GEORGE BRODY, Bankruptcy Judge.
This proceeding involves the question of whether a debtor may redeem property under section 722 of the Bankruptcy Reform Act of 1978 (hereinafter referred to as the "Bankruptcy Code"), by compelling the secured creditor to accept payment in installments.
Raymond Robert Miller (hereinafter referred to as the "debtor") filed a voluntary Chapter 7 petition in bankruptcy on December 12, 1979. In his schedules he claimed as exempt, a 1979 Chevrolet which is subject to a security interest held by General Motors Acceptance Corporation (hereinafter referred to as "G.M.A.C."), on a total outstanding indebtedness of $5,680.00. G.M.A.C. filed a complaint to reclaim the automobile. In response, the debtor has offered to redeem the automobile, pursuant to section 722 of the Bankruptcy Code, by paying G.M.A.C. $4,050.00, the fair market value of the automobile, plus the prevailing rate of interest, in thirty (30) monthly installments. G.M.A.C. acknowledges that the Bankruptcy Code permits the debtor to redeem the automobile, but contends that unless it agrees to accept installment payments pursuant to section 524(c), the debtor must pay the $4,050.00 in cash.
Under pre-Bankruptcy Code law, a creditor with a valid security interest could repossess the collateral, regardless of its value, if the bankrupt did not pay the total outstanding indebtedness. Long v. Bullard, 117 U.S. 617, 6 S.Ct. 917, 29 L.Ed. 1004 (1886). The secured creditor, therefore, was able to use the threat of repossession to induce the debtor to reaffirm the entire debt.
Since the parties agree that the automobile is property that may be redeemed pursuant to section 722 and that the amount of the allowed secured claim is $4,050.00,
The official comment to section 9-506, the redemption provision of the Uniform Commercial Code, states that the payment that must be made, "obviously means more than a new promise to perform the existing promise; it requires payment in full of all monetary obligations then due. . . ." This comment expressly recognizes that the concept of redemption presumes payment in cash, and does not encompass a mere promise to make the required payment in installments.
Whether a debtor may redeem by paying "the amount of the allowed secured claim" in installments without the creditor's consent, need not, however, be decided solely by reference to section 722. Section 524(c) permits a debtor to enter into an agreement with a creditor to reaffirm certain debts.
The debtor, however, contends that section 1325(a)(5) of Chapter 13 of the Bankruptcy Code is authority for construing section 722 as permitting installment payments.
The substantive provisions of the Bankruptcy Code appear in Title 11 of the United States Code and are divided into eight (8) odd numbered chapters [chapters 1, 3, 5, 7, 9, 11, 13 and 15].
Additionally, the debtor contends that if the court holds that redemption requires payment in cash, section 722 would, for all practical purposes, have no application, since debtors will not be able to redeem property of any significant value, and it cannot be presumed that Congress intended such a result. However, Congress obviously recognized that not all debtors would be in a position to redeem under section 722; otherwise, there would be no need for section 524(c)(4)(B)(ii). Undoubtedly, many debtors will not be able to redeem property of any significant value unless
However, the fact that debtors may not in many cases be able to exercise the option given to them by section 722, with respect to collateral of any significant value, unless the creditor agrees to accept installment payments, is no justification for a court to ignore the clear meaning of section 722 to reach what it considers to be a more equitable result. A judge is not at liberty to substitute his own social and economic predilections in contravention of an express statutory mandate.
The debtor's argument embodies a matter of policy that should be addressed to the Congress. It is not the function of a court to weigh the wisdom of legislation nor to dispense its own ideas of justice.
Finally, the debtor contends that section 362 of the Bankruptcy Code may be utilized by the court to compel a secured creditor to accept the allowed amount of the secured claim in installments. This argument also has no merit.
The filing of a bankruptcy petition operates as a stay of any act to enforce any lien against property of the debtor to the extent that such lien secures a claim that arose before the commencement of the case. § 362(a)(5).
An appropriate order to be submitted.
"An agreement between a holder of a claim and the debtor, the consideration for which, in whole or in part, is based on a debt that is dischargeable in a case under this title is enforceable only to any extent enforceable under applicable nonbankruptcy law, whether or not discharge of such debt is waived, only if —
Thus, the court must grant relief to the secured creditor if the debtor does not have an equity in the property and the property is not necessary to an effective reorganization, but the court need not terminate the stay.