Tips for Filing Reaffirmation Agreements in Cases Before Judge Karlin

Tips for Filing Reaffirmation Agreements in Cases Before Judge Karlin

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Tips for Filing Reaffirmation Agreements
in Cases Before Judge Karlin

April 16, 2012

Make sure that all blanks are filled in and the forms are
I routinely receive forms with missing or incomplete information.
Without all of the information required by the reaffirmation agreementform (Form 240-A) and the required cover sheet (Form B27), the Courtcannot process the Reaffirmation Agreement and will issue an order to

Attach a copy of the note, mortgage, security agreement, or
other relevant documentation to the reaffirmation agreement.
When copies of the relevant documentation are attached, I can reviewthe documentation if questions arise about the agreement, includingwhether there is perfection.

Check your calculations.
If the numbers on the reaffirmation agreement, particularly Part D orthe Cover Sheet, do not add up, you may be required to appear at ahearing and explain the inconsistencies or errors.

Do not ignore orders to correct from the Court.
Although 99% of lawyers would never ignore a court order,
reaffirmation agreements are routinely stricken because the partiesfailed to comply with a Court order to correct the reaffirmationagreement or provide additional information. Orders to correct provideyou an opportunity to fix these errors by supplementing or amendingthe reaffirmation agreement rather than appearing at a hearing toexplain the errors.

Disclose the debtor’s current income and expenses, and explain
any values that differ from those in Schedules I and J.
The reaffirmation agreement and accompanying cover sheet require you

to disclose the income and expenses listed on Schedules I and J (i.e., attime of filing the petition) as well as the debtor’s current income andexpenses as of the date of the filing of the reaffirmation agreement. Ifthose values differ, you must explain the difference. Significant swings,
without explanation, do nothing but raise my concerns about thewisdom of the reaffirmation agreement.

Make sure your explanations are complete, accurate and make
I often see reaffirmation agreements where the parties claim thatincome has increased or expenses have decreased since the filing of thecase. These changes must be explained by giving specific information,
such as “Debtors have surrendered their second car and no longer havethat payment,” or “Debtors have reduced their food costs by $50 by noteating out as often and have reduced their transportation costs by $75by carpooling to work.” If your explanation is simply “income hasincreased” or “Debtors have cut back on expenses,” or, worse yet, “myclient needs the car,” you will receive an order to correct to providemore information or an order setting the matter for hearing. You cansave everyone time and effort by providing the explanation on the formwhen it is originally filed.

Also, make sure that your explanation is accurate. For example, Irecently reviewed a reaffirmation agreement where the debtorsexplained a $400 reduction in monthly expenses by stating “Debtorshave reduced their spending on groceries and charitable giving.” That
explanation was not sufficient when Schedule J showed $350 per monthtotal for those two expenses; the matter was set for hearing.

File your reaffirmation agreement within 60 days of the
original date set for the 341 meeting.
Rule 4008 requires that a reaffirmation agreement be filed within 60days of the first date set for the 341 meeting. This will ensure that thereaffirmation agreement is on file prior to the entry of discharge. Iroutinely grant motions for extension of time to file reaffirmationagreements, which will also delay the entry of discharge until the newdeadline has expired. If the reaffirmation agreement is filed after the


entry of discharge, I will strike the reaffirmation agreement. Inaddition, I have found that the discharge order should not be set asidefor the purpose of allowing the filing of a (late) reaffirmationagreement, as explained in In re Kellison, Order Denying Motion to
Vacate, Case No. 08-40480, Doc. 30 (Jan. 5, 2009).

If you are an attorney, your representation of the debtor does
not end even if you do not sign Part C of the reaffirmation
agreement—you must attend any hearing.
The Court considers reaffirmation agreements to be an integral part ofthe Chapter 7 bankruptcy process, and will not allow attorneys to limitthe scope of their representation to exclude any involvement in thereaffirmation agreement process. The Court recognizes that attorneysmay have a variety of reasons why they elect not to sign Part C of theagreement. However, you will be required to appear in Court to providelegal counsel to your client at any hearing on any reaffirmationagreement, whether you signed the agreement or not.

Reaffirmation Hearings by telephone.
If you or your client live or work a distance from the courthouse thatmakes it unduly burdensome to appear for a reaffirmation hearing, askfor a telephone hearing. I do not think these hearings are as effective inconveying Congressional intent about reaffirmation agreements ashearings where the debtors are in the courtroom, but I am grantingrequests when appropriate.


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