Reaffirmation agreement becomes effective upon filing with the Court if represented by an attorney and not presumed an undue hardship.  Per the reaffirmation agreement language set out in the Code, “…No court approval is required if your reaffirmation agreement is for a consumer debt secured by a mortgage, deed of trust, security deed, or other lien on your real property, like your home.”  § 524(k)(3)(J)(i)7.

A brewing hot topic in bankruptcy law is how a Debtor deals with property that is collateral for a secured creditor which is surrendered but has not yet been legally foreclosed or repossessed by the creditor. The Debtor’s interest is obvious: to avoid accruing post petition obligations, such as taxes, insurance, and homeowner’s association dues.

“Many debtors…fail to complete a Chapter 13 [bankruptcy] plan successfully,” noted Justice Ruth Bader Ginsburg in a recent Supreme Court decision, Harris v. Viegelahn, 135 S.Ct. 1829 (2015). It is for this reason that the Bankruptcy Code provides the nonwaiveable right of a debtor to convert a voluntary Chapter 13 case to a Chapter 7 case at any time. 11 U.S.C. § 1307(a). However, this conversion is not without its challenges. One such challenge is determining how postpetition wages that were collected during the Chapter 13 plan should be distributed after the conversion.

On June 1, 2015, the Supreme Court of the United States decided the case Bank of America v. David B. Caulkett, 2015 WL 2464049. Caulkett clarifies that a debtor in Chapter 7 bankruptcy may not be relieved of a second mortgage when their property is worth less than the payoff balance of their first mortgage. In reaching this conclusion, Court relies upon on the 1992 case,Dewsnup v. Timm.