From a discussion from another listserve: (Remember Prof. Scarberry is brilliant but creditor oriented).
Looking for some suggestions. We’re finding that most car lenders won’t repo and will accept tender of payments if debtors comply with all requirements of 362(h) and 521(a)(2) but the reaff is denied based on undue hardship. One lender – San Diego County Credit Union – simply refuses tender of payment after the reaff is denied, and then picks up the car after discharge.
For those of you at NACBA in San Antonio less than two months ago, Bankruptcy Judge Eileen Hollowell of Arizona spoke on reaffs and “ride through”. Her Moustafi opinion essentially allows ride-through in the above circumstances, and her form Order was included in the NACBA materials. In her form order, she specifically orders the creditor to continue accepting payments.
Here’s where I get lost. Last year, there was a San Diego County Credit Union case that went up to the BAP. Judge Hollowell was on that BAP panel which held that:
…a creditor does not violate the Bankruptcy Code by refusing to accept payments tendered by a debtor. Additionally, we did not find any other federal law that may apply.
If 521(d) (which makes ipso facto default clauses unenforceable) is inapplicable in a case because debtors have fully complied with 362(h) and 521(a)(2), isn’t acceptance of tender implicit – even mandatory – in the terms of an otherwise enforceable contract?
I now have a debtor with a denied reaff, sufficient funds in my trust account from every post-petition refusal of tender, and a guaranteed repo in a few days when the discharge issues.
Gary Holt
San Diego
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