MEMORANDUM OF DECISION
ROBERT L. KRECHEVSKY, Bankruptcy Judge.
The issue in this matter is the enforceability, after a debtor's Chapter 7 case has closed, of two clauses in a retail installment contract ("the contract"), secured by the debtor's automobile, providing that a bankruptcy filing by the buyer is an event of default permitting repossession of the automobile. Cynthia L. Sokolowski, the debtor ("the debtor"), has raised the issue in a complaint she filed against BankBoston ("the Bank"), the holder of the contract. The complaint seeks a declaratory judgment and an injunction enjoining the Bank from repossessing the automobile solely because the debtor filed a bankruptcy petition. The parties, agreeing that the adversary proceeding is a core proceeding, have submitted the matter to the court for determination upon a stipulation of facts and the parties' briefs.
The debtor, then aged 54, on or about March 19, 1996, executed a retail installment contract for $10,090.00, payable over five years at 10.9 percent interest, to finance the purchase of a 1993 Pontiac Grand Am ("the automobile" or "the vehicle") from The M.J. Sullivan Automotive Corner ("the seller"). The automobile purchase price was $10,100.00. The seller simultaneously assigned the contract to the Bank. The contract, in which the debtor granted a security interest in the automobile to the contract holder, contains the following paragraphs:
The debtor filed a Chapter 7 petition on May 1, 1997. The court granted her an uncontested discharge on September 29, 1997. On July 7, 1997, the Chapter 7 trustee filed a report of no distribution, and, on November 17, 1997, the court closed the case. The Chapter 7 trustee did not in any way administer the automobile as an estate asset.
During the Chapter 7 case, the debtor and the Bank entered into a reaffirmation agreement, but within the statutory rescission period the debtor rescinded the agreement. The debtor, at all relevant times, has been current in her monthly payments to the Bank and has maintained adequate insurance coverage on the automobile. At the time the debtor filed her Chapter 7 petition, she owed the Bank approximately $7,900 under the contract. The parties have not stipulated to the value of the automobile on the petition date.
The Bank, on December 2, 1997, after the debtor's Chapter 7 case was closed, sent to the debtor and to her attorney a letter which included the following statement:
The debtor thereafter moved to reopen her Chapter 7 case in order to bring the declaratory
The debtor, in her brief, submitted a list of rulings in which courts have refused to enforce default-on-bankruptcy clauses. Four courts have held that such clauses are invalid post bankruptcy. See GNC Community Fed. Credit Union v. Stefano (In re Stefano), 134 B.R. 824, 827 (Bankr.W.D.Pa.1991) (finding that a bankruptcy court may, post bankruptcy, determine that a default-on-bankruptcy clause is unenforceable because it defeats the purpose of providing a fresh start to debtors and, pursuant to Bankruptcy Code § 105(a), prohibit a creditor from enforcing such clause); Century Bank at Broadway v. Peacock (In re Peacock), 87 B.R. 657, 659-60 (Bankr.D.Colo.1988) (concluding that default-on-bankruptcy clauses are unenforceable both during and after bankruptcy because they thwart the debtor's fresh start and impose a penalty on debtors for exercising their constitutional right to file bankruptcy); In re Cassell, 41 B.R. 737, 740 (Bankr.E.D.Va. 1984) (refusing to enforce a default-on-bankruptcy clause after the debtor had received a discharge because such clauses are unenforceable as a matter of law); Brock v. Amer. Sec. Bank (In re Brock), 23 B.R. 998, 1003 (Bankr.D.C.1982) (finding a default-on-bankruptcy clause unenforceable post discharge because "(1) to permit repossession by sole reliance on invocation of the bankruptcy clause would in effect result in a forfeiture, which courts of equity traditionally abhor" and "(2) the invocation of such a clause is contrary to the well-established public policy now evinced by the provisions of the Bankruptcy Code").
Other courts, while not reaching the question of their validity post discharge, have declined to enforce default-on-bankruptcy clauses before the debtor received a discharge. See Riggs Nat'l Bank of Wash., D.C. v. Perry (In re Perry), 729 F.2d 982, 984-85 (4th Cir.1984) (holding default-on-bankruptcy clauses unenforceable as a matter of law because they "clearly intrude upon" a "clear Congressional purpose to create a way by which debtors may obtain a fresh start towards reorganization of their financial obligations"); In re Winters, 69 B.R. 145, 146-47 (Bankr.D.Or.1986) (construing Bankruptcy Code § 541(c)(1)(B) as voiding default-on-bankruptcy clauses, which "threaten the fresh start which is the purpose of bankruptcy"); In re Bryant, 43 B.R. 189, 195-96 (Bankr.E.D.Mich.1984) (holding that Code § 541(c)(1)(B) invalidates default-on-bankruptcy clauses and noting that "[t]he Code is devoid of language which would revive or reinstate such clauses," which "create a penalty upon individuals who seek the protection afforded by the Bankruptcy Code" and "are a form of discriminatory treatment the bankruptcy laws were intended to prohibit"); First and Merchants Nat'l Bank v. Ballance (In re Ballance), 33 B.R. 89, 91 (Bankr.E.D.Va.1983) ("A part of the `fresh start' Congress provided is invalidation of those boiler plate, ipso facto, bankruptcy clauses"); General Motors Acceptance Corp. v. Rose (In re Rose), 21 B.R. 272, 277 (Bankr.D.N.J.1982) (concluding that default-on-bankruptcy clauses are unenforceable because, if valid, they would "defeat the purpose of providing a `fresh start' to debtors" and "render a penalty on debtors.")
The Bank, on its part, proffers in its brief a list of authorities concluding that there is no basis in the Bankruptcy Code, public policy, or legislative intent, to deny post-discharge or post-case-closing enforcement of a
Although this court, if left to its own analysis, would side with those authorities cited by the debtor, such analysis is not required. The court believes that the thorough and thoughtful ruling in In re Boodrow, 126 F.3d 43 (2nd Cir.1997), cert. denied, ___ U.S. ___, 118 S.Ct. 1055, 140 L.Ed.2d 118 (1998), is precedential and mandates the result, even though the present issue was not specifically addressed by the Boodrow court.
In Boodrow, the court affirmatively answered the question "whether a bankruptcy court may allow a debtor, who files for bankruptcy and is `current' on a car-purchase loan, to retain the collateral securing the loan and continue making monthly payments under the original loan agreement." 126 F.3d at 45. The court did not frame the question so as to limit its holding to pre-case closing situations. The Boodrow court adopted the concept of "reinstatement" to describe the situation when the debtor "retain[s] the collateral and continue[s] to perform under the loan agreement." 126 F.3d at 49. The court quoted approvingly from an article describing reinstatement as
126 F.3d at 49 n. 6 (quoting Joann Henderson, The Gaglia-Lowry Brief: A Quantum Leap from Strip Down to Chapter 7, 8 BANKR.DEV.J. 131, 137 (1991) (emphasis added)).
The Boodrow court's discussion of the options available to a creditor after reinstatement clearly contemplated a period beyond the closing of the debtor's case. The court observed
126 F.3d at 52 (emphasis added) (quoting In re Belanger, 118 B.R. 368, 372 (Bankr. E.D.N.C.1990), aff'd sub nom, Home Owners Funding Corp. of Am. v. Belanger, 128 B.R. 142 (E.D.N.C.1990), aff'd, 962 F.2d 345 (4th Cir.1992)).
This court concludes that under the Boodrow analysis and it principles, and as a necessary corollary thereof, the Bank, under
On the debtor's complaint for a declaratory judgment, a judgment will enter that paragraphs 10 and 12 of the retail installment contract, executed by the debtor on or about March 12, 1996, may not be enforced by the Bank, or any contract holder, solely for the reason that the debtor filed a bankruptcy petition, and BankBoston, its agents and assigns are enjoined from so enforcing such paragraphs. The debtor's request for reasonable attorney's fees is denied.