Bankruptcy Attorneys Must Pay Attention to Local Procedures When Handling Reaffirmation Agreements
Richard Stokan from our office recently wrote an interesting post here about the practical aspects of negotiating reaffirmation agreements. In short, a reaffirmation agreement is a new contract signed between the debtor and a lender that reaffirms the debtor’s personal liability for a debt (typically an automobile or home). This agreement essentially states that the debtor will continue to pay all or part of the debt obligation (depending upon what is negotiated) to the creditor – bankruptcy notwithstanding – in order to retain the vehicle or real estate.
In addition to the issues discussed in Mr. Stokan’s post, bankruptcy attorneys must also be aware of local court rules and procedures when handling reaffirmation agreements. For example, in the Eastern District of Michigan Bankruptcy Court there is a new Official Bankruptcy Form B27, “Reaffirmation Agreement Cover Sheet.” Effective December 1, 2009, this cover sheet must be filed for every reaffirmation agreement, with the reaffirmation agreement attached to it. The form, which may be filed by any party to the reaffirmation agreement, requires a certification that the reaffirmation agreement attached to the form is a true and correct copy of the reaffirmation agreement between the parties identified in the cover sheet. Failure to file the reaffirmation agreement cover sheet with the reaffirmation agreement will result in a notice of deficiency from the Bankruptcy Court Clerk. Failure to correct the deficiency within seven days may result in striking the reaffirmation agreement or the scheduling of a hearing by the Court.
Additionally, on December 16, 2009, the Eastern District of Michigan announced the adoption of a new Administrative Order (available here) regarding the responsibilities of debtor’s counsel with respect to reaffirmation agreements. The new Administrative Order states that, in order to fulfill their obligations as counsel for the debtor in a Chapter 7 case, counsel may not exclude services relating to a reaffirmation agreement from the scope of their representation. Also, counsel for the debtor must appear and represent the debtor at any hearing relating to a reaffirmation agreement.
When dealing with reaffirmation agreements, Detroit bankruptcy lawyers must be aware of these and other local rules and practices in the Eastern District, which covers Detroit, Bay City, and Flint.
