12.01.2008

E.D.N.C. Reports Circuit Split: Are Title 11 Debtor Duties Options Exclusive?

Per Coastal Federal Credit Union v. Hardiman, 2008 WL 4899529 (E.D.N.C. Oct 28, 2008):

[T]he Fourth Circuit rejected the Seventh Circuit's conclusion that the three options in section 521(a)(2)(A) were exclusive. The Fourth Circuit noted, inter alia, that the Seventh Circuit's analysis rested on another case which reasoned in part from the premise that ipso facto clauses were enforceable in that circuit. See id. at 347-18 (rejecting Edwards and its reliance on In re Bell, 700 F.2d 1053 (6th Cir.1983)).

In so holding, the Fourth Circuit chose its side in a vigorous circuit split. This circuit split persisted for over fifteen years. See Donald, 343 B.R. at 530-31. The Supreme Court never resolved whether the three options listed in section 521(a)(2)(A) were exclusive, or whether there was a "fourth option." Rather, this issue was the subject of ten different decisions of the courts of appeals. Five courts of appeals held that a debtor is not limited by the options enumerated in current section 521(a)(2)(A). Five others held to the contrary.

[FN7] In re Price, 370 F.3d 362, 379 (3d Cir.2004) (explaining that current section 521(a)(2)(A) is merely a notice provision); In re Parker, 139 F.3d 668, 673 (9th Cir.1998) ("The debtor's other options remain available...."); In re Boodrow, 126 F.3d 43, 51 (2d Cir.1997) (explaining that current section 521(a)(2)(A) "appears to serve primarily a notice function, not necessarily to restrict the substantive options available to a debtor"); Belanger, 962 F.2d at 347-18 ("Nothing in [current] section 521[a](2)(A) requires the debtor to choose redemption, reaffirmation or surrender of the property to the exclusion of all other alternatives...."); Lowry Fed. Credit Union v. West, 882 F.2d 1543, 1547 (10th Cir.1989) ("[W]e do not believe those provisions make redemption or reaffirmation the exclusive means by which a bankruptcy court can allow a debtor to retain secured property.").

[FN8] Four courts of appeals rejected the ride-through option. In re Burr, 160 F.3d 843, 849 (1st Cir.1998) ("[W]e believe that [current] 11 U.S.C. § 521 [ (a) ](2) unambiguously requires chapter 7 debtors wishing to retain property of the estate that secures a consumer debt to elect one of the retention options specified...."); In re Johnson, 89 F.3d 249, 252 (5th Cir.1996) (per curiam) ("[D]ebtors are limited to the three options set forth in the statute."); In re Taylor, 3 F.3d 1512, 1517 (11th Cir.1993) ("[W]e hold the plain language of [current] 11 U.S.C. § 521 [ (a) ](2) does not permit a Chapter 7 debtor to retain the collateral property without either redeeming the property or reaffirming the debt...."); Edwards, 901 F.2d at 1387 ("[W]e hold that [current] 11 U.S.C. § 521 [ (a)(2) ] requires a debtor to choose between the reaffirmation, redemption or surrender of property...."). Additionally, the Sixth Circuit rejected an argument that approximated ridethrough shortly before Congress amended the Bankruptcy Code in 1984 to include the language that gave rise to the ride-through dispute. See Bell, 700 F.2d at 1054-55, 1058 (rejecting argument that debtor may "redeem" property by making installment payments); see also Taylor, 3 F.3d at 1515 n. 3 ("The Sixth Circuit decided Bell the year before Congress passed the 1984 Amendments to the Bankruptcy Code.").

2 Comments:

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Город ангелов / City of Angels
Триумф История Рона Кларка / The Ron Clark Story
Коллективный иск / Class Action
Класс 76 / Class of '76
Взвесь весь риск / Classe tous risques
Очищение / Clean
Клеопатра / Cleopatra
Клеопатра 2003 / Cleopatra
Заводной апельсин / A Clockwork Orange
Коктейль / Cocktail
Кокон 2 Возвращение / Cocoon: The Return
Кокон / Cocoon
Код 46 / Code 46
Мое сердце биться перестало / De battre mon coeur s'est arrete
Коллекционер 1965 / The Collector
Цвет денег / The Color of Money
Цвет пурпура / The Color Purple
Колосс Родосский / Colossus of Rhodes, The (Colosso di Rodi, Il)
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Дирижер / Dyrygent) (The Conductor
Пелле завоеватель / Pelle erobreren) (Pelle the Conqueror
Контакт / Contact

 

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