In Re Weir

Is there any bite in the Bankruptcy Code’s toothless tiger, 11 U.S.C. § 521 (2)? Consumer debtors who are not in default on secured consumer debts sometimes flout the mandate in section 521(2) that they state (and perform) an intention to reaffirm the debt, surrender the collateral, or redeem the collateral by paying its value. Instead, debtors who are not otherwise in default say they will “remain current” on payments without reaffirming. Here, a secured creditor contests that tactic as not authorized by the statute; and the question becomes what to do.

Four courts of appeals are evenly divided on the permissibility of a nondefaulting debt- or remaining current without reaffirming. Dozens of lower courts are similarly deadlocked. Ten years of inconclusive and not-very-helpful debate suggests that it is time to approach the problem from a different perspective and ask whether the answer matters.

The better question to ask is “what difference does it make?” This question looks beyond the point that has been debated, assumes that the debtor’s strategy is impermissible, and focuses on the remedies available to the creditor of a nondefaulting debtor who fails to reaffirm…