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Georgia Bankruptcy Courts Review: Reopen Ch. 7 to Reaffirm a Mortgage?

Posted By USFN, Tuesday, May 06, 2014
Updated: Tuesday, October 13, 2015

May 6, 2014

 

by Brian Jordan
McCalla Raymer, LLC – USFN Member (Georgia)

On October 25, 2013, a bankruptcy court in the Southern District of Georgia (Savannah Division) held that a Chapter 7 case would not be reopened for the purpose of entering into a reaffirmation agreement where the agreement was not made prior to discharge. See In re Conner, 2013 WL 5781682 (Bankr. S.D. Ga. 2013).

Under Bankruptcy Code § 350(b), a case may be reopened to administer assets, to accord relief to the debtor, or for other cause. For a reaffirmation to be enforceable, Bankruptcy Code § 524(c) requires, among other things, that the agreement to reaffirm be made before the granting of a discharge. In Conner, the debtors motioned the court to reopen their Chapter 7 case for the purpose of filing a reaffirmation agreement so that they could pursue a loan modification with their mortgage lender. Although both debtors and the mortgage lender had agreed to reaffirmation terms as of the motion to reopen and no party had objected to the motion to reopen, debtors’ counsel stated that no reaffirmation agreement had been made prior to discharge.

The court held that, because no reaffirmation agreement had been made prior to discharge, it cannot be enforceable. Accordingly, as the reaffirmation agreement put forth by the debtors was unenforceable, the Chapter 7 case would not be reopened. This outcome echoes the Northern District of Georgia where a bankruptcy court there held that a Chapter 7 case may be reopened for the purpose of filing a reaffirmation agreement where the parties had agreed to all terms prior to discharge. See In re Farris, 2009 WL 6499264 (Bankr. N.D. Ga. 2009).

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