Bankruptcy: Implementation of Reform Act's Debt Reaffirmation Agreement Provisions
Published: 2007-12-07T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (referred to hereafter as the Reform Act) included provisions to better inform individuals who file for personal bankruptcy about their options for reaffirming debt--whereby filers may voluntarily agree to pay certain creditors in an effort to retain assets, such as an automobile. Reaffirmation agreements between debtors and creditors are required, by law, to formally disclose to debtors the terms of the agreement, such as the amount of debt reaffirmed. Some requirements differ for credit unions, such as an exemption for reporting debtor financial information when the debtor's attorney signs the agreement. The Reform Act required GAO to study the bankruptcy reaffirmation process. This report discusses (1) the extent to which required Reform Act disclosures and other information have been incorporated into reaffirmation agreements, (2) the types of debts reaffirmed and the percent this debt comprised of debtors' overall debt burden, and (3) how reaffirmed and original interest rates compare. GAO reviewed a representative sample of bankruptcy files with agreements in five bankruptcy courts (in AL, CA, IL, TX, and WV) selected by, among other things, filing volume and geographic dispersion. Estimates from our sample cannot be generalized to all bankruptcy courts, but can be generalized to each of the selected bankruptcy courts.
section_title: What GAO Found
paragraphs: Most reaffirmation agreements across the five districts included Reform Act disclosure statements and other required information. For example, for the five districts, the required disclosure statement for the "Annual Percentage Rate" was included in an estimated 86 to 97 percent of agreements and the disclosure statement for the "Amount Reaffirmed" and the amount was included in an estimated 87 to 98 percent of agreements. We also estimate that, for the five districts, 67 to 88 percent of non-credit union agreements included monthly income, expense, and net income information--conversely, 12 to 33 percent were missing this information. This information helps to inform debtors, debtor attorneys, creditors, and court officials of the potential inability of the debtor to make payment on reaffirmed debt. In May 2007, a federal judiciary advisory committee proposed the use of a reaffirmation agreement coversheet that, if approved, would make it mandatory for debtors to provide required financial information to determine an undue hardship. If approved, the coversheet would appear to address the issue of missing financial information. For the five districts, debts secured by assets, such as an automobile, were the most frequently reaffirmed type of debt--comprising an estimated 90 percent or more of all reaffirmations. Unsecured debt--such as credit card debt--was reaffirmed infrequently in reaffirmation agreements, occurring in an estimated 2 percent to 10 percent among all agreements in the five districts. For the five districts, we estimate that in approximately two-thirds of cases the reaffirmed debt burden comprised 25 percent or less of the debtors' total debts. In those cases where an original interest rate was provided, rates on reaffirmed debt were generally less than or equal to the original rate. Specifically, the interest rates were equal to the original rate in an estimated 56 to 84 percent of reaffirmed debts for the five districts, less than the original rate for 10 to 44 percent of debts, and greater in 0 to 8 percent of debts. (The margin of error for these estimates is at most plus or minus 16 percent at the 95 percent confidence level.)

section_title: Letter
paragraphs: Individuals may file for personal bankruptcy in federal bankruptcy courts  to reduce their debts by having their eligible debts discharged by the  bankruptcy court. Bankruptcy filers may voluntarily reaffirm—that is,  agree to pay—certain debts with creditor firms in an effort to retain  assets. Debtors may, for example, be motivated to reaffirm one or more  debts through a reaffirmation agreement with a creditor to retain an asset  that secures a debt, such as an automobile, home, or household good that  otherwise would likely have to be surrendered to the creditor if the debtor  did not reaffirm the debt. A debtor may also choose to reaffirm a debt that  is not secured by an asset, such as credit card debt or a line of credit from  a bank. In the late 1990s, several reports, including a 1997 National  Bankruptcy Review Commission report, expressed concern over  questionable practices that may have led some individuals filing for  bankruptcy to take actions that were not in their best interests—by  entering, for example, into agreements with creditors that were financially  burdensome.
Between 2001 and 2004, an average of more than 1.5 million people  annually filed for personal bankruptcy protection. In April 2005, the  Bankruptcy Abuse Prevention and Consumer Protection Act of 2005  (referred to in this report as the Reform Act) was enacted and contained  provisions designed to better inform debtors and assist them in making  decisions about reaffirming debt. Under the Reform Act, a reaffirmation  agreement is required to contain specified disclosure statements that,  among other things, are designed to inform debtors of the terms of the  reaffirmation agreement as well as the debtor’s rights and responsibilities.  For example, the amount reaffirmed and the annual percentage rate for  that amount must be conspicuously disclosed in the agreement.  Statements, among other prescribed narratives, must also be included to  inform debtors of their right to rescind a reaffirmation agreement within a  certain time period and that the debtor or creditor must file the agreement  with the court. The required disclosure statements are designed to help  ensure that debtors make decisions about reaffirming a debt that are in  their best interests.
The Reform Act required that GAO study the bankruptcy reaffirmation  agreement process. This report addresses the following questions  regarding reaffirmation agreements in cases filed over a 1 year period  beginning October 17, 2005, when the reaffirmation provisions of the  Reform Act took effect:  1.  To what extent have required Reform Act disclosure statements and  other required information (such as the annual percentage rate for the  reaffirmed debt) been incorporated into reaffirmation agreements?  2.  What types of debts were reaffirmed and to what extent did reaffirmed  debt amounts comprise debtors’ overall debt burden when they filed  for bankruptcy?  3.  How did the reaffirmed and original interest rates compare?
To answer these questions, we reviewed a representative sample of  bankruptcy case files with reaffirmation agreements in each of five district  bankruptcy courts: Alabama Northern (AL-N), California Central (CA-C),  Illinois Northern (IL-N), Texas Northern (TX-N), and West Virginia  Southern (WV-S). The districts were selected based on the following  criteria: a range of filing volume, proportion of Chapter 7 filings within the  bankruptcy courts, whether cases were overseen by the U.S. Trustee  Program or the Bankruptcy Administrator program, and courts in  dispersed geographic locations. From January 1, 2001, to June 30, 2006, the  average quarterly filing volume for the nation’s 90 district bankruptcy  courts was 385,424. The five districts we selected collectively represented  about 12 percent of those average quarterly filings. When determining  which districts to include in our study, we selected the 2001 to 2006 time  period to gather sufficient historical filing data to determine the average  number of filings each district had over time. Each sample of cases within  these districts was selected from the universe of cases that were filed in  the five districts between October 17, 2005, and October 17, 2006—the first  year the Reform Act’s reaffirmation provisions were in effect—and also  contained at least one reaffirmation agreement. Each universe of cases  with at least one reaffirmation agreement was drawn from a database  maintained by the bankruptcy courts. We determined that these data were  sufficiently reliable to develop the universe of cases for each of the five  district bankruptcy courts from which we selected a representative sample  of bankruptcy cases. To determine the reliability of the bankruptcy data  we reviewed documentation about the system that maintained them and  interviewed agency officials knowledgeable about the data to discuss the  procedures they used in collecting and maintaining these data. On the  basis of our samples of bankruptcy cases with at least one reaffirmation  agreement from the five selected bankruptcy court districts, we generated  estimates of percentages, means, and medians to generalize sample results  to each district’s bankruptcy court. All percentage estimates in this report  have a margin of error of plus or minus 10 percent or less, unless  otherwise noted. Some percentage estimates we present have a margin of  error greater than plus or minus 10 percent. This occurred for percentage  estimates based on a small number of cases in the district samples with  specific characteristics that were unavailable to us prior to sampling. For  instance, when we present percentage estimates for reaffirmation  agreements made with credit unions, the small number of agreements  made with credit unions in the samples results in larger margins of error.  Mean and median estimates have a relative error of 20 percent or less,  unless otherwise noted. Some mean and median estimates we present in  this report have a great deal of variance, resulting in large percentages of  relative error. For instance, when we discuss the mean and median  amount of the debt reaffirmed per reaffirmation agreement, individual  reaffirmation agreement debts range from very low amounts (such as a  small outstanding balance for an automobile) to much higher amounts (as  with the outstanding balance for the mortgage on a home); these large  variations result in larger percentages of relative error.
Our case file review was performed using a data collection instrument that  included uniform questions to ensure data were collected consistently. We  relied on data presented in bankruptcy documents filed with the courts by  debtors, creditors, and debtor attorneys. Bankruptcy courts, bankruptcy  administrators, and the U.S. Trustee Program manage bankruptcy cases  and perform some measures to verify data that help ensure the reliability  of information provided. For example, bankruptcy court officials have  measures to ensure that data entered into information systems are  accurate. Also, as a part of the bankruptcy process, the U.S. Trustee  Program verifies selected debtor-reported financial data, such as income  and assets. On the basis of these measures, we believe the bankruptcy data  we reviewed to be sufficiently reliable for our purposes. In addition to  reviewing case files in each district, we interviewed bankruptcy court  clerks, U.S. Regional Trustees, case trustees, and the Bankruptcy  Administrator for the Northern District of Alabama to determine the  availability of reaffirmation agreement data and to learn about the  reaffirmation process. We interviewed four creditors that we identified  during our case file review as the creditors that most frequently entered  into reaffirmation agreements in the five selected districts. We also  interviewed debtor and creditor attorneys, bankruptcy consumer  advocates who represented the interests of debtors during development of  the Reform Act, and academics specializing in bankruptcy issues.
The Reform Act provides that disclosures (with the exception of the terms  “Amount Reaffirmed” and “Annual Percentage Rate”) may be made in a  different order and may use terminology different from those set out in the  Reform Act and that such disclosure requirements shall be satisfied if the  required disclosures are given in good faith. This report discusses how the  reaffirmation process was working under the Reform Act in selected  bankruptcy court districts, not whether agreements were in compliance  with the Reform Act. Furthermore, we did not determine the reason that  individual reaffirmation agreements did not include required disclosures  or other information. Appendix 1 provides additional information on our  scope and methodology.
Our work was conducted from June 2006 through November 2007 in  accordance with generally accepted government auditing standards.
subsections: section_title: Background
subsections: section_title: Overview of Reaffirmation Agreement Process
paragraphs: The reaffirmation agreement process involves several parties and many  steps. Creditors, debtors, debtor attorneys, and the courts each have  reaffirmation agreement roles. The process begins when a debtor in  bankruptcy decides to reaffirm a debt or the creditor proposes a  reaffirmation agreement and forwards it to a debtor. Officials at four credit  institutions that frequently engaged in reaffirmation agreements we  reviewed stated that once they receive notice of a debtor filing for  bankruptcy, the creditors generally send the debtor or the debtor’s  attorney their proposal for a reaffirmation agreement. Under the Reform  Act, certain certifications may be required such as an attorney certification  that certifies that the agreement does not impose an undue hardship on  the debtor. Also, under the Reform Act, the court is to review agreements  where debtors are not represented by an attorney and those that have a  presumed undue hardship. A presumption of undue hardship is triggered  when a debtor’s monthly net income (including expected monthly  payments on post-bankruptcy debt) is not sufficient to pay the proposed  monthly reaffirmed payment. A debtor may try to counter this  presumption in writing. After these reviews, the court may approve or  disapprove the agreement. Figure 1 provides more detailed information  about the reaffirmation agreement process.
section_title: Reform Act Provisions Related to Reaffirmation Agreements
paragraphs: Described as representing the most comprehensive set of reforms in more  than 25 years, the Reform Act addressed, among other things, the  reaffirmation agreement process. The Reform Act added new disclosures and  court review requirements with respect to reaffirmation agreements designed  to help ensure that reaffirmation agreements are consistent with the debtor’s  best interests. The reaffirmation agreement requirements include, among  other things, disclosures notifying debtors of reaffirmed terms. Agreements  must also include the debtor’s monthly income and expenses to determine if a  presumption of undue hardship exists and certification by the debtor’s  attorney that the agreement represents a fully informed and voluntary  agreement by the debtor and that the agreement does not impose an undue  hardship. Table 1 summarizes key reaffirmation agreement disclosure  requirements under the Reform Act. Appendix II provides the full text of the  disclosure statements required by the Reform Act.
The Reform Act allows for some flexibility in the disclosures required in  reaffirmation agreements and provides that the disclosure requirements  shall be satisfied if the disclosures were provided to the debtor in good  faith. Almost all of the disclosures can be made in a different order and  with different terminology than what is set forth in the law. In addition,  one creditor official we interviewed stated that his organization uses a  standardized form created by the creditor to comply with the Reform Act.  However, according to the official, his company has 32 versions of the  form designed to comply with individual bankruptcy court requirements.
The AOUSC, which provides administrative, legal, and other support to the  federal judiciary, issued a reaffirmation agreement form that incorporates  the required and recommended language in the Reform Act. The form was  issued on October 2005 and was revised in August 2006 and in January  2007. Because of the requirement for flexibility in disclosure language,  creditors and debtors are not required to use the AOUSC form and may  use other forms. According to AOUSC, one of the primary reasons the  federal judiciary did not impose a specific reaffirmation form was because  the law allows for different reaffirmation agreement forms. The federal  judiciary also took other factors into consideration, according to AOUSC,  including the many variations of statutory requirements that are  dependent upon the debtors’ circumstances, and the fact that a creditor  and debtor might want to include language in addition to what the law  requires.
subsections: section_title: Court Review of Reaffirmations under the Reform Act
paragraphs: The Reform Act also specifies in what circumstances reaffirmation  agreements are to be reviewed by the courts during the bankruptcy  process. In general, if the reaffirmation agreement is signed by a debtor  attorney, the agreement is effective upon filing with the court, unless  income and expense information on the debtor’s statement in support of  the agreement reflects insufficient funds for making the reaffirmation  payment, which triggers the presumption of an undue hardship. If a  presumption of undue hardship exists, the court is required to review and  approve or disapprove the agreement based on whether the presumption  is countered by debtor explanations for how the debtor can afford the  reaffirmation payment.
The Reform Act makes certain provisions for reaffirmation agreements  that do not include a debtor attorney signature. Reaffirmation agreements  might not include a debtor attorney signature because the debtor has  opted to undergo the bankruptcy process without an attorney, which is  known as a pro se bankruptcy filing. Also, in some instances, debtor  attorneys might not sign the agreement because he or she believes the  agreement imposes an undue hardship on the debtor. All agreements that  are not signed by debtor attorneys must be submitted to the court for  review and approval or disapproval, with the exception of reaffirmed  consumer debt secured by a lien on real property such as a home.  Agreements cannot be disapproved without a hearing and notice of the  hearing to the debtor and creditor.
section_title: Reaffirmations with Credit Unions
paragraphs: Under the Reform Act, reaffirmation agreements where the creditor is a  credit union have different requirements than reaffirmation agreements  with other types of creditors. While most requirements for reaffirmation  agreements are uniform across all types of lenders, the Reform Act’s  presumption of undue hardship provisions are not applicable to  agreements with credit unions. This exemption is evident in several  Reform Act provisions. For example, while reaffirmation agreements  where the creditor is a credit union are to include a debtor statement in  support of the reaffirmation agreement when the agreement is signed by a  debtor attorney, the statement is not, however, required to include the  income and expense information otherwise used to calculate whether  there is a presumption of undue hardship. Instead, such a debtor’s  statement in support of the agreement is required to include that the  reaffirmation is in the debtor’s financial interest, that the debtor can afford  the reaffirmation payments, and that the debtor received a copy of the  required disclosures and has completed and signed the agreement. In  addition, when the debtor is represented by an attorney, with respect to  credit unions, a required debtor notification is to explain the reaffirmation  process and state that the reaffirmation agreement is effective upon filing  with the court. By contrast, the required debtor notification for  agreements with all other types of creditors states that the agreement is  effective upon filing with the court unless the agreement is presumed to be  an undue hardship.
section_title: Required Reform Act Disclosure Statements Were Included in Most Reaffirmation Agreements, though Required Information Was Missing in Some Agreements
paragraphs: We estimate that required disclosure statements were included in most  reaffirmation agreements for each of the five districts. For example, we  estimate inclusion of the statement “Amount Reaffirmed” and the amount  was from 87 percent (in WV-S) to 98 percent (in CA-C) of all reaffirmation  agreements. Similarly, we estimate that the statement “Annual Percentage  Rate” and the amount were in 86 percent (in AL-N and WV-S) to 97 percent  (in CA-C) of all reaffirmation agreements for the five districts. Debtor  attorney certifications were frequently included in reaffirmation  agreements signed by attorneys—from an estimated 95 percent (in WV-S)  to 100 percent (in CA-C) of agreements. We also estimate that 67 percent  (in AL-N and WV-S) to 88 percent (in IL-N) of non-credit union agreements  included monthly income, expense, and net income information— conversely, an estimated 12 percent (in IL-N) to 33 percent (in AL-N and  WV-S) were missing this required information (as mentioned previously,  these data are not required of credit union agreements signed by a debtor  attorney). This information helps to inform debtors, debtor attorneys,  creditors, and court officials of the potential inability of the debtor to  make payment on reaffirmed debt. While information about income,  expenses and net income available can be determined from other  schedules in the bankruptcy filings or during hearings, having that  information included in the agreement makes it easier for the courts to  evaluate the debtor’s financial situation. In March 2007, the Judicial  Conference’s Advisory Committee on Bankruptcy Rules proposed the use  of a reaffirmation agreement coversheet that, if approved, would make it  mandatory for debtors to provide income and expense information, among  other things, on the coversheet to be used in the evaluation of undue  hardship. If approved by the Judicial Conference, the mandatory  coversheet would appear to address the issue of missing financial  information.
subsections: section_title: Financial Data, Asset Information, and Debtor Notifications Included in Most Reaffirmation Agreements
paragraphs: The Reform Act requires that reaffirmation agreements include financial  data disclosure statements for the amount reaffirmed and the annual  percentage rate for the amount reaffirmed. As shown in table 2, we  estimate that these disclosure statements were included in a high  percentage of all agreements within the five districts. For example, the  statement “Amount Reaffirmed” and the amount were included in an  estimated 87 percent (in WV-S) to 98 percent (in CA-C) of all reaffirmation  agreements. Similarly, the statement “Annual Percentage Rate” and the  amount were included in an estimated 86 percent (in AL-N and WV-S) to 97  percent (in CA-C) of all reaffirmation agreements for the five districts.
The Reform Act requires several notification disclosure statements  designed to help ensure that debtors make decisions about reaffirming  debt that are in their best interests, such as informing them of the  reaffirmation agreement process as well as the effect of agreeing to  reaffirm debt. We estimate these notification disclosure statements were  included in high percentages of reaffirmation agreements in all five  districts. One notification disclosure explains the reaffirmation process  and certain requirements. For example, the disclosure instructs debtors on  which sections of the agreement to read and sign and under what  circumstances the agreement may be reviewed by the court before  becoming effective. The notification also informs debtors, among other  things, of their right to rescind the agreement and that reaffirmation  agreements are not required. As shown in table 2, we estimate that non- credit union reaffirmations included the notification disclosure statement  explaining the reaffirmation process and certain requirements in an  estimated 87 percent (in AL-N) to 96 percent (in CA-C) of reaffirmation  agreements for the five districts. This disclosure statement differs for  credit unions. We provide estimates for inclusion of disclosure statements  in credit union agreements later in this report.
Other required debtor notification disclosure statements were also  included in high percentages of reaffirmation agreements in the five  districts. As shown in table 2, we estimate that 87 percent (in WV-S) to 97  percent (in CA-C) of all reaffirmation agreements within the five districts  included a statement instructing debtors to review the required  disclosures. Similarly, we estimate that 87 percent (in WV-S) to 97 percent  (in CA-C) of all reaffirmation agreements in the five districts included a  statement that summary information in the reaffirmation agreement was  made pursuant to the requirements of the Bankruptcy Code.
With respect to unsecured debts, other than requiring a brief description  of the credit agreement, the Reform Act does not provide a specific  disclosure statement for inclusion of asset information, the original  purchase price, or the original amount of the loan. However, when a  reaffirmed debt is secured by an asset, the Reform Act requires both the  asset and either the original purchase price or original amount of the loan  be listed in the agreement. As shown in table 2, we estimate that required  information describing the asset securing the agreement was included in  87 percent (in WV-S) to 99 percent (in CA-C) of agreements in the five  districts. The original purchase price or the original amount of the loan  was also included in a high percentage of agreements—an estimated 81  percent (in WV-S) to 91 percent (in CA-C) for the five districts.
section_title: Debtor Agreement Disclosure Statement Included in Most Reaffirmation Agreements
paragraphs: The Reform Act requires a disclosure statement that includes a statement  that the debtor agrees to reaffirm the debt, a field for a brief description of  the credit agreement, a field for a description of any changes to the credit  agreement made as part of the reaffirmation agreement, and fields for  debtor and creditor signatures. As shown in table 3, we estimate that this  statement by the debtor was included in 84 percent (in WV-S) to 95  percent (in CA-C) of all reaffirmation agreements within each of the five  districts. We also estimate that creditors or debtors included required  information describing the credit agreement in 76 percent (in WV-S) to 84  percent (in IL-N) of all reaffirmation agreements in the five districts, as  shown in table 3. These descriptions varied in content. For example, when  reviewing reaffirmation agreements, we observed agreements that  included descriptive information about the type of contract involved in the  transaction, such as a type of “retail installment contract” or “promissory  note.” Other agreements included more detail about the terms of the credit  agreement, such as the number of payments, monthly payment amounts,  and original amount of the loan.
While not required information in all reaffirmation agreements, in a few  reaffirmation agreements in the five districts, creditors or debtors included  a description of changes to the credit agreement made as a part of the  reaffirmation. We estimate that 12 percent (in AL-N) to 20 percent (in CA- C and WV-S) of all reaffirmations within the five districts included a  description of such a change. For example, in one district we reviewed 36  agreements that had changes identified in the agreement. The interest rate  was cited as a change in 17 of these 36 agreements. Other changes  described in the remaining 19 agreements included reductions in the loan  balance, changes to the payment date, and changes in the monthly  payment amount. Because analysis of these 36 agreements was conducted  in addition to our standardized file review, we are not able to generalize  these figures to all reaffirmations in this district.
section_title: Debtor Attorney Certification Included in Most Reaffirmation Agreements, although Notice of Undue Hardship Unclear in Some Agreements
paragraphs: Debtor attorneys signed reaffirmation agreements in an estimated 90  percent to 97 percent of all agreements in each of the five districts. When  a debtor attorney signs a reaffirmation agreement, the Reform Act requires  that a disclosure statement be included with the signature. The disclosure  statement includes the debtor attorney’s certification that (1) the  agreement represents a fully informed and voluntary agreement by the  debtor, (2) the agreement does not impose an undue hardship on the  debtor or any dependent of the debtor, and (3) that the attorney has fully  advised the debtor of the legal effect and consequences of the agreement  and any default under the agreement. As shown in table 4, we estimate  that this required attorney disclosure statement was included in 95 percent  (in WV-S) to 100 percent (in CA-C) of reaffirmations signed by attorneys in  the five districts.
In addition to the disclosure statement, the Reform Act requires that when  a presumption of undue hardship has been established with respect to the  agreement, the debtor attorney certify that in his or her opinion, the  debtor is able to make the reaffirmation payment. We estimate that 1  percent (in CA-C) to 11 percent (in WV-S) of all reaffirmation agreements  with non-credit unions in the five districts included an attorney  certification statement explicitly identifying that a presumed undue  hardship was established with respect to the agreement, and that in the  opinion of the attorney, the debtor could make the reaffirmation  payment. Reaffirmation agreements are not required by the Reform Act  to include an explicit indication of whether a presumed undue hardship  has been established with respect to the agreement. While we did not  formally track the extent to which reaffirmation agreements forms  included an explicit way for presumed undue hardship to be identified, we  observed that some reaffirmation agreement forms included a way to  explicitly identify presumed undue hardship in the debtor attorney  certification and some did not. For example, we observed reaffirmation  agreement forms that included the following language for debtor attorneys  to certify, which has no explicit indication of whether a presumption of  undue hardship had been established: “If a presumption of undue hardship  has been established with respect to this agreement, in my opinion the  debtor is able to make the payment.” This statement is unclear because it  does not explicitly identify whether a presumption of undue hardship has  been established with respect to the reaffirmation agreement. Instead, the  statement only indicates that “if” a presumption of undue hardship is  established, the debtor attorney certifies that the debtor can make the  payment. AOUSC’s reaffirmation agreement form dated January 2007  addresses this ambiguity by placing a checkable box next to an explicit  statement indicating that there is a presumption of undue hardship and  that the debtor attorney certifies that the debtor is able to make the  required payment. As mentioned previously, use of the AOUSC form is  suggested but not required. Figures 2 and 3 illustrate clear and unclear  debtor attorney certification of an undue hardship.
In some reaffirmation agreements, the debtor attorney certification  portion of reaffirmation agreements included additional language beyond  the disclosure statement required by the Reform Act. We estimate that  from 1 percent (in CA-C) to 11 percent (in TX-N) of reaffirmation  agreements in the five districts included such additional language. We  observed several instances where the additional language supplemented  the debtor attorney’s certification by indicating that the attorney was not  guaranteeing the debtor’s reaffirmation payment. One example of this  supplemental information is shown in figure 4.
section_title: Debtor Statement in Support of Agreement Included in Most Reaffirmation Agreements, although Required Data Missing in Some Agreements
paragraphs: The Reform Act requires a debtor statement in support of the  reaffirmation agreement that is to include debtor-inserted data for  determination of whether a presumption of undue hardship is  established. The data to be inserted include monthly income, monthly  expenses (which are to include payments on post-bankruptcy debt and  other reaffirmation payments), and the monthly net income remaining to  make the monthly payments for the reaffirmed debt. If the net income is  not sufficient to pay the reaffirmation payments, a presumption of undue  hardship is established that the debtor may overcome if the debtor  explains, to the satisfaction of the court, how the debtor can afford to  make the payments. Specifically, the court is required to review  reaffirmation agreements where a presumption of undue hardship has  been established when net income is insufficient for the reaffirmation  payments. The court may approve or disapprove the agreement based on  information presented to the court.
The majority of reaffirmation agreements were with non-credit unions— from 80 percent to 94 percent of reaffirmations in the five districts. As  shown in table 5, we estimate that 89 percent (in AL-N) to 97 percent (in  CA-C) of reaffirmation agreements with non-credit unions for the five  districts included the debtor statement that the reaffirmation agreement  does not impose an undue hardship on the debtor. We also estimate that  67 percent (in AL-N and WV-S) to 88 percent (in IL-N) of non-credit union  agreements included monthly income, expense, and net income  information—conversely, an estimated 12 percent (in IL-N) to 33 percent  (in AL-N and WV-S) were missing this required information. This  information is a key component in the presumption of undue hardship  determination. While information about income, expenses, and net  income available can be determined from other schedules in the  bankruptcy filings or during hearings, having that information included in  the agreement makes it easier for courts to evaluate the debtor’s financial  situation. For example, one case included reaffirmation agreements  certified by a debtor attorney for two automobiles with monthly payments  of $315 and $376. The debtor’s statement in support for each  reaffirmation agreement was signed by the debtor but did not include the  required monthly income, expense, and net income data. According to  monthly expenses and net income reported on other documents the  debtor provided the court, which included only one of the reaffirmed car  payment amounts as an expense, the debtor’s monthly net income was  negative $131, reflecting the potential inability of the debtor to afford the  reaffirmed payment amounts.
subsections: section_title: Federal Judiciary Has Proposed a New Form to Evaluate Undue Hardship
paragraphs: In March 2007, the Judicial Conference’s Advisory Committee on  Bankruptcy Rules proposed the use of a reaffirmation agreement  coversheet form that, if approved, would make it mandatory for debtors to  provide financial information on the coversheet, such as amount of debt  reaffirmed, the annual percentage rate for reaffirmed debt, monthly  reaffirmation payment, and monthly income and expense information at  the time of petition and reaffirmation agreement filings, to facilitate the  evaluation of undue hardship. The coversheet form also requires a  supplemental debtor certification that any explanation of the difference  between the income and expenses reported on the debtor’s bankruptcy  petition documents and the income and expenses reported in the debtor’s  statement of support of the reaffirmation agreement is true and correct.  According to AOUSC, this new coversheet form could take effect by  December 1, 2009, after undergoing a period of at least 6 months for public  comment on the new coversheet as well as final review by the Judicial  Conference. If approved, the coversheet would appear to address the issue  of missing financial information. See appendix V for the proposed  reaffirmation agreement coversheet.
section_title: Small Percentage of Reaffirmation Agreements Required a Motion for Court Approval
paragraphs: The Reform Act requires that a motion for court approval be included in  reaffirmation agreements when the debtor is not represented by an  attorney. We determined whether debtors were not represented by an  attorney by noting whether reaffirmation agreements were or were not  signed by a debtor attorney. Reaffirmation agreements were not signed by  debtor attorneys in an estimated 3 percent to 10 percent of agreements for  the five districts. In two districts we had sufficient data to estimate the  extent to which a motion for court approval was included when a debtor  attorney did not sign the agreement. In the two districts (IL-N and WV-S), a  motion for court approval was included in 62 percent (in WV-S) and 80  percent (in IL-N) of agreements. In one of the two districts (WV-S) court  officials told us that regardless of whether or not a motion for court  approval is filed, their internal process calls for clerk staff to review each  reaffirmation agreement and forward those with undue hardship or lack of  a debtor attorney's signature for court review. In the remaining three  districts, the number of agreements including a debtor attorney signature  was not sufficient to generate reliable estimates. Our review of cases in  these three districts showed that 13 of 26 agreements (in AL-N), 28 of 34  agreements in (TX-N), and 20 of 23 agreements (in CA-C) without debtor  attorney signatures included the motion.
section_title: Reaffirmation Agreements with Credit Unions Included Required Disclosures in Varying Percentages
paragraphs: Reaffirmation agreements with credit unions comprised an estimated 6  percent to 20 percent of all reaffirmations in each of the five districts. As  mentioned previously, under the Reform Act credit union reaffirmation  agreements have different requirements than reaffirmation agreements  with other types of creditors. The debtor notification statement explaining  the reaffirmation agreement process is generally the same as the statement  for other types of creditors. However, the debtor notification statement for  credit union reaffirmation agreements indicates that the agreement is  effective upon filing with the court (for non-credit unions, the debtor  notification statement indicates that the agreement is effective upon filing  with the court unless the reaffirmation is presumed to be an undue  hardship). For the five districts, reaffirmation agreements with credit  unions included the complete credit union debtor notification statement  that explained the reaffirmation agreement process and stated that  reaffirmation agreements with credit unions are effective upon filing with  the court in an estimated 61 percent to 96 percent of agreements. Another  difference for agreements with credit unions is that the Reform Act does  not require an agreement with credit unions to include debtors’ monthly  income, expense, and net income information in the debtor statement in  support of the agreement (unless the agreement does not include a debtor  attorney signature). Instead, the disclosure statement indicates that the  debtor believes the agreement is in his or her financial interest and that he  or she can afford to make the reaffirmation payments. In four districts we  estimate that from 54 percent to 93 percent of agreements with credit  unions included the credit union debtor statement in support of the  agreement. However, for these same four districts, we also estimate that  45 percent to 96 percent of agreements with credit unions included the  debtor statement whereby the debtor’s income, expense and net income  information could be recorded even though such data were not required  (because the agreement was with a credit union and the debtor was  represented by an attorney). Appendix II includes estimates for inclusion  of other required disclosure statements in agreements with credit unions  for the five districts.
section_title: Secured Debts for Autos and Homes Most Frequent Type of Reaffirmed Debt; for Most Agreements, Reaffirmed Debt Burden Less than 25 Percent of Total Debt
subsections: section_title: Secured Debts Most Frequently Reaffirmed
paragraphs: An estimated 90 percent (in AL-N) to 98 percent (in TX-N and WV-S) of  reaffirmations in the five districts were for secured debts. Specifically,  debtors more frequently reaffirmed debts for automobiles and homes in  comparison to debts for other assets. We estimate that 54 percent (in AL- N) to 87 percent (in CA-C) of reaffirmations in the five districts were for  automobiles. In addition to automobiles, in four districts, we estimate that  between 15 percent (in WV-S) to 24 percent (in IL-N) of reaffirmation  agreements were for homes. Reaffirmations for homes in the remaining  district (CA-C) occurred in an estimated 2 percent of agreements. In  addition to automobiles and homes, secured debts reaffirmed included,  among other things, those for boats, electronics, and household goods.  Appendix IV, table 14, provides more information on debts reaffirmed for  each district.
Unsecured debt was reaffirmed infrequently—occurring in an estimated 2  percent to 10 percent of all reaffirmation agreements in the five districts.  In the one district where an estimated 10 percent of all reaffirmations were  for unsecured debt, almost half of these agreements were for electricity  service (agreements that reaffirmed delinquent payments on electricity  service so that the service could continue). Because of the small number  of reaffirmation agreements that were unsecured, the following  information about these agreements is based on our review of actual  reaffirmation agreements and is not projected to the entire population of  reaffirmation agreements in the five districts. Twenty of the 52 unsecured  agreements reviewed were for some type of credit card debt such as bank  charge cards, lines of credit, and merchant credit cards. In the remaining  32 cases, debtors reaffirmed either an unsecured personal loan from a  bank, a debt to another individual, a tax debt, or electricity service.
Similar to agreements for non-credit unions, most credit union  reaffirmation agreements were for automobiles and houses. The types of  secured and unsecured debts reaffirmed with credit unions generally did  not differ from the types of secured and unsecured debts reaffirmed with  non-credit unions. However, we are not able to make statistically  significant comparisons between the types of debt reaffirmed by credit  and non-credit unions because of the small number of credit union  reaffirmation agreements.
section_title: For Most Agreements, Reaffirmed Debt Burden Less than 25 Percent of Total Debt
paragraphs: One concern that consumer advocates and academics have had is that if  the debtor reaffirms a high proportion of the total debts owed when filing  for bankruptcy, the debtor may not obtain the financial “fresh start” that is  one of the fundamental purposes of bankruptcy. To determine whether  debtors were reaffirming a large proportion of their total debts, we  examined reaffirmed debts in each case we reviewed as a percentage of  the total debts the debtor reported he or she owed when he or she filed for  bankruptcy.
As shown in table 6, we estimate that in 58 percent (in AL-N) to 68 percent  (in CA-C) of cases in the five districts, total reaffirmed debts were less  than 25 percent of total debts. By contrast, in 0 percent (in TX-N) to 8  percent (in IL-N) of cases, reaffirmed debts comprised 75 percent or more  of total debts. We reviewed 63 reaffirmation agreements in 26 cases in  which reaffirmed debt was 75 percent or more of total debts. For these 26  cases, automobiles were reaffirmed in 20 cases, homes in 18, mobile  homes in 2, and household goods or other assets in 5 of the cases. In  addition, we estimate that the average total amount of debt reaffirmed per  case for the five districts was from $15,000 to $47,000, while the average  of total debts per case was from $120,000 to $189,000.
The debt burden for debtors after bankruptcy may include debts in  addition to those reaffirmed. For example, debtors’ total debts may  include student loans, child support obligations, or other financial  obligations that cannot be discharged in bankruptcy. Our scope of work  included gathering information about debts reaffirmed and total debts at  the time of filing, but did not gather data on total debt burdens following  discharge of all nonreaffirmed debt.
For the five districts, the average amount reaffirmed per reaffirmation  agreement was an estimated $12,000 to $31,000 for non-credit union  reaffirmation agreements. For each of the three districts for which we are  able to estimate the average amount reaffirmed for credit unions, the  average amount reaffirmed in credit union agreements was an estimated  $13,000.
section_title: Reaffirmed Interest Rates Were Less than or Equal to the Original Rate
paragraphs: We estimate that the vast majority of interest rates on reaffirmed debt  were equal to or less than the interest rate on the original debt, as shown  in figure 5. As mentioned previously, the Reform Act requires that the rate  on reaffirmed debt be disclosed as the “Annual Percentage Rate,” hereafter  referred to as the interest rate. While the Reform Act requires a brief  description of the underlying credit agreement, the interest rate for the  original debt is not specifically required to be included in reaffirmation  agreements. However, we found the original interest rate in reaffirmation  agreements or attached original credit agreements in some case files. The  original interest rate was available in five districts in an estimated 32  percent to 88 percent of reaffirmation agreements or their supporting  documents. One district had a high percentage of agreements with the  original interest rate because the district had a standard form that required  disclosure of the original interest rate.
As reflected in figure 5, we estimate that from 91 percent (in IL-N) to 100  percent (in WV-S) of agreements in each of the five districts had  reaffirmed interest rates less than or equal to the original rate. In one of  the five district bankruptcy courts (WV-S), the reaffirmed interest rate was  less than the original interest rate in an estimated 44 percent of  reaffirmation agreements. In the other four districts, interest rates were  less than original interest rates in an estimated 10 percent (in IL-N) to 17  percent (in AL-N) of reaffirmation agreements.
Average interest rates on reaffirmed debt were similar for the five districts.  The same was true for original interest rates. For the five districts the  average interest rate on the debt reaffirmed was an estimated 8 percent (in  CA-C, IL-N, and TX-N) to 10 percent (in AL-N and WV-S), while the average  interest rate on the original debt was an estimated 9 percent (in TX-N) to  14 percent (in AL-N).
Moreover, we noted the following characteristics:    For 9 (of 1,164) reaffirmation agreements we reviewed where the  reaffirmed interest rate was greater than the original rate, the amount  of the interest rate increase ranged from 0.10 percentage points to 4.25  percentage points. Four of the agreements were for houses, 3 for  automobiles, 1 for a mobile home, and 1 for household goods. A variety  of creditors were involved in the 9 agreements—ranging, for example,  from two credit unions to a mortgage company and a department store.
For 72 (of 1,164) reaffirmation agreements we reviewed where the  reaffirmed interest rate was less than the original rate, the amount of  the interest rate decrease ranged from 0.01 percentage points to 26.99  percentage points—which was for a reduction in rate to 0 percent.  Over half of the 72 reaffirmation agreements were for automobiles and  homes—44 were for automobiles and 7 were for homes. The remaining  21 agreements included 6 agreements for household goods, 5 for  mobile homes, 8 agreements for a wide variety of debt—including  jewelry and electronic equipment—and 2 agreements that did not  disclose the type of debt.
For the 61 (of 1,164) reaffirmation agreements we reviewed with credit  unions (that disclosed both an original and a reaffirmed interest rate),  in each of the five bankruptcy courts the interest rate on the reaffirmed  debt was equal to or less than the interest rate on the original debt in  all but 2 reaffirmation agreements—10 of 10 agreements in AL-N, 27 of  28 agreements in CA-C, 2 of 2 agreements in IL-N, 16 of 17 agreements  in TX-N, and 4 of 4 agreements in WV-S.
We interviewed four creditors who were among the firms that most  frequently engaged in reaffirmations that we reviewed in the five selected  districts. Officials from three of these creditors stated that during the  reaffirmation process their policy was to not adjust credit terms, such as  interest rates, from the terms established in original debt contracts. The  fourth creditor said that when reaffirming debt it had a policy to consider  reducing amounts reaffirmed and interest rates based on certain criteria.
As mentioned previously, reaffirmed unsecured debt occurred in a small  number of reaffirmation agreements reviewed (52 of 1,164). Consequently,  information about these agreements is based on our review of actual  reaffirmation agreements and is not projected across the entire population  of reaffirmed agreements in the five districts. Interest rates and amounts  reaffirmed for unsecured debt in reaffirmations varied in the agreements  we reviewed in the five districts. Interest rates ranged from 0 to 21 percent  among 41 of 52 unsecured reaffirmations that disclosed a reaffirmed  interest rate. Nineteen of the 41 agreements were reaffirmed with a 0  percent interest rate, while the remaining 22 agreements had interest rates  ranging from 7.99 to 21 percent. Examples of unsecured debt reaffirmed at  0 percent interest included electricity service and credit card debt.  Examples of unsecured debt reaffirmed in the 7.99 to 21 percent range  included overdraft protection for a checking account reaffirmed at a 12  percent interest rate and a credit card reaffirmed at a 21 percent interest  rate. Amounts reaffirmed for the 52 unsecured agreements also varied (all  of the agreements had amounts reaffirmed disclosed), ranging from $0 (for  a line of credit on a credit card) to $25,000 (for a legal fine owed by a  debtor). While we cannot generalize average amounts for unsecured  reaffirmations, for the 52 agreements we reviewed, the average amount of  unsecured debt reaffirmed was $2,300.
During our review, court officials in one district and academics who  conduct bankruptcy research that we spoke with expressed concerns that  debtors who are not represented by an attorney would potentially be at a  disadvantage. To test this premise, we analyzed interest rate data based on  whether a debtor attorney had signed an agreement (our proxy for  whether a debtor was represented by an attorney) and when an original  interest rate could be determined (disclosure of the original interest rate is  not required). When a reaffirmation agreement did not include a debtor  attorney’s signature, the interest rate on the reaffirmed debt was equal to  or less than the interest rate on the original debt in all reaffirmations  reviewed in each of the five bankruptcy courts. In addition, with the  exception of one district, we estimate that there was no significant  difference between the average interest rate on reaffirmed debt when a  reaffirmation agreement either included or did not include a debtor  attorney’s signature. In one district where the difference was statistically  significant, however, the average reaffirmed interest rate was an estimated  8 percent when the agreement was signed by a debtor attorney, and an  estimated 12 percent when the agreement was not signed by a debtor  attorney.
section_title: Agency Comments
paragraphs: We requested comments on a draft of this report from the Director of  AOUSC. AOUSC reviewed a draft of this report and had technical  comments, which we incorporated as appropriate.
We are sending copies of this report to the Director of AOUSC and  interested congressional committees and parties. We will also make copies  available to others upon request. In addition, the report will be available at  no charge on GAO’s Web site at http://www.gao.gov.
If you or your staff have any questions about this report, please contact me at  (202) 512-8757 or jenkinswo@gao.gov. Contact points for our Offices of  Congressional Relations and Public Affairs may be found on the last page of  this report. GAO staff contributing to this report are listed in appendix VI.
section_title: Appendix I: Objectives, Scope, and Methodology
paragraphs: Our objectives were to determine the following:    To what extent have required Reform Act disclosure statements and  other required information (such as the annual percentage rate for the  reaffirmed debt) been incorporated into reaffirmation agreements?
What types of debts were reaffirmed and to what extent did reaffirmed  debt amounts comprise debtors’ overall debt burden when they filed  for bankruptcy?
How did the reaffirmed and original interest rates compare?
To answer these objectives, in five selected bankruptcy court districts we  reviewed a representative sample of bankruptcy cases that included at  least one reaffirmation agreement. We selected this sample of bankruptcy  cases from a universe of bankruptcy case data provided by bankruptcy  court officials. We determined that these data were sufficiently reliable to  develop the universe of cases for each of the five district bankruptcy  courts. To determine the reliability of the bankruptcy data, we reviewed  documentation about the system that produced them and interviewed  agency officials knowledgeable about the data. Our case file review was  performed using a data collection instrument that included uniform  questions to ensure data were collected consistently. We relied on data  presented in bankruptcy documents filed with the courts by debtors,  creditors, and debtor attorneys. Bankruptcy courts and U.S. Trustees  manage bankruptcy cases and perform some measures to verify data that  help ensure the reliability of information provided. For example,  bankruptcy court officials have measures to ensure that data entered into  information systems is accurate. Also, as a part of the bankruptcy process,  the U.S. Trustee Program verifies selected debtor-reported financial data,  such as income and assets.
We also interviewed bankruptcy experts, creditor officials as well as  bankruptcy court, U.S. Trustee, and bankruptcy administrator officials. We  used information gathered during these interviews to identify data  contained in bankruptcy file documents, including reaffirmation  agreements, that could assist in answering our objectives. We considered  reviewing reaffirmation agreements from a nationally representative  sample of bankruptcy cases that included at least one reaffirmation  agreement. However, because of the nature of the bankruptcy courts’ data,  information needed to develop a sample frame of cases with reaffirmation  agreements is only available at the district level. In addition, we  interviewed four creditors that we identified during our document review  as the creditors that most frequently signed reaffirmation agreements in  the five selected districts.
When reviewing reaffirmation agreements, we determined both whether  complete disclosure information was included in the reaffirmation  agreement and whether the language in the disclosure, while complete,  varied at all from what is required by the Bankruptcy Abuse Prevention  and Consumer Protection Act of 2005 (referred to here as the Reform Act).  Reaffirmation agreements had some variation in disclosure language, as is  allowed by the Reform Act, but the variations were generally minor  alterations to the disclosure that did not affect the disclosure content. For  example, headings were often inserted in the Part A disclosure sections  that were not prescribed in the Reform Act but that did not affect the  disclosure content. In another example of variation, many agreements also  included both credit union and non-credit union disclosure information.  For purposes of our analysis, we combined the data categories indicating  inclusion of a verbatim disclosure and a nonverbatim (but complete)  disclosure.
To obtain additional information about reaffirmation agreements and the  bankruptcy process, we reviewed literature from bankruptcy journals and  attended the American Bankruptcy Institute One-Year Anniversary  Program on the Bankruptcy Abuse Prevention and Consumer Protection  Act, October 16, 2006, in Washington, D.C.
Our work was conducted from June 2006 through November 2007 in  accordance with generally accepted government auditing standards.
subsections: section_title: Selection of Five Bankruptcy Court Districts for File Review
paragraphs: In selecting bankruptcy court districts in which to conduct reviews of  cases with reaffirmation agreements, we selected courts based on the  following criteria: a range of filing volume, proportion of Chapter 7 filings  within the bankruptcy courts, whether cases were overseen by the U.S.  Trustee Program or the Bankruptcy Administrator program, and the  courts’ geographic location. During the January 1, 2001, to June 30, 2006,  time period, the average quarterly filing volume for the nation’s 90 district  bankruptcy courts was 385,424. The five districts we selected collectively  represented about 12 percent of those quarterly filings. When determining  which districts to include in our study, we selected the 2001 to 2006 time  period to gather sufficient historical filing data to determine the average  number of filings each district had over time.
section_title: Selection of Cases Reviewed within Five Bankruptcy Court Districts
paragraphs: At each of the selected bankruptcy court districts, we obtained a universe  of all cases with at least one reaffirmation agreement filed between  October 17, 2005, and October 17, 2006. We chose this time period because  the Reform Act’s effective date for reaffirmation agreement requirements  was October 17, 2005. We selected stratified random probability samples  of cases from each bankruptcy court. We stratified the sampling universe  for each district by case status (open versus closed) and by pro se status  (i.e., debtors who file for bankruptcy without attorney representation). For  each selected case, we examined every reaffirmation agreement on record.  We calculated estimates of percentages and means/medians at the  reaffirmation agreement level using methods appropriate for stratified  cluster samples. Table 8 provides a description of the sampling universe  and samples for the five selected districts.
With these probability samples, each case had a nonzero probability of  being selected, and that probability could be computed for any case. Each  selected case was subsequently weighted in the analysis to account  statistically for all the members of the population, including those who  were not selected.
Because we followed a probability procedure based on random selections,  our sample is only one of a large number of samples that we might have  drawn. Since each sample could have provided different estimates, we  express our confidence in the precision of our particular sample’s results  as a 95 percent confidence interval (e.g., plus or minus <YY> percentage  points). This is the interval that would contain the actual population value  for 95 percent of the samples we could have drawn. As a result, we are 95  percent confident that each of the confidence intervals in this report will  include the true values in the study population.
Estimates from these samples are not generalizable to the population of all  bankruptcy courts; however, they can be generalized to each of the  selected bankruptcy court districts and are intended for illustrative  purposes. All percentage estimates in this report have a margin of error of  plus or minus 10 percent or less, unless otherwise noted. All mean and  median estimates have a relative error of 20 percent or less, unless  otherwise noted. Some percentage estimates we present have a margin of  error greater than plus or minus 10 percent. This occurred for percentage  estimates based on a small number of cases in the district samples with  specific characteristics that were unavailable to us prior to sampling. For  instance, when we present percentage estimates for reaffirmation  agreements made with credit unions, which we estimate comprises only 6  to 20 percent of all reaffirmation agreements across the districts, the small  number of agreements made with credit unions in the samples results in  larger margins of error. Some mean and median estimates we present in  this report have a great deal of variance, resulting in large percentages of  relative error. For instance, when we discuss the mean and median  amount of the debt reaffirmed per reaffirmation agreement, individual  reaffirmation agreement debts range from very low amounts (such as a  small outstanding balance for an automobile) to much higher amounts (as  with the outstanding balance for the mortgage on a home), these large  variations result in larger percentages of relative error.
section_title: Appendix II: Reaffirmation Agreement Disclosures and Required Information; Estimates for Credit Unions
paragraphs: This appendix includes two tables. Table 9 presents Bankruptcy Abuse  Prevention and Consumer Protection Act of 2005 (Reform Act) reaffirmation  agreement disclosure statements and other required information. We included  disclosure inclusion information for all reaffirmation agreements in the letter  portion of this report. Because some Reform Act provisions apply only to  credit unions, we present data solely for credit unions in table 10. Table 10  shows estimated percentages for inclusion of disclosure statements and other  required information for reaffirmation agreements with credit unions, for five  bankruptcy court districts—Northern Alabama (AL-N), Central California  (CA-C), Northern Illinois (IL-N), Northern Texas (TX-N), and Southern West  Virginia (WV-S). As the tables indicate, the Reform Act places most  information on reaffirmation agreements within five separately labeled  sections—A through E—each with its own set of disclosure statements.  Italicized areas in table 9 denote disclosure statements that GAO assessed  were or were not included in reviewed reaffirmation agreements.
Table 10 lists disclosure information for reaffirmation agreements with  credit unions. The percentage estimates can be generalized to all  reaffirmation agreements with credit unions in cases filed in the five  districts between October 17, 2005, and October 17, 2006. Unless  otherwise noted, our percentage estimates in table 10 fall within a margin  of error of plus or minus 20 percent or less.
section_title: Appendix III: Federal Judiciary Reaffirmation Agreement Form, January 2007
section_title: Appendix IV: Additional Estimates on Cases and Reaffirmation Agreements Filed in Five Bankruptcy Court Districts
paragraphs: As part of our review, we collected information not reported in the body of  this letter that provides context about the extent to which reaffirmations  are included in Chapter 7 cases, the financial circumstances of debtors,  and content of reaffirmation agreements. For example, we collected  information at the case-level about the debtor’s assets, liabilities, income,  and expenses reported on the petition filed with the court and whether the  court waived the requirement for the filer to pay filing fees. We also  collected additional data about the reaffirmation agreements that included  whether or not (1) the agreement was with a credit union, (2) a debtor  attorneys signed the agreement, (3) the court approved or disapproved the  agreement, (4) the agreement was rescinded, and (5) the agreement was  filed after a case was closed. The following figures and tables provide  estimates for the additional information. Unless otherwise noted, our  percentage estimates in this appendix fall within a margin of error of plus  or minus 10 percent or less, and our mean and median estimates fall within  a relative error of 20 percent or less. In addition, for some items we are  able to provide estimates for means but not medians, or vice versa. This is  because the estimates of means and medians can be different in terms of  their distributions and so can the variances of the estimates. Two of the  factors that control the sampling error of an estimate are sample size and  the estimated variation of the parameter we are estimating (mean and  median). The difference between the sampling error of the means and  medians is most likely due to the estimated variance of the parameters.  Also, our samples were not designed to generate precise estimates of  means or medians, so the results (in terms of sampling error) are sensitive  to relatively small differences in distributions.
section_title: Appendix V: Federal Judiciary Proposed Coversheet for Reaffirmation Agreements
section_title: Appendix VI: GAO Contact and Staff Acknowledgments
paragraphs: William O. Jenkins Jr. at (202) 512-8777 or jenkinswo@gao.gov.
subsections: section_title: Acknowledgments
paragraphs: In addition to the contact named above, Linda Watson, Assistant Director;  Pille Anvelt; James Ashley; Ben Atwater; Amy Bernstein; Carlos Garcia;  Daniel Garcia; Geoffrey Hamilton; Lemuel Jackson; Ronald La Due Lake;  Brian Lipman; Grant Mallie; Jamilah Moon; and Johanna Wong made  significant contributions to this report.