In the

United States Court of Appeals

For the Seventh Circuit

No. 99-4239

Ralph M. Cox, on behalf of himself

and others similarly situated,

Plaintiff-Appellant,

v.

Zale Delaware, Inc.,

Defendant-Appellee.

Appeal from the United States District Court

for the Northern District of Illinois, Eastern Division.

No. 99 C 1670--Elaine E. Bucklo, Judge.

Argued September 12, 2000--Decided February 8, 2001

 Before Posner, Coffey, and Manion, Circuit Judges.

 Posner, Circuit Judge. A large class-action suit

has grown out of a tiny acorn of a dispute. In

1993 Ralph Cox filed a voluntary petition for

bankruptcy under Chapter 7 of the Bankruptcy

Code. In the list of debts that he submitted to

the bankruptcy court he listed a debt to Zale,

from which he had bought (on credit) a ring in

which Zale retained a security interest. About a

month after the submission of the list of debts

he signed an agreement with Zale reaffirming the

debt and agreeing to pay the unpaid balance of

$218.93 at the rate of $15 a month. The next

month the bankruptcy proceeding wound up with an

order discharging Cox from all his listed debts--

including the debt to Zale, because the

reaffirmation agreement had not been filed with

the bankruptcy court.

 The failure to file had an additional

significance besides preventing the court from

learning of the agreement and so deleting the

debt to Zale from the list of discharged debts.

Section 524(c) of the Bankruptcy Code provides

that an agreement reaffirming a dischargeable

debt "is enforceable only if . . . such agreement

has been filed with the court." 11 U.S.C. sec.

524(c)(3). The purpose is to help assure that the

agreement is voluntary on the debtor’s part

rather than coerced and does not put such a
crushing weight on his shoulders that it prevents

him from making the "fresh start" that is one of

the goals of bankruptcy law. In re Turner, 156

F.3d 713, 718 (7th Cir. 1998); In re Duke, 79

F.3d 43 (7th Cir. 1996); see generally Grogan v.

Garner, 498 U.S. 279, 286 (1991); In re Renshaw,

222 F.3d 82, 86 (2d Cir. 2000). Provided there is

no coercion or harassment of the debtor, the

creditor’s offer of reaffirmation is not deemed

an attempt to collect the debt and therefore does

not violate the automatic stay, the statutory

injunction against creditors’ seeking to collect

their debts from a debtor after he’s entered

bankruptcy. In re Duke, supra; Pertuso v. Ford

Motor Credit Corp., 233 F.3d 417, 423 (6th Cir.

2000); In re Brown, 851 F.2d 81, 84 (3d Cir.

1988). Cox’s argument that Zale’s offer violated

the automatic stay is therefore frivolous.

 But the reaffirmation agreement was never filed,

and was therefore invalid even though the offer

itself had not been improper. Bessette v. Avco

Financial Services, 230 F.3d 439, 444 (1st Cir.

2000); In re Turner, supra, 156 F.3d at 718.

Section 524(c) is explicit that such an agreement

is enforceable only if all the statutory

conditions, including filing, are satisfied. The

record is silent on why the agreement was not

filed. Cox argues that Zale has a practice of not

filing such agreements because it fears that

bankruptcy judges will disallow them, though the

judge cannot do that if the debtor is represented

by counsel, as Cox was. 11 U.S.C. sec.

524(c)(6)(A); In re Grinnell, 170 B.R. 495

(Bankr. D.R.I. 1994); In re Dabbs, 128 B.R. 307,

309 (Bankr. D. Fla. 1991). The argument, though

implausible in a case such as this in which the

debtor was represented by counsel in his

bankruptcy proceeding, cannot be evaluated on the

present record.

 The reader may be wondering why a debtor would

ever agree to pay a dischargeable debt, and why a

secured creditor would care about securing an

agreement that the debtor pay, since a discharge

in bankruptcy does not extinguish a secured

creditor’s right to enforce his security

interest. Dewsnup v. Timm, 502 U.S. 410 (1992);

In re Penrod, 50 F.3d 459, 461 (7th Cir. 1995);

In re Be-Mac Transport Co., 83 F.3d 1020, 1025

(8th Cir. 1996). The answer to the second

question, as explained in our Penrod opinion, 50

F.3d at 461-62, is that secured creditors are

frequently undersecured, especially when the cost

of foreclosing on a security interest is factored

in, and so they would like to collect the debt

directly from the debtor rather than liquidate

their security interest. The answer to the first

question is that the debtor may prefer to retain

the property in which his creditor holds a
secured interest, rather than avoid paying the

creditor but lose the property to repossession or

foreclosure. An understanding of the incentives

of the parties to debt-reaffirmation agreements

will turn out to be important to deciding on the

proper remedy for violation of the statutory

requirement that such agreements be filed with

the bankruptcy court.

 Back to our case. Years passed and the

bankruptcy proceeding was long over with and Cox

had paid off the reaffirmed debt in full when he

brought this suit on behalf of himself and all

others similarly situated--meaning all other

customers of Zale who had signed debtreaffirmation agreements that Zale had not filed

with the bankruptcy court. The suit sought to

rescind the agreement and recover the amounts

that Cox (and the other members of the class in

similar situations) had paid Zale after the

bankruptcy court had entered its order

discharging his listed debts. Cox based federal

jurisdiction on 28 U.S.C. sec. 1334(a), which

gives the federal district courts exclusive

jurisdiction over suits arising under the

Bankruptcy Code. The district court referred the

suit to the bankruptcy court (which technically

is a division of the district court) pursuant to

28 U.S.C. sec. 157(a) (see also 28 U.S.C. sec.

1334(b)), which authorizes such references. That

court permitted Cox to reopen his bankruptcy case

in order to present his claim for rescission. Why

the old case should have been reopened rather

than a new one filed is a mystery that the

parties have not explored; but it has no

practical importance beyond the question whether

a filing fee had to be paid, Central Laborers’

Pension, Welfare & Annuity Funds v. Griffee, 198

F.3d 642, 644 (7th Cir. 1999), so we ignore it.

 But the court then dismissed the reopened case

on the ground that section 524(c) does not create

a private right of action for violation of its

requirement that a debt-reaffirmation agreement,

to be enforceable, be filed with the bankruptcy

court. Cox’s exclusive remedy, the judge ruled,

was a motion in the reopened bankruptcy

proceeding that Zale be adjudged in contempt of

court for violating the order of discharge by

trying to collect a discharged debt, and be

suitably sanctioned. To similar effect, see

Bessette v. Avco Financial Services, supra, 230

F.3d at 444-45. A still more recent decision,

Pertuso v. Ford Motor Credit Corp., supra, 233

F.3d at 421-23, agrees with Bessette that section

524(c) creates no private right of action, but

disagrees that the contempt power can be used to

punish violations of the filing requirement, id.

at 423 n. 1, though its disagreement may have

been shaped by the facts of the case, as we’ll
see. Both cases hold, correctly in our view, that

remedies against debt-affirmation agreements

contended to violate the Bankruptcy Code are a

matter exclusively of federal bankruptcy law. Id.

at 426; Bessette v. Avco Financial Services,

supra, 230 F.3d at 447-48; see also MSR

Exploration, Ltd. v. Meridian Oil, Inc., 74 F.3d

910, 913-14 (9th Cir. 1996). That extinguishes

the plaintiff’s claim for unjust enrichment,

which is based on state law.

 In holding that section 524(c) does not create

a private right of action, the Sixth Circuit in

Pertuso and the district court and bankruptcy

court in the present case emphasized that

Congress explicitly created a private right of

action for violation of 11 U.S.C. sec. 362, the

provision that creates the automatic stay to

which we referred earlier, yet did not do so in

section 524(c), and that the Supreme Court is

reluctant to imply private rights of action in

federal statutes. E.g., Suter v. Artist M., 503

U.S. 347, 363-64 (1992); Thompson v. Thompson,

484 U.S. 174, 187 (1988); California v. Sierra

Club, 451 U.S. 287, 297-98 (1981); Transamerica

Mortgage Advisors, Inc. v. Lewis, 444 U.S. 11, 24

(1979); Touche Ross & Co. v. Redington, 442 U.S.

560, 576 (1979). With all due respect, we think

those emphases misplaced. The private rights of

action that the Court is reluctant to read into

federal statutes are rights to obtain damages for

statutory violations remediable by public

agencies. Cox is not seeking damages, and section

524(c) is enforceable only by private parties. A

statute regulating purely private rights that

makes a contract void makes the contract

rescindable by a party to it, especially when the

other party to the contract is trying to enforce

it, so that the contract’s illegality is

interposed by way of defense, rather than as the

basis for an independent suit. E.g., Transamerica

Mortgage Advisors, Inc. v. Lewis, supra, 444 U.S.

at 18. If a statute declaring a type of contract

unenforceable does anything, it creates a defense

to a suit to enforce such a contract.

 It is thus a non sequitur for Zale to argue that

because section 524(c) does not create a right to

seek damages for violation of the requirement

that a debt-reaffirmation agreement be filed with

the bankruptcy court, Cox would have had no

defense to a suit by Zale to enforce the

agreement. Suppose Cox had realized the agreement

was unenforceable before he had completed paying

off the debt and so had refused to complete

payment. Had Zale sued him for breach of

contract, he could have successfully interposed

the defense that the contract was unenforceable.

(Otherwise an unenforceable contract would be

enforced!) In other words, he could have sought
rescission in that suit. It is true that to

obtain rescission and thus get his $219 back, he

would have to revest Zale with its security

interest in the ring and perhaps compensate Zale

for the rental value of the ring during the

period since he signed the debt-reaffirmation

agreement, on the theory that had it not been for

that agreement Zale would have repossessed (or at

least would have had the right to repossess) the

ring. When a contract is rescinded, the parties

have to be put back to where they were before the

contract was made, more precisely to where they

would have been had they not made the contract in

the first place. Fleming v. United States Postal

Service, 27 F.3d 259, 262 (7th Cir. 1994);

Resolution Trust Corp. v. FSLIC, 25 F.3d 1493,

1504 (10th Cir. 1994). Hence the relevance of the

rental value of the ring.

 It makes no difference, however, whether the

contract is rescinded in a suit for rescission or

by the successful interposition of a defense to a

suit to enforce the contract. Hogue v. Pellerin

Laundry Machinery Sales Co., 353 F.2d 772, 774

(8th Cir. 1965); Rosewood Corp. v. Fisher, 263

N.E.2d 833, 838 (Ill. 1970); Amato v. Edmonds,

408 N.E.2d 1172, 1175 (Ill. App. 1980). The

effect of rescinding a debt-reaffirmation

agreement is the same in either case: the debt is

discharged in bankruptcy but the creditor is

revested with his security interest. That does

not make the debtor’s victory Pyrrhic (if we

disregard the minuteness of the stakes in

relation to the expense of litigation), because

often the value of the security interest is too

slight to incite the creditor actually to enforce

it.

 If we are right so far, it can make no

difference, at least as regards drawing any

inference from the right conferred by section

362(h) to seek damages for violation of the

automatic stay, that Cox sought rescission after

rather than before completing payment under the

reaffirmation agreement. A contract may be

rescinded after full performance on both sides,

see, e.g., Finke v. Woodard, 462 N.E.2d 13, 18

(Ill. App. 1984); Seneca Wire & Mfg. Co. v. A.B.

Leach & Co., 159 N.E. 700, 702 (N.Y. 1928); E.

Allan Farnsworth, Contracts, sec. 4.4, p. 228 and

n. 2; sec. 4.15, p. 261 (3d ed. 1999), provided

that it is possible to put the parties back in

the position they would have occupied had they

not made the contract in the first place, and

that was possible here, as we have just seen. The

debtor cannot wait forever to rescind an invalid

debt-reaffirmation agreement, or he’ll be met

with a defense of statute of limitations or of

laches, but neither is pleaded here. We add that

suits under the Bankruptcy Code, presumably
including suits for rescission, can proceed as

class actions in appropriate circumstances. Fed.

R. Bankr. Pro. 7023; In re American Reserve

Corp., 840 F.2d 487 (7th Cir. 1988); Bolin v.

Sears, Roebuck & Co., 231 F.3d 970, 973, 975 (5th

Cir. 2000); Bessette v. Avco Financial Services,

Inc., supra, 230 F.3d at 446.

 But--and it is a big "but"--we have yet to

consider the remedial scheme of section 524

itself, a matter potentially of great relevance

to the question whether a suit for rescission of

a debt-affirmation agreement invalidated by that

section is proper. Section 524(a)(2) provides

that an order discharging the debtor from his

debts "operates as an injunction against the

commencement or continuation of an action, the

employment of process, or an act, to collect,

recover, or offset any such debt as a personal

liability of the debtor, whether or not discharge

of such debt is waived." Until the addition of

section 14(f) to the Bankruptcy Act in 1970 (the

section that is now section 524(a)(2) of the

Bankruptcy Code), a discharge was merely an

affirmative defense that the debtor could plead

if later sued by the holder of one of the

discharged debts. 4 Collier on Bankruptcy para.

524.LH.[1] (15th rev. ed., Lawrence P. King ed.

2000). Section 524(a)(2) not only prohibits but

also enjoins such suits, as well as other

collection actions, and so the creditor who

attempts to collect a discharged debt is

violating not only a statute but also an

injunction and is therefore in contempt of the

bankruptcy court that issued the order of

discharge. Pertuso v. Ford Motor Credit Corp.,

supra, 233 F.3d at 421; In re National Gypsum

Co., 118 F.3d 1056, 1063 (5th Cir. 1997); 4

Collier on Bankruptcy, supra, para. 524.02[2][c].

The question we have to decide is whether that

remedy is exclusive, or whether, as Cox has done,

a debtor can sue to rescind a contract by which a

creditor attempted to collect a debt that had

been discharged.

 If the debt-reaffirmation agreement was

ineffective to take Cox’s debt to Zale off the

list of debts that were discharged in the

bankruptcy proceeding, it may seem to follow as

the night the day that Zale violated the

discharge order (which section 524(a)(2), to

repeat, deems an injunction) by "an act to

collect" a discharged debt, namely billing Cox

periodically in accordance with the reaffirmation

agreement. Bessette v. Avco Financial Services,

Inc., supra, 230 F.3d at 445, so holds, but

Pertuso v. Ford Motor Credit Corp., supra, 233

F.3d at 424-25, is to the contrary, pointing out

that the debtor, there as here represented by

counsel when he signed the reaffirmation
agreement, made the payments called for by the

agreement voluntarily. He wanted to hold on to

the property that he would have lost had the

creditor repossessed the property to enforce its

lien in it (though we have noted that often the

creditor will not bother to do this because of

the small value of the lien). The violation of

section 524(c) thus was technical, trivial, and

arguably, indeed, condoned and hence no violation

at all, and certainly not the sort of thing that

would warrant a proceeding for contempt. The

debtor or his lawyer could have found out by a

simple inquiry whether the agreement had been

filed, had either of them thought that important,

as doubtless neither did, since the debtor wanted

to honor the agreement even though not legally

obligated to. It is the same here. Cox’s debt to

Zale was listed on his schedule of discharged

debts; his lawyer could have advised him that,

the debt having been discharged, Cox didn’t have

to keep paying Zale--though the consequence of

not paying might be that Zale would repossess the

ring. Zale might not be able to enforce Cox’s

agreement to pay it $219, but it could enforce

its security interest, which the order of

discharge had not touched.

 In these circumstances, as Pertuso holds, the

inference that continued payment is voluntary,

having only to do with the debtor’s desire to

retain his property and nothing to do with an

unenforceable promise to pay, is compelling.

Advised by counsel, Cox obtained the deal with

Zale that he wanted: keep the ring, but keep

paying for it, since otherwise Zale could

repossess it. This implies that the stakes in

this case are negative--that Cox would be worse

off if he won than if he lost--since if he can

get his $219 back, Zale can get the ring back,

together with the rental value of the ring during

the period since Zale, by signing the debtreaffirmation agreement, forwent its right to

repossess it. So Cox’s suit for rescission is,

not unusually when a class action is in the

offing, both a frivolous suit and a nuisance

suit--frivolous because the payments that Cox

seeks to recoup were made voluntarily, a nuisance

suit because its net expected value to Cox is

negative. The purpose of the suit is to lay the

groundwork for a frivolous, nuisance class

action.

 In the unlikely event that Zale really has

committed a deliberate, indeed a flagrant, breach

of the filing requirement (unlikely because, the

bankruptcy court lacking power to void a debtreaffirmation agreement when the debtor is

represented by counsel, Zale would have no

incentive not to file the agreement), Cox could

ask the bankruptcy court to hold Zale in contempt
of the discharge order, which the statute makes

an injunction. In such a proceeding he could

obtain not only restitution of the payments he

made (as in a suit for rescission), assuming they

were involuntary, but also a reasonable

attorney’s fee to enable so small a claim to be

litigated. These are standard remedies in cases

of civil contempt. United States v. United Mine

Workers of America, 330 U.S. 258, 303-04 (1947);

In re General Motors, 61 F.3d 256, 259 (4th Cir.

1995) (per curiam); South Suburban Housing Center

v. Berry, 186 F.3d 851, 854-55 (7th Cir. 1999);

BPS Guard Services Inc. v. International Union of

Plant Guard Workers, 45 F.3d 205, 211 (7th Cir.

1995); Bessette v. Avco Financial Services,

supra, 230 F.3d at 445; 1 Dan B. Dobbs, Dobbs Law

of Remedies: Damages-Equity-Restitution sec.

2.8(2), pp. 194-95 (2d ed. 1993). The victim of a

violation of the statutory injunction might even

be able to obtain punitive damages, though

presumably only if he could prove criminal

contempt, In re General Motors, supra, 61 F.3d at

259; In re Power Recovery Systems, Inc., 950 F.2d

798, 802 (1st Cir. 1991); but see Bessette v.

Avco Financial Services, supra, 230 F.3d at 445,

since punishment is the purpose of criminal but

not of civil contempt.

 The remedy authorized by section 524(a)(2) has

the advantage of placing responsibility for

enforcing the discharge order in the court that

issued it. That makes more sense than a suit

seeking more limited relief (a suit for

rescission would not entitle the successful

plaintiff to attorneys’ fees or punitive damages,

Estate of Jones v. Kvamme, 449 N.W.2d 428, 432

(Minn. 1989); 2 Dobbs, supra, sec. 9.4, pp. 613-

14), which could be filed in any federal district

in which Cox could serve Zale. The court that

issued the discharge order is in a better

position to adjudicate the alleged violation,

assess its gravity, and on the basis of that

assessment formulate a proper remedy. In the

context of debt-reaffirmation agreements the

rescission remedy is, for the reasons we’ve

explained, hokey.

 Cox points out that an interpretation of the

Bankruptcy Code that makes contempt the sole

remedy for violation of the requirement that

debt-reaffirmation agreements be filed precludes

class-action relief, since the other debtors

whose debt-reaffirmation agreements Zale failed

to file with the bankruptcy court in which the

debtor’s bankruptcy was pending are scattered all

over the country. Cox argues that given the small

size of the debts and hence the small stakes in

individual actions, only class-action treatment

can assure adequate relief. Maybe so. But if

really engaged in a nationwide scheme of flouting
discharge orders Zale can readily be humbled in a

proceeding for criminal contempt, with the

unlimited monetary sanctions that are available

for such contempts when grave. Granted, it is

unsettled whether bankruptcy judges have

criminal-contempt powers. Compare In re Ragar, 3

F.3d 1174 (8th Cir. 1993), with In re Hipp, 895

F.2d 1503, 1515-16 (5th Cir. 1990). Their power

to determine civil contempt is explicitly

conferred by Fed. R. Bankr. 9020(b); see also 11

U.S.C. sec. 105; In re Power Recovery Systems,

Inc., supra, 950 F.2d at 802; In re Rainbow

Magazine, Inc., 77 F.3d 278, 284-85 (9th Cir.

1996); In re Skinner, 917 F.2d 444, 447-48 (10th

Cir. 1990) (per curiam), but there is no

corresponding grant of power to determine

criminal contempt. It is true that 362(h) of the

Bankruptcy Code expressly authorizes an award of

punitive damages for the willful violation of the

statutory injunction created by section 362 (the

automatic stay), and it has been assumed that

bankruptcy judges can enforce that subsection as

well as the rest of section 362. In re Knaus, 889

F.2d 773, 775-76 (8th Cir. 1989); Budget Service

Co. v. Better Homes of Virginia, Inc., 804 289,

292 (4th Cir. 1986). Since punitive damages are--

punitive, and it is punitive purpose that

distinguishes criminal from civil contempt,

section 362(h) implies that bankruptcy judges do

have some criminal contempt power; but there is

no corresponding grant of power in section 524

and the omission may have been deliberate. We can

save the issue of the bankruptcy judges’

criminal-contempt powers for another day,

however. It is peripheral to the issue of the

adequacy of criminal contempt as a remedy for

violations of that section, since the district

court, the court with primary jurisdiction in

bankruptcy as we noted, can hold a party in

criminal contempt for violating a statutory

injunction. United States v. Guariglia, 962 F.2d

160, 162-63 (2d Cir. 1992).

 We conclude, agreeing with Pertuso though

without endorsing its analysis of private rights

of action, that a suit for violation of section

524(c) can be brought only as a contempt action

under section 524(a)(2). But recurring to our

hypothetical case in which Zale sues Cox under

the debt-reaffirmation agreement because Cox

stops paying before the debt is paid off

completely, we remind that in such a case the

debtor can interpose section 524(c) as a defense

to the suit as an alternative to seeking a

contempt sanction in the bankruptcy court that

issued him his discharge. If all he wants is to

be left alone, and all the court in which Zale

sues has to decide is whether the agreement was

filed in the bankruptcy court, we cannot see any

statutory or other objection to his being allowed
to elect that remedy. But once he has paid the

debt in full and is not in jeopardy of being

sued, affirmative relief can be sought only in

the bankruptcy court that issued the discharge.

In such a case the proper procedure would indeed

be to reopen the bankruptcy proceeding, since the

debtor would be seeking to enforce the order of

discharge issued in that proceeding. A court

retains jurisdiction to enforce its injunctions.

Affirmed.