Consumer Bankruptcy

Through the reaffirmation process, debtors may voluntarily enter into agreements with creditors to repay otherwise-dischargeable debts.[2] However, when a dispute arises as to whether a party has performed its end of the bargain, the question becomes whether the terms of the original agreement or the reaffirmation agreement apply.

The Sixth Circuit recently held in Chandler v. Peoples Bank & Trust Co. of Hazard[3] that if the terms of a reaffirmation agreement do not “specifically differ” from those of the original agreement, then the terms of the original agreement control.[4] While the precedential value of Chandler may be limited because it was not recommended for full-text publication, the opinion still provides useful guidance for attorneys who represent debtors or creditors in reaffirmation agreement negotiations.

In a chapter 13 bankruptcy, a debtor in default under a residential lease may assume the lease but the debtor’s plan must provide a cure provision for the pre-petition default. 11 U.S.C. §365. If the debtor later rejects the post confirmation assumed lease, is the lessor entitled to an administrative expense claim for post-petition rents?

On July 30, 2019, the leadership of the Consumer Bankruptcy Committee presented the free webinar “The Intersection of Bankruptcy and the FDCPA: the CFPB’s Notice of Proposed Rulemaking.” The expert panel included Committee Co-Chair Jon Lieberman (Sottile & Barile LLC; Loveland, Ohio), Chris Hawkins (The Bradley Firm; Birmingham, Alabama), and Keith Larson (Seiller Waterman LLC; Louisville, Kentucky.) The Consumer Financial Protection Bureau’s (CFPB) efforts to update the Fair Debt Collections Practices Act (FDCPA) are expressed in the CFPB’s Notice of Proposed Rulemaking (NPR), for which the CFPB is seeking public comment. The proposals in the NPR are a clear recognition by the CFPB that modern forms of communication must be incorporated into the debt collection process and that other updates are necessary. However, while the NPR touches on the bankruptcy discharge with respect to the transfer of debts, it contains no recognition of – or proposed remedies to – the confusion caused when a debt collector subject to the FDCPA is required to communicate with a consumer that has filed a bankruptcy case. The webinar discussed three issues on which the leadership of the Consumer Bankruptcy Committee have reached a consensus that guidance from the CFPB is essential: validation of debts impacted by a bankruptcy filing; the Mini-Miranda Disclosure on communications to consumers in bankruptcy; and communications with consumers represented by counsel in a bankruptcy case.”