Credit Union Could Not Bootstrap Terms into Reaffirmation Agreement through inconspicuous Additions to the Statutory Disclosures

Credit Union Could Not Bootstrap Terms into Reaffirmation Agreement through inconspicuous Additions to the Statutory Disclosures

This decision concerns whether a creditor’s right of rescission placed in an inconspicuous manner by the creditor in the Disclosures section of the Director’s Form 2400A Reaffirmation Agreement is enforceable through a “Notice of Rescission” filed by the creditor.

The Credit Union argues that it had the legal ability under state contract law to negotiate and agree upon additional reaffirmation terms and that it is merely seeking to enforce that right provided in the agreement and voluntarily entered into by the Debtor. The Credit Union notes that the rescission provision added to Director’s Form 2400A was placed with the disclosure of the Debtor’s right of rescission and was not confusing or misleading. The Credit Union further asserts that the reason it desires to rescind the Reaffirmation Agreement is because the Debtor was to have entered a second reaffirmation agreement reaffirming an unsecured debt owed to the Credit Union and failed to do so. The Credit Union asserts that its agreement to enter into the Reaffirmation Agreement relating to the Volvo was contingent on the Debtor entering into the second reaffirmation agreement.

The Debtor asserts that the Form 2400A reaffirmation agreement was improperly modified with the addition of the Credit Union’s rescission rights added to the disclosure section of the Form. The Debtor notes that the added language was not made conspicuous in any manner and is inconsistent with the Form’s instructions. The Debtor also asserts that there was no agreement making one reaffirmation agreement contingent upon the other and that she simply signed the one relating to the Volvo reaffirmation agreement and returned it to the Credit Union’s counsel who then signed and filed it. The Debtor asserts that if one reaffirmation agreement was contingent on the other, the Credit Union could have declined to enter the Volvo reaffirmation agreement until the second one was signed by the Debtor. The Debtor also asserts that under Ohio law a party to a contract may only rescind a contract for fraud or mutual mistake, neither of which occurred. If there was a mistake with respect to the entering of the Volvo Reaffirmation Agreement, that mistake was solely the mistake of the Credit Union.

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