Court Hearing Required When Presumption of Undue Hardship

In re O’Halloran, Case No. 07-13528-RGM; January 17th, 2008

The debtor has attempted to enter into a reaffirmation agreement, pursuant to Bankruptcy Code §524(c).  The court noted that, under that section, paragraph (3) requires that the agreement has been filed with the court.  Bankruptcy Code §524(m)(1) states that a reaffirmation agreement presents an undue hardship on the debtor if the debtor’s monthly income is less that the debtor’s monthly expenses and that such findings requires a review by the court.  If the presumption is not rebutted to the satisfaction of the court, the court may disapprove such agreement.  See id.  Finally, “no agreement shall be disapproved without notice and hearing to the debtor and creditor, and such hearing shall be concluded before the entry of the debtor’s discharge.  See id.

In this case, the difference between the income and expenses did not leave enough money for the car payment.  Under Bankruptcy Code §524(c)(6), involving reaffirmation agreements for pro se debtors, the court can only approve reaffirmation agreements as not imposing an undue hardship.  Because of the undue hardship presumption in this case, the court decided that a hearing was required before it could disapprove of the agreement.

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