In Re Charles Lopez in Re Julie Lopez, Debtors, Bankruptcy Receivables Management v. Charles Lopez Julie Lopez

This case addresses the question of whether a creditor may enforce a post-bankruptcy discharge agreement entered into with a debtor retaining the collateral pursuant to its rights under McClellan Fed. Credit Union v. Parker (In re Parker), 139 F.3d 668 (9th Cir.1998). Creditor Bankruptcy Receivables Management (“BRM”) seeks to enforce such an agreement on the grounds that it offered the debtors, Charles and Julia Lopez, new consideration in the form of waiving its right of replevin. The Bankruptcy Appellate Panel (“BAP”) held that the agreement was an invalid reaffirmation agreement pursuant to Bankruptcy Code 11 U.S.C. § 524 because the consideration was based in part on the Lopezes’ discharged debt. The BAP also rescinded the agreement under California law as having been executed under mistake of law. BRM appeals.

I

Charles and Julia Lopez bought a diamond ring and jewelry. The seller, Samu-els Jewelers, Inc., financed the purchase of $5,623.01 and took a security interest in the jewelry.

Thereafter, the Lopezes filed a Chapter 7 bankruptcy petition. The Lopezes stated their intention to reaffirm their debt to Samuels. During the pendency of the case, Samuels…