Matthew J Rizzuto

1 Pub. L. No. 109-08, 119 Stat. 23.
2 The Court has subject matter and personal jurisdiction
pursuant to 28 U.S.C. §§1334 and 157(b); this is a core
proceeding pursuant to 28 U.S.C. §157(b)(2)(I) and (J); and these
are findings of fact and conclusions of law as may be required by
(continued...)
UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF NEW MEXICO
In re:
ANTHONY R. WILSON and
MYRA K. WILSON,
Debtors. 	No. 7-06-11807 SL
In re:
DIANA L. OBERLANDER and
NICHOLAS A. OBERLANDER,
Debtors. 	No. 7-06-11824 SL
In re:
MATTHEW J. RIZZUTO,
Debtor. 	No. 7-06-11892-SA
MEMORANDUM OPINION AND ORDER
CONCERNING PROPOSED REAFFIRMATION
AGREEMENTS WITH FORD MOTOR CREDIT COMPANY
These matters came before the Court upon the submission by
the parties (“Debtors” and “FMCC” [Ford Motor Credit Company]
respectively) of proposed reaffirmation agreements or, in the
Rizzuto case, of a proposed consent order approving a
reaffirmation agreement. 	For the reasons cited, the Court
declines to “review” the reaffirmation agreements, as that term
is used in §524(m), enacted by the Bankruptcy Abuse Prevention
and Consumer Protection Act of 2005 (“BAPCPA”) 1, and also declines
to approve or disapprove the reaffirmation agreements. 2
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2(...continued)
Rule 7052 F.R.B.P.
3 These statements appear not to comply with what Congress
seems to have intended when it enacted §§521(a)(trailing
paragraph) and 362(h) is not an issue in these cases. 	See In re
Rowe, 342 B.R. 341, 351 (Bankr. D. Ks. 2006) (“Congress by
amending §§ 521 and 362 intended to and was successful in
eliminating the ‘fourth option’...."). 	However, that is not an
issue in these cases.
4 The Wilsons are now divorced and only Ms. Wilson seeks to
reaffirm the debt. 	In consequence the budget numbers in Part D
and the jointly filed Schedules I and J differ considerably.
5 The reaffirmation agreement form used in all three cases
is the current B240 suggested by the Administrative Office of the
United States Courts, with Part D being supplemented by the
disclosure required by NM IBR 4008. 	A portion of that rule
requires as follows: “The debtor’s statement required under
§524(k) shall be accompanied by a statement of the total income
and total expense amounts stated on schedules I and J. 	If there
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Background
In each of these cases, the respective Debtors were
represented by counsel. 	In each case the Debtors filed
statements of intention which recited that “Debtor will retain
collateral and continue to make regular payments.” 3
The Wilson agreement (doc 13) is for a 2005 Ford Escape,
NADA retail value of $18,000, for $10,657 at 4.9%, resulting in
49 monthly payments of $239. 	Part D recites that the Debtor’s 4
income is $4,234 and expenses are $3,985, for a surplus of $249,
which exceeds the proposed monthly payment by $10. 	However,
Schedules I and J show income of $7,267 and expenses of $8,452
for a monthly deficit of $1,184. 5
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5(...continued)
is a difference between the income and expense amounts stated on
schedules I and J and the statement required under §524(k), the
accompanying statement shall include an explanation of any
difference.”
6 Counsel for Debtors explained that after the receipt of
the reaffirmation agreement forms from FMCC’s counsel, they each
met with their respective clients, determined with the clients
that retaining these vehicles on these terms were the best the
clients could do to ensure they had reliable transportation, and
worked with the clients to revise their budgets to be able to
afford the payments. 	Nothing in this opinion is intended to
second-guess counsels’ advice to their clients or the judgments
made by counsel and clients in seeking to reaffirm.
Page 3 of 	10
The Oberlander agreement (doc 9) is for a 2004 Ford Mustang,
NADA retail value $12,000, for $12,600 at 4.5%, resulting in 42
monthly payments of $316. 	Part D recites that the Debtors’
income is $2,698 and expenses are $2,382, resulting in a surplus
of exactly $316. 6 	Schedules I and J show income of $2,698 and
expenses of $3,459 for a monthly deficit of $761.
The Rizzuto agreement (doc 13) is for a 2005 Ford F-150
truck, NADA retail value of $25,450, for $33,681 at 8.9%,
resulting in 59 payments of $693. 	Part D recites that the
Debtor’s income is $4,107 and expenses are $3,200, resulting in a
surplus of $907. 	Schedules I and J show income of $4,107 and
expenses of $4,481 for a monthly deficit of $374.
In each case, Debtors’ counsel have executed Part C of the
respective agreements. 	In the Wilson and Oberlander cases,
Debtors’ counsel has hand-checked the box which recites:
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7 Not that it makes a difference; clearly both counsel had
agreed to have the Court review or at least approve the
agreement.
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A presumption of undue hardship has been established
with respect to this agreement. 	In my opinion,
however, the debtor is able to make the required
payments under the Reaffirmation Agreement.
In the Rizzuto case, a “typewritten” (to use a quaint but
descriptive adjective) “X” has been inserted in the same box.
Mr. Rizzuto’s counsel did not recall one way or the other whether
he had checked that box before sending it back to FMCC’s counsel. 7
As a result of an earlier preliminary hearing on the Wilson
and Oberlander agreements, the Court had learned that FMCC’s
counsel had required that the undue hardship box be checked as a
condition for FMCC to agree to the reaffirmation agreement. 	The
demand was contained in a fax sent by FMCC’s counsel’s legal
assistant to Wilson’s and the Oberlanders’ counsel which stated
in relevant part exactly as follows:
As my phone message – We cannot file these
[reaffirmation agreements] unless you check the box
indicating a presumption of undue hardship --
Please call to discuss or I have been instructed to
file Motions for Relief.
At the earlier preliminary hearing the Court had asked counsel
for those three debtors for a copy of the fax, and counsel
subsequently filed a copy of the fax as an exhibit in each case
(docs 20 and 15 respectively).
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The proposed stipulated Rizzuto order contained the
following finding:
Based upon the Debtor’s pre-petition budget, the
reaffirmation may have constituted an “undue hardship.”
The Reaffirmation Agreement explained that the Debtor’s
pre-petition budget included substantial payments made
on his home mortgage and utilities; however, because of
a divorce, the Debtor has moved from this residence and
is no longer making mortgage payments or utility
payments. 	Based on the post-petition budget, the
Debtor can afford the payments provided for in the
Reaffirmation Agreement....
IT IS HEREBY ORDERED, ADJUDGED AND DECREED as follows:
The Reaffirmation Agreement between the Debtor and Ford
Motor Credit Company is hereby approved pursuant to
11 U.S.C. §§524(c), (k) and (6)(A) (Part D) and (7)....
Having reviewed both the copy of the fax and the language of
the stipulated order, the Court set all three of these matters
for (continued) preliminary hearings on January 29, 2007. 	At the
Wilson and Oberlander hearings FMCC’s counsel candidly confirmed
the Court’s surmise, that FMCC sought a §524(m) “review” or
finding for each of these three agreements with the idea that the
Court’s imprimatur would make it more difficult for a debtor to
dispute or escape from the binding effect of the reaffirmation
agreement at some point in the future.
Analysis
11 U.S.C. §524(m)(1) provides as follows:
Until 60 days after an agreement of the kind specified
in subsection (c) is filed with the court (or such
additional period as the court, after notice and a
hearing and for cause, orders before the expiration of
such period), it shall be presumed that such agreement
is an undue hardship on the debtor if the debtor's
monthly income less the debtor's monthly expenses as
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8 Overall the statute is “stubbornly obtuse” and the form
that tracks it “a disaster”. 	In re Mendoza, 347 B.R. 34, 40 and
n.11 (Bankr. W.D. Tex. 2006) (illustrating the administrative
difficulties with the statute and the form and suggesting
procedures to effectuate the statute). 	See generally David B.
Wheeler and Douglas E. Wedge, A Fully Informed Decision:
Reaffirmation, Disclosure and the Bankruptcy Abuse Prevention and
Consumer Protection Act of 2005, 79 Am. Bankr. L.J. 789 (2005).
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shown on the debtor's completed and signed statement in
support of such agreement required under subsection
(k)(6)(A) [Part D] is less than the scheduled payments
on the reaffirmed debt. 	This presumption shall be
reviewed by the court. 	The presumption may be rebutted
in writing by the debtor if the statement includes an
explanation that identifies additional sources of funds
to make the payments as agreed upon under the terms of
such agreement. 	If the presumption is not rebutted to
the satisfaction of the court, the court may disapprove
such agreement. No agreement shall be disapproved
without notice and a hearing to the debtor and
creditor, and such hearing shall be concluded before
the entry of the debtor's discharge.
In at least one respect, this portion of the statute is
clear 8: the presumption of undue hardship which mandates Court
“review” arises only from the numbers in Part D. 	That the
analogous numbers from Schedules I and J differ from those in
Part D is irrelevant for purposes of the “review”. 	Thus it is
simply not accurate to check the “undue hardship” box if the Part
D numbers do not show a deficit when the reaffirmed monthly
payment is taken into account. 	What FMCC is doing, therefore, is
in effect procuring a false statement. 	Using its economic
leverage on the debtors, it is pressuring Debtors’ counsel to
inaccurately or even falsely certify by their signatures
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9 In this decision the Court does not consider whether the
counsel involved should have done what they did, or how debtors’
counsel would have brought this to the attention of the Court
without endangering their clients’ prospects for post-bankruptcy
economic survival. 	The Court is familiar with all three counsel
as ethical lawyers. 	The focus of this decision instead is on
FMCC, whose actions are the root of the problem.
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something that simply is not true. 	See Rule 9011(b) F.R.B.P. 9;
see also §526(a)(2) (“A debt relief agency shall not...make any
statement...that is untrue or misleading....”). 	Should the Court
encounter another instance of this behavior by FMCC, it will
issue an order to show cause why FMCC should not be sanctioned.
The fact that NM IBR 4008 requires the additional disclosure
of the schedule I and J figures does not change the statute’s
clear instruction to look only at the specified Part D numbers in
determining whether there is a presumption of undue hardship. 	It
is true that NM IBR 4008 in effect adds the schedule I and J
numbers to Part D of the local version of the B240 form, but
§524(m) refers only to the specified language of §524(k)(6)(A)
and not to any additions required by a local rule. 	It is also
true that, when a debtor is not represented by counsel and the
Court is reviewing the file in order to make the reaffirmation
decision on behalf of the debtor as required by §524(c)(6)(A),
the Court will look at virtually the entire file, including most
obviously schedules I and J. 	See, for example, In re Payton, 338
B.R. 899 (Bankr. D. N.M. 2006) (full review of debtors’
circumstances in determining whether to approve reaffirmation
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10 Nothing in this decision is intended to rule on whether a
debtor who has stayed current on her payments and has maintained
insurance on the vehicle has a cause of action under
nonbankruptcy law if the creditor repossesses the vehicle before
or after the case closes. 	See In re Laynas, 345 B.R. at 517 and
n.11; In re Rowe, 342 B.R. at 350 (“The creditor's right to
foreclose on the collateral is controlled by the security
agreement and state law.”).
Page 8 of 	10
agreement). 	But these debtors had counsel, a consequence of
which is that the Court’s review is limited to any review both
required and limited by §524(m). 	See In re Laynas, 345 B.R. 505,
512 (Bankr. E.D. Pa. 2006)(§524(m) review required regardless of
counsel if presumption arises.) None of these facts provides an
excuse for FMCC to ignore the statute and ask a debtor’s counsel
to make an inaccurate or false statement in the reaffirmation
agreement.
FMCC is of course entitled to not enter into a reaffirmation
agreement with a debtor, even if the debtor proposes to reaffirm
on the original contract terms. 	§524(c) (“An agreement between a
holder of a claim and the debtor....) (Emphasis added.); see
§362(h)(1)(B) (providing that if the debtor has timely and
correctly filed a statement of intention to reaffirm the debt on
the original contract terms and the creditor refuses to reaffirm,
the automatic stay is not terminated). 	The Code also allows FMCC
to seek stay relief before the discharge is entered and the case
is closed, or to wait until those events have taken place and the
stay expires on its own. 10 	And, candidly, probably nothing in the
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11 This ruling is not intended to suggest that, had Debtors
not been represented by counsel in make these agreements, the
Court would not have approved them. 	Were the various Debtors to
have purchased vehicles postpetition to replace these vehicles,
the Debtors would have incurred debts that of course would not be
discharged in their pending chapter 7 cases. 	And it is unlikely
that Wilson or the Oberlanders could obtain better interest rates
and prices than contained in the reaffirmation agreements. 	On
the other hand, there may be other factors that would militate
against approving these agreements. 	Whether such factors exist
is not known, since the Court has not conducted the sort of
examination that might uncover such factors or disclose that
there are none.
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Bankruptcy Code prevents Ford from punishing (that is, attempting
to regain possession of the vehicle from) a represented debtor in
retaliation for the Court’s obstreperousness in not reviewing a
reaffirmation agreement when Part D does not raise a presumption
of undue hardship. 	The existence of all of these remedies merely
underscores that FMCC has no business pursuing its unlawful
course of action.
Conclusion and Order
Following the dictate of §524(m), the Court is not required
(or even permitted) to “review” the presumption of undue hardship
in these cases since it is not raised. 	And since each Debtor was
represented by counsel in making the reaffirmation agreement, the
Court will also not approve or disapprove any of the agreements,
as would otherwise be required by §524(c)(6)(A). 11
IT IS THEREFORE ORDERED that the Court will not review any
of these reaffirmation agreements with FMCC (Wilson – doc 13;
Oberlander – doc 9; Rizzuto – doc 13), nor will it approve or
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disapprove any of these agreements, whether by stipulated order
or otherwise.
Honorable James S. Starzynski
United States Bankruptcy Judge
copies to:
Ford Motor Credit Company
c/o Atty Allan L. Wainwright
920 Lomas NW
Albuquerque, NM 87102
United States Trustee
PO Box 608
Albuquerque, NM 87103-0608
Louis Puccini, Jr
PO Box 30707
Albuquerque, NM 87190-0707
Matthew J Rizzuto, Debtor
3313 Red Rock Court
Rio Rancho, NM 87144-6598
Linda S. Bloom
Trustee
PO Box 218
Albuquerque, NM 87103-0218
Anthony R. Wilson
P.O. Box 152
High Rolls Mountain, NM 88325
Myra K. Wilson
P.O. Box 152
High Rolls Mountain, NM 88325
Oralia B Franco
650 East Montana Suite E
Las Cruces, NM 88001-3100
Kieran F. Ryan
Trustee
PO Box 26
Las Cruces, NM 88004-0026
Diana L. Oberlander
505 5th Street
Tularosa, NM 88352
Nicholas A. Oberlander
505 5th Street
Tularosa, NM 88352
Philip J. Montoya
Trustee
PO Box 159
Albuquerque, NM 87103
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