MEMORANDUM OF DECISION
JIM D. PAPPAS, Bankruptcy Judge.
The facts in this matter are undisputed. The Debtor granted the creditor GMAC a security interest in his vehicle to secure the unpaid balance of the purchase price. The Debtor filed for relief under Chapter 7, but is current on his payments to GMAC.
As required by Section 521(2) of the Bankruptcy Code, the Debtor filed a statement of intention with respect to his assets subject to liens for consumer debts indicating that as to the vehicle secured to GMAC, he would "keep paying".
GMAC has filed a motion attacking the substance of the Debtor's statement of intention arguing that the option elected by the Debtor is not one of the statutory alternatives authorized by the statute — that is, he must either elect to surrender the vehicle, or to redeem it from the lien or reaffirm the GMAC debt. GMAC therefore seeks an order from the Court directing the Debtor to make the election, and to perform any choice he makes.
The Trustee has filed his "no-asset report" and the parties agree there is no non-exempt equity in the vehicle. In addition, when queried at the hearing, the creditor can point to no specific defaults committed by Debtor under the security agreement, other than the filing of the bankruptcy petition.
There appear to be two issues presented for resolution by the Court. First, is the Debtor limited to the statutory alternatives listed in Section 521(2)(A) as to the GMAC claim in filing his statement of intention?
The first issue has already been resolved in this district and after review, there are no good grounds to vary the results of the prior decision. In In re Stevens, 85 B.R. 854, 88 I.B.C.R. 1 (Hagan, C.J.), the Court determined that a debtor must either surrender the collateral, or he must redeem the collateral by payment to the creditor of the cash value of the property, or he must negotiate a reaffirmation agreement with the creditor. The debtor does not have the option to retain the collateral, and keep the contract payments current. Id. at 2-3. The Court granted the debtor in Stevens thirty days within which to either reaffirm or redeem, or to return the security to the creditor.
While at first glance Stevens appears to have also dealt with the second issue in this case, the ruling is not precisely on point as to the enforcement tools available to the Court to correct a deficiency in the Debtor's statement of intention. In Stevens, the matter was before the Court on motion of the Chapter 7 Trustee for entry of an "enforcement" order. The Code squarely places the duty to ensure that the debtor performs according to his stated intention on the trustee. 11 U.S.C. § 704(3). The Trustee in this case is not a party to the motion, and it is the secured creditor seeking entry of the order to either redeem, surrender or reaffirm.
882 F.2d at 1546 (footnotes omitted). The creditor in Lowry did not present any evidence of actual prejudice. The Court was unwilling to accept ". . . speculative arguments over dreadful possibilities that may result if the debtors fail to exercise proper care of the truck or ultimately fail to pay . . .", 882 F.2d at 1546, and the Court would not rule on the enforceability of the "ipso facto" bankruptcy clause in the security agreement since the issue was not properly before it. The Lowry Court concluded that while the provisions of Section 521 were mandatory, they did not make redemption or reaffirmation the exclusive means by which the Court can allow a debtor to retain secured property. Lowry affirmed the bankruptcy court's ruling that allowed the debtor to retain the property conditioned upon the debtor's performance of the conditions of the security agreement.
A contrasting perspective is found in In re Edwards, 901 F.2d 1383 (7th Cir.1990). There, the Court interprets the effect of the statutes as follows:
901 F.2d at 1386. Responding directly to the Tenth Circuit's decision, the Court suggests that ". . . Lowry is not consonant with the plain language of the Bankruptcy Code . . . [and] renders the statutory scheme set up by § 521 and § 524 (the specific reaffirmation provisions) nugatory." 901 F.2d at 1386-87.
After a careful review of the authorities discussed, and others cited by the parties, this Court will adopt the position explained in Edwards by the Seventh Circuit for several reasons.
The Bankruptcy Code, by its very nature, is an attempt to balance the interests of debtors and their creditors. The Court is of the opinion that in passing Section 521, Congress was likely cognizant of the potential effects of limiting a debtor's options to three choices with respect to secured consumer debts: redemption, reaffirmation or surrender. The Court will not judicially create a fourth alternative by allowing the
By holding that debtors in Chapter 7 cases must make the statutory election, and that the Court will enforce it, does not leave those debtors without protection. First of all, Section 521(2) itself ensures that the debtor will have at least 75 days to execute one of the alternatives it describes. This allows ample time after the filing of a bankruptcy to attempt a negotiated reaffirmation, or to make other suitable arrangements to either replace or refinance the collateral.
In addition, both subsections (A) and (B) provide for extensions of the time limits for compliance with the election procedure for "cause" upon a timely request. 11 U.S.C. § 521(2)(A) and (B). These provisions would accommodate the cases in which the Court's discretion is needed to temper the operation of the statute, and would allow the Court to craft appropriate creditor protections as part of that process. This approach more closely serves the purpose of the statute by requiring the debtor to act promptly and mitigates against the insincere debtor.
Finally, it seems to the Court that the result in Lowry resembles a sort of single creditor Chapter 13 plan in that the secured creditor is deprived of the value of the collateral until the debtor decides the arrangement is no longer desirable or economical. If the debtor truly has the ability to pay the secured claim over time, this can be accomplished in a "real" Chapter 13 case, but only in a manner that properly recognizes the rights of the creditor.
The Court is convinced that it has the implied, if not express, authority to enter orders respecting the debtor's duty to state and perform a statutory intention as required by the Bankruptcy Code. To find that because there is no express enforcement language in Section 521 the Court is without power to enter an order in favor of the secured creditor would effectively frustrate the function of the statute. While the Code dictates that the trustee may enforce the statement of intention, 11 U.S.C. § 704(3), a trustee is not the only interested party in such matters. Should the secured creditor be required to seek a court order compelling the trustee to take action against a debtor to enforce the statement of intention? This would be an oddly inefficient system indeed.
The creditor's motion is proper and it will be granted by a separate order.