Court Opinion

ID: 9517174
Source: CourtListenerOpinion
Date Created: 2023-08-07 00:07:07.622081+00
Date Added: 2024-06-11T09:43:49.494233
License: Public Domain

BRANDT, Bankruptcy Judge,
concurring.
I join in the foregoing, but write separately to point out another reason why we must reverse: a stipulation to nondis-chargeability is a reaffirmation agreement, requiring court approval in accordance with 11 U.S.C. § 524 when the debtor/defendant, as Ms. Andreyev here, is unrepresented:
*306• that section is to be broadly construed, In re Bennett, 298 F.3d 1059, 1067-68 (9th Cir.2002);
• governs when the new agreement (i.e., the settlement or “consent judgment”) is based in part on discharged debt, In re Lopez, 345 F.3d 701, 707-709 (9th Cir.2003); and
• Andreyev’s debt to the bank is discharged, 11 U.S.C. § 727(b), unless and until the bankruptcy court determines to the contrary, § 523(c), which in this instance is the judgment on review: there was no prior determination of non-dischargeability, as in In re Martinelli, 96 B.R. 1011 (9th Cir. BAP 1988).
The Code requires, in § 524(d):
[I]f the debtor desires to make [a reaffirmation agreement] and was not represented by an attorney during the course of negotiating such agreement, then the court shall hold a hearing at which the debtor shall appear in person and at such hearing the court shall— .
(1) inform the debtor—
(A) that such an agreement is not required under this title, under non-bankruptcy law, or under any agreement not made in accordance with the provisions of subsection (c) of this section; and
(B) of the legal effect and consequences of—
(i) an agreement of the kind specified in subsection (c) of this section; and
(ii) a default under such an agreement; and
(2) determine whether the agreement that the debtor desires to make complies with the requirements of subsection (c)(6) of this section, if the consideration for such agreement is based in whole or in part on a consumer debt that is not secured by real property of the debtor.
(Emphasis added.)
Subsection (c)(6)(A) requires the bankruptcy court, in order to approve a reaffirmation, and hence the “settlement” here (even if the deficiencies pointed out in the foregoing were remedied), to find it
(i) [does] not impos[e] an undue hardship on the debtor or a dependent of the debtor; and
(ii) [is] in the best interest of the debtor[,]
and to do so after a hearing at which the unrepresented debtor/defendant appears in person, and is advised by the judge of the voluntary nature of reaffirmation, and of the legal effect and consequences of reaffirming. Since the debt is otherwise discharged, I do not see how the settlement could be found “in the best interest of the debtor” unless the plaintiff bank can show, with competent evidence, each element of its causes of action. That will require evidence of actual intent to defraud with respect to the bank’s § 523(a)(2)(A) action, and of the luxury nature of the goods and services purchased under § 523(a)(2)(C).
None of that occurred here: no hearing attended by debtor, no advice from the judge to the debtor, no showing of a prima facie case. Approving the “settlement” and entering the “consent” judgment without requiring compliance with the statutory requirements for reaffirmation reflects an erroneous view of the law, which is an abuse of discretion. Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 405, 110 S.Ct. 2447, 110 L.Ed.2d 359 (1990).