Court Opinion

ID: 9691133
Source: CourtListenerOpinion
Date Created: 2023-08-24 20:13:09.298511+00
Date Added: 2024-06-11T18:19:11.392567
License: Public Domain

KLEIN, Bankruptcy Judge,
concurring:
I join the majority and write separately to emphasize the importance and difficulty of the issue of what a creditor may do in the wake of a debtor’s election of the so-called “fourth option” under § 521(2) of remaining current under an installment contract to pay for consumer goods that the Ninth Circuit recognized in McClellan Fed. Credit Union v. Parker (In re Parker), 139 F.3d 668, 673 (9th Cir.1998).
In so doing, there is a note of poetic justice because I must confess to a role in creating the problem and am in the position of having to skin my own skunk. I was the trial judge in Parker. The Ninth Circuit, in affirming my ruling, was agree*546ing with my analysis in In re Weir, 173 B.R. 682 (Bankr.E.D.Cal.1994), upon which my Parker ruling was based.
The gravamen of the analysis was that Congress, by way of calculated ambiguity for reasons explained in Weir, left open the possibility of continuing to perform a consumer contract without reaffirming it. The benefit to the debtor of not reaffirming is that the debtor is not exposed to the possibility of a post-bankruptcy deficiency judgment. The benefit to the creditor of the debtor continuing to pay is that it is better than a redemption because the creditor retains its security and has the opportunity to collect the full contract price notwithstanding that the security usually is worth less.
The conceptual problem is that, by retaining the collateral and continuing to perform all contractual obligations, a contract remains de facto even though it has not been reaffirmed. It is an internal contradiction that is neither fish nor fowl. Trouble is bound to ensue if the debtor is not punctilious in performing the obligations imposed by the contract, which in the case of a motor vehicle typically include timely payment, insurance, and licensing. The slightest misstep may warrant repossession.
The only way this ambiguous and not-very-satisfactory situation can function is to recognize that communications between debtors and creditors must be governed by a rule of reason.
Debtor’s position in this action that only written communications are permitted defies reason. To be sure, written communications tend to be more polite than other communications. Nevertheless, the creditor — who, after all, loses the benefit of a right to a deficiency judgment by virtue of not having a reaffirmation agreement— should not be stripped of the right to communicate with the discharged debtor by the same means that would be permitted if the debt had been reaffirmed. The logical implication of Debtor’s position is that Arcadia should respond to a late payment by asking no questions and instantly repossessing the collateral. I perceive no merit in this.
Finally, I question the viability of an action seeking an injunction to enjoin someone from violating an injunction. If, as Debtor contends, the § 524(a)(2) discharge injunction has been offended, the remedy is by way of a contempt proceeding.