was secured by the debtors' motor home which was their residence. The debtors were current in their monthly payments and stated that they only wanted to reaffirm the obligation to assure that they would not lose the motor home.The court determined that reaffirmation was not necessary for the preservation of the motor home. As long as the debtors were current on their contractual obligation, the secured creditor could not deprive the debtors of the collateral. Further, reaffirmation could potentially saddle the debtors to a nondischargeable and unsecured obligation should they default, the motor home be repossessed and the secured creditor obtain an in personam deficiency judgment. Finding that reaffirmation would not be in the best interest of the debtors under Section 524(c) of the Bankruptcy Code, the court refused to grant the motion for reaffirmation of the loan.