DUBINA, Circuit Judge:
Creditor Albany Government Employees Federal Credit Union ("AGE") appeals the district court's reversal of the bankruptcy court's order which held that a Chapter 7 bankruptcy debtor who has outstanding consumer debt may not retain the property securing the creditor's claim without redeeming the property or reaffirming the debt on the property under 11 U.S.C. § 521(2).
I. STATEMENT OF THE FACTS AND PROCEDURAL HISTORY
The parties stipulated to the relevant facts in the bankruptcy and district courts. On February 20, 1991, the debtors, Warren L. Taylor, Jr. and Cathy L. Taylor (the "Taylors"), filed a petition pursuant to 11 U.S.C. Chapter 7. AGE holds a first lien on the Taylors' vehicles, a 1991 Chevrolet S-10 pickup truck and a 1985 Chevrolet Caprice Classic.
The Taylors filed a statement of intention with respect to the property as required by 11 U.S.C. § 521(2) regarding property as security for consumer debt. The Taylors indicated on their statement an intention to retain the property; however, they failed to indicate whether they would reaffirm or redeem the collateral, the two options expressly set forth in 11 U.S.C. § 521(2) for retaining collateral serving as security for debt. At the creditors' meeting, the Taylors declared their intention to retain the vehicles and remain current on their obligations to AGE without reaffirming or redeeming.
AGE filed a motion to compel the Taylors to comply with 11 U.S.C. § 521 and specify their intention to either redeem the vehicles or reaffirm the debts secured by the vehicles. The Chapter 7 trustee also filed a motion to compel the debtors to comply with section 521 and adopted the allegations in AGE's motion.
The bankruptcy court entered an order compelling the Taylors to enter into a reaffirmation agreement or redeem the property. 138 B.R. 1018 (Bankr.M.D.Ga.1992). The Taylors appealed that order to the district court, which reversed the order of the bankruptcy court. AGE then perfected this appeal.
"Although this case has been reviewed on appeal by the district court, we review the bankruptcy court's findings as if this were an appeal from a trial in the district court." In re St. Laurent, 991 F.2d 672 (11th Cir.1993). The parties do not dispute the facts. Therefore, we review only the legal conclusions of the bankruptcy and district courts. These conclusions are reviewed de novo. Id.; See also In re Patterson, 967 F.2d 505, 508 (11th Cir.1992).
The debtors contend that 11 U.S.C. § 521(2) provides a Chapter 7 debtor who has consumer debts with the option to retain the collateral property and to keep current on the obligation under the existing contract. In contrast, AGE maintains that section 521(2) provides that a consumer debt holder may only retain the collateral and reaffirm the debt, retain the collateral and redeem it, or surrender the collateral.
The question presented here is whether 11 U.S.C. § 521(2) permits a Chapter 7 debtor to retain the property without reaffirming or redeeming if he continues to perform according to the repayment provisions of the note and underlying contract. This is an issue of first impression in this circuit. Other circuits addressing the issue have reached different conclusions regarding the debtor's duties under section 521. See Homeowners Funding Corp. v. Belanger (In re Belanger), 962 F.2d 345 (4th Cir.1992) (debtor may retain property without reaffirming or redeeming); In re Edwards, 901 F.2d 1383 (7th Cir.1990) (debtor must redeem or reaffirm to retain property); Lowry Fed. Credit Union v. West, 882 F.2d 1543 (10th Cir.1989) (within discretion of bankruptcy court debtor may retain property without reaffirming or redeeming).
AGE cites Edwards, 901 F.2d at 1385-86, in support of its argument that the language of section 521(2) clearly provides that a debtor shall retain the property and reaffirm the debt, retain the property and redeem, or surrender the property. This reasoning is based upon the plain language of section 521(2)(A) which states:
In support of its decision that section 521(2) is mandatory, the Edwards court relied upon the Sixth Circuit's conclusion in In re Bell, 700 F.2d 1053, 1056-58 (6th Cir. 1983),
Edwards, 901 F.2d at 1386, noted in Bell, 700 F.2d at 1056. Relying upon this reasoning and the 1984 Amendments to the Bankruptcy Code, the Edwards court concluded that the language of section 521 is mandatory. Id. at 1386-87.
Although the Tenth Circuit in Lowry reached a contrary result, the court noted that the language of section 521 is mandatory. "There is no room within the direct language of the section to presume [the language is not mandatory]." 882 F.2d at 1545. The court further stated:
Id. at 1545, n. 2. The court continued to address the enforcement of section 521(2) and stated that although a debtor may redeem property under 11 U.S.C. § 722, or reaffirm a debt pursuant to 11 U.S.C. § 524(c)(4), "nothing within the Code makes either course exclusive." Id. at 1546.
Several bankruptcy courts agree with the Seventh Circuit's analysis and have held that section 521(2) mandates that a debtor must make a choice either to reaffirm the debt, redeem the collateral or surrender the collateral. See, e.g., In re Kennedy, 137 B.R. 302 (Bankr.E.D.Ark.1992); In re Horne, 132 B.R. 661 (Bankr.N.D.Ga.1991); In re Chavarria, 117 B.R. 582 (Bankr.D.Idaho 1990); In re Stephens, 85 B.R. 854 (Bankr.D.Idaho 1988). In Kennedy, a creditor filed a motion seeking an order requiring a debtor to choose from among the three requirements of section 521(2). The bankruptcy court adopted the Edwards rationale and held that section 521 did not permit a debtor to retain the collateral and to make payments without reaffirming or redeeming. The court reasoned that if a debtor is permitted to retain the collateral without performing either redemption or reaffirmation, both of these alternatives would be rendered "nugatory." Id. at 304. "A Chapter 7 debtor would never have a reason to either reaffirm the debt or
The Taylors urge us to adopt the Fourth Circuit's holding in In re Belanger, 962 F.2d 345 (4th Cir.1992), which permits a debtor to retain his or her property and keep current on his or her obligation under the existing contract. They also rely on several bankruptcy opinions from this circuit. See, In re Shubert, 147 B.R. 618 (Bankr.N.D.Ga.1992); In re Windham, 136 B.R. 878 (Bankr. M.D.Fla.1992); In re Donley, 131 B.R. 193 (Bankr.N.D.Fla.1991); In re Hunter, 121 B.R. 609 (Bankr.N.D.Ala.1990). Most of these courts focused upon the phrase "if applicable" and reasoned that if a debtor wishes to retain secured property but does not want to redeem or reaffirm, then those options are not "applicable." This reasoning does not comport with the plain language of section 521 which states that "the debtor shall file with the clerk a statement of his intention with respect to the retention or surrender of such property, and if applicable. ...." 11 U.S.C. § 521(2)(A) (emphasis added). Referring to the language preceding the phrase "if applicable," it is clear when the options of redemption and reaffirmation would not be applicable. This language does not apply to a debtor's surrender of the property; it therefore must apply to a debtor's retention of property. If a debtor retains secured property, then the options of redemption and reaffirmation are applicable and the debtor is required to redeem or reaffirm.
The plain language of section 521(2)(B), which requires a debtor, within forty-five days of the filing of the statement of intention, to "perform his intention with respect to such property ...," indicates that the debtor must perform some act with respect to the property within a specified period of time. An option to retain and keep current is not an act capable of performance within forty-five days. This option provides that the debtor's performance not be concluded until the expiration of the contract, a period of time ordinarily beyond the forty-five day limit. Additionally, retention is not a duty that the debtor needs to "perform," as the debtor already has possession of the property.
We find the reasoning articulated by Judge Drake in Horne to be persuasive. Judge Drake stated:
132 B.R. at 663-64 (citations omitted).
We recognize Congress intended the bankruptcy laws to provide a debtor a "fresh start" by allowing a debtor to discharge all dischargeable debts while retaining assets that are exempt. See 11 U.S.C. §§ 727 and 522, respectively. Allowing a debtor to retain property without reaffirming or redeeming gives the debtor not a "fresh start" but a "head start" since the debtor effectively converts his secured obligation from recourse to nonrecourse with no downside risk for failing to maintain or insure the lender's collateral.
Section 521 mandates that a debtor who intends to retain secured property must specify an intention to redeem or reaffirm. Nothing in the plain language of the statute provides a debtor with an option to retain the property and to continue to make payments. "Courts must apply the law as enacted by Congress. The statutory language clearly expresses congressional intent, and, in the absence of any ambiguity, [this] court [will]
Because we hold the plain language of 11 U.S.C. § 521(2) does not permit a Chapter 7 debtor to retain the collateral property without either redeeming the property or reaffirming the debt, we reverse the judgment of the district court and remand this case with instructions to affirm the bankruptcy court's order.
REVERSED and REMANDED.
11 U.S.C. § 521(2) (emphasis added).