There is no “Ride-Through” on Mobile Home Debt; Debtor must Redeem the Property or Reaffirm the Debt in order to Retain it

There is no “Ride-Through” on Mobile Home Debt; Debtor must Redeem the Property or Reaffirm the Debt in order to Retain it

The question in this case is whether a chapter 7 debtor may retain a mobile home subject to a security interest without redeeming the property or reaffirming the debt. 21st Mortgage Corporation (“21st Mortgage”) filed its Motion to Compel Compliance with 11 U.S.C. § 521(a)(2) and to Delay Entry of Discharge (the “Motion”). The Debtors filed a response and a hearing was held. The Court finds that Debtors must select between surrender, redemption, or reaffirmation, as they are the only options available under § 521(a)(2).

Debtors filed a chapter 7 petition on July 31, 2017. The petition included the Debtors’ SOI that is at issue before the Court. “Part 1” of the SOI instructs the Debtors to list their secured creditors and select whether they will surrender, redeem, or reaffirm the property. A fourth checkbox is also listed which Debtors selected for all of the listed secured creditors. 21st Mortgage holds a lien on a mobile home purchased by Debtors in 1999.  The fourth box states, “Retain the property and [explain]:” which is followed by the Debtors’ manual entry of “Debtor will continue making payments to creditor without reaffirming.” 21st Mortgage delivered a reaffirmation agreement to Debtors’ counsel but it was ignored. 21st Mortgage then timely filed this Motion, moving the Court to compel Debtors to comply with their duties under § 521(a)(2) and to delay entry of discharge until Debtors have done so.

There are two issues before the Court. First, under § 521(a)(2), as amended by the Bankruptcy Abuse Prevention and Consumer Protection Act (“BAPCPA”), are debtors limited to surrender, redemption, or reaffirmation as their only options, or may they select “ride-through” as Debtors are attempting to do in this case? Second, if ride-through is not an option and yet a debtor still attempts it, what enforcement options are available to the court? Sections 521(a) and 362(h)(1), along with Fifth Circuit precedent, provide the answers to these questions.

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