                                                                                                                           Opinions of the United
2004 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit


6-3-2004

In Re: Price
Precedential or Non-Precedential: Precedential

Docket No. 03-2084




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Recommended Citation
"In Re: Price " (2004). 2004 Decisions. Paper 567.
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                      PRECEDENTIAL      Andrea G. Green [ARGUED]
                                        Doroshow, Pasquale, Krawitz,
        UNITED STATES                    Siegel & Bhaya
       COURT OF APPEALS                 911 South Dupont Highway
     FOR THE THIRD CIRCUIT              P. O. Box 1428
                                        Dover, DE 19903
                                        Counsel for Appellants
             No. 03-2084
                                        W. J. Winterstein, Jr. [ARGUED]
                                        P. O. Box 917
             IN RE:                     Bryn Mawr, PA 19010
        MICHAEL B. PRICE;               Counsel for Appellee
        CHRISTINE R. PRICE,
                    Debtors             Eric L. Frank
                                        Miller, Frank & Miller
                                        21 South 12th Street
       MICHAEL B. PRICE;                640 PSFS Building
       CHRISTINE R. PRICE,              Philadelphia, PA 19107
                 Appellants             Counsel for Amicus-Appellants
               v.                       National Association of
    DELAWARE STATE POLICE               Consumer Bankruptcy Attorneys
     FEDERAL CREDIT UNION                     and
                                        Consumer Bankruptcy Assistance
                                        Project
            US TRUSTEE,
                 Trustee

                                              OPINION OF THE COURT
    Appeal from the United States
        District Court for the
         District of Delaware
                                        RENDELL, Circuit Judge.
     (D.C. Civil No. 02-cv-01339)
         District Court Judge:                 The Prices are chapter 7 debtors
   Joseph J. Farnan, Jr., Chief Judge   who wanted to use their automobiles while
                                        remaining current on their monthly auto
                                        loan payments. The lienholder, Delaware
       Argued January 12, 2004          State Police Federal Credit Union (“Credit
Before: SLOVITER, RENDELL, and          Union”), convinced the Bankruptcy Court
        ALDISERT, Circuit Judges.       and the District Court that section
                                        521(2)(A) of the Bankruptcy Code does
         (Filed June 3, 2004)           not permit the Prices to continue
                                        possessing the cars simply by paying their
bills, but instead allows the Prices only          section 521(2), namely: (1) surrender the
four options: surrender the cars, purchase         vehicles; or, (2) if they wished to retain the
them in a lump-sum payment, negotiate              vehicles, redeem the collateral by making
another loan that would attach post-               a lump sum payment; or (3) enter into a
petition liability, or claim a recognized          formal reaffirmation agreement. The
exemption under the Bankruptcy Code.               Prices relied on their Statement of
This issue has been the subject of no fewer        Intention and took no further action other
than eight discordant decisions of the             than keeping up the payments on the loans.
courts of appeals. Four courts of appeals          At the time of filing of their petition, the
have held that a debtor is not limited by          Prices were current on their payments on
the options enumerated in 521(2), while            the vehicle loans and they continued to
four others have held to the contrary. It          keep the loans current during the chapter 7
seems that the only thing our courts can           proceeding. On February 21, 2002, the
agree on is that we disagree. After a close        Credit Union filed a Motion to Compel
examination of the text and context of             Debtors to Elect to Surrender, Redeem, or
section 521(2)(A), we conclude that the            Reaffirm Secured Debt.
provision does not prevent nondefaulting
                                                          On June 25, 2002, the United States
debtors, such as the Prices, from retaining
                                                   Bankruptcy Court for the District of
secured property by keeping current on
                                                   Delaware granted the Credit Union’s
their loans.
                                                   motion, and on April 1, 2003, the United
                                                   States District Court for the District of
                                                   Delaware affirmed the order of the
                     I.
                                                   Bankruptcy Court. Therefore, the Prices
       Michael and Christine Price filed a         are currently under order to surrender,
petition for relief under chapter 7 on             reaffirm, or redeem their automobiles,
December 11, 2001. On their bankruptcy             although the effect of that order was stayed
schedules, the Prices listed two loans owed        by the District Court pending this appeal.
to the Credit Union, which were secured
by liens on their two motor vehicles.
Along with their petition, the Prices filed                             II.
a “Statement of Intention with Respect to
                                                           At the outset, we will examine the
Secured Debt,” indicating that they
                                                   justiciability of this controversy in light of
intended to continue regular payments to
                                                   recent communications received from the
the Credit Union on the two secured loans
                                                   parties regarding the effect of loan
and retain the two vehicles.
                                                   payments made by the Prices. We are
       Thereafter, the Credit Union                persuaded that this matter is not moot.
advised the Prices that their only choice in
connection with the retention of the cars
was to exercise one of the options stated in              On March 31, 2004, counsel for the

                                               2
Prices notified the panel that she believed         (1998)). It is reasonable to suppose that
the Prices had paid the amount due to the           the Credit Union will again encounter the
Credit Union under both auto loans and              same scenario with respect to section
that the matter may be moot. However,               521(2) with other borrowers of auto loans.
counsel urged us to decide the issue before         And owing to the typically short duration
us, as it fell under the exception to the           of these loans, the issue raised in this
mootness doctrine for issues “capable of            appeal would arguably evade judicial
repetition yet evading review.” In re               review.1    That this matter has been
Surrick, 338 F.3d 224, 230 (3d Cir. 2003).
The panel sought the Credit Union’s
response, and it too “beg[ged] for                        1
                                                           The dissent appears to question
resolution by this Court” because “the
                                                    whether the Credit Union is not the same
factual predicate central to this appeal
                                                    “complaining party” that may confront a
frequently recur[s] in the bankruptcy
                                                    similar legal quandary in the future.
courts in this circuit . . . .” We note that
                                                    However, it was the Credit Union that
although both parties urge us to decide the
                                                    moved the bankruptcy court to compel the
issue before us, parties may not stipulate as
                                                    Prices to either redeem, reaffirm, or
to whether a matter is moot. Kremens v.
                                                    surrender their automobiles. The Credit
Bartley, 431 U.S. 119, 134 n.15 (1977).
                                                    Union successfully defended that ruling in
This Court is duty-bound to independently
                                                    the District Court and has continued to
examine the issue of mootness. North
                                                    make that case to our Court. Thus, the
Carolina v. Rice, 404 U.S. 244, 246
                                                    Cred it Un ion is und oubtedly the
(1971).
                                                    complaining party in the action before us.
         Both parties make the argument that        Further, the dissent contends that it is
this case qualifies under the exception to          somehow “too speculative” to believe that
the mootness doctrine for those cases that          the Credit Union will again face a
are capable of repetition and yet which             borrower seeking chapter 7 protection.
evade review. “Under the ‘capable of                But the inquiry, as the dissent
repetition’ exception, a court may exercise         acknowledges, is whether there is a
its jurisdiction and consider the merits of a       “reasonable expectation” that the same
case that would otherwise be deemed moot            controversy will recur; we need not be
when ‘(1) the challenged action is, in its          absolutely certain of the future. As the
duration, too short to be fully litigated           Supreme Court has noted, “in numerous
prior to cessation or expiration, and (2)           cases . . . we have found controversies
there is a reasonable expectation that the          capable of repetition based on expectations
same complaining party will be subject to           that, while reasonable, were hardly
the same action again.’” Merle v. United            demonstrably probable.” Honig v. Doe,
States, 351 F.3d 92, 95 (3d Cir. 2003)              484 U.S. 305, 319 n.6 (1988); see also
(quoting Spencer v. Kemna, 523 U.S. 1, 17           Reich v. Local 30, Int’l Bhd. of Teamsters,
                                                    6 F.3d 978, 985 n.8 (3d Cir. 1993). We

                                                3
considered by several of our sister courts            paid in full but nevertheless argued that the
of appeals does not gainsay this point.               matter was capable of repetition yet
Indeed, given the high volume of personal             evading review.         Reply Br. at 6,
bankruptcies in this judicial circuit, and the        Sokolowski, 205 F.3d 532 (2d Cir. 2000)
twenty years of bankruptcy practice since            (Nos. 99-5048, 99-5054).2 Notwithstanding
the enactment of section 521(2), it is                this representation, the court held that
notable that this most basic issue of a               “Sokolowski ha[d] failed to proffer
debtor’s obligation under chapter 7 is a              competent evidence to support her claim
matter of first impression in this Court.             that this particular appeal ha[d] been
But in any event, even if this exception to           rendered moot. Specifically, she ha[d] not
the mootness doctrine is inapplicable, we             pointed to any evidence in the record of
cannot conclude on the record before us               her satisfaction of the BankBoston loan or
that this matter is moot.                             of her disposal of the vehicle in question.”
                                                      Sokolowski, 205 F.3d at 534. Here, there
        We doubt that the letters from
                                                      is a similar absence of any evidence
counsel, containing vague assertions as to
                                                      demonstrating mootness. Counsel for the
the satisfaction of the Prices’ loans, meet
                                                      Prices, like Sokolowski, stated her belief
the heavy burden of establishing mootness.
                                                      that the Prices’ loans were paid in full,
Princeton Cmty. Phone Book, Inc. v. Bate,
                                                      offering no evidence whatsoever to
582 F.2d 706, 710 (3d Cir. 1978) (“party
                                                      support that assertion. M oreover, while
arguing that a case is moot must bear a
                                                      the creditor in Sokolowski acknowledged
heavy burden of demonstrating the facts
                                                      full payment, in this case the Credit
underlying that contention” (quoting
                                                      Union’s response made no mention at all
United States v. W. T. Grant Co., 345 U.S.
                                                      of whether the obligations had been paid,
629, 633 (1953))). The Court of Appeals
                                                      whether it relinquished its right to
for the Second Circuit recently resolved a
                                                      enforcement, or whether it retained its
strikingly similar issue of mootness with
                                                      right to damages arising out of the order
respect to the same bankruptcy provision
                                                      on appeal requiring that the debtors must
under consideration in this appeal, section
                                                      redeem or reaffirm. We have no assertion
521(2). BankBoston, N.A. v. Sokolowski
                                                      by the Credit Union that the liens are fully
(In re Sokolowski), 205 F.3d 532, 534 (2d
                                                      satisfied, no evidence that would compel a
Cir. 2000). In Sokolowski, the debtor
                                                      f i n d ing of mootness, and no
represented to the court that the relevant
loans were paid in full. The creditor bank
acknowledged that the obligations were
                                                         2
                                                          While, as the dissent notes, this fact
                                                      was not specifically mentioned in the
easily conclude that the Credit Union can             Sokolowski opinion, it is clear that the
reasonably expect to encounter other                  record contains the creditor’s
borrowers that will file for personal                 acknowledgement that the loan had been
bankruptcy.                                           paid in full.

                                                 4
acknowledgment that it has no claim                 (A) within thirty days after the date of the
against the Prices. Because the present             filing of a petition under chapter 7 of this
controversy is justiciable, we conclude that        title or on or before the date of the meeting
it is proper to address the merits of the           of creditors, whichever is earlier, or within
Prices’ appeal.                                     such additional time as the court, for
                                                    cause, within such period fixes, the debtor
       Accordingly, we have jurisdiction
                                                    shall file with the clerk a statement of his
over the District Court’s order under 28
                                                    intention with respect to the retention or
U.S.C. § 158(d) and exercise plenary
                                                    surrender of such property and, if
review over the D istrict Co urt’s
                                                    applicable, specifying that such property is
interpretation of the Bankruptcy Code.
                                                    claimed as exempt, that the debtor intends
Official Comm. of Unsecured Creditors v.
                                                    to redeem such property, or that the debtor
R.F. Lafferty & Co., 267 F.3d 340, 346
                                                    intends to reaffirm debts secured by such
(3d Cir. 2001).
                                                    property;
                                                           (B) within forty-five days
                    III.                                   after the filing of a notice of
                                                           intent under this section, or
       The Bankruptcy Code requires
                                                           within such additional time
debtors to file a “statement of intention”
                                                           as the court, for cause,
with the bankruptcy court indicating
                                                           within such forty-five day
whether the debtor intends to retain or
                                                           period fixes, the debtor shall
surrender personal property subject to a
                                                           perform his intention with
security interest. 11 U.S.C. § 521(2).
                                                           respect to such property, as
Section 521 provides, in relevant part, that:
                                                           specified by subparagraph
       The debtor shall–                                   (A) of this paragraph; and
       (1) file a list of creditors,                       (C) nothing in subparagraphs
       and unless the court orders                         (A) and (B) of this paragraph
       otherwise, a schedule of                             shall alter the debtor's or the
       assets and liabilities, a                            trustee's rights with regard
       schedule of current income                           to such property under this
       and current expenditures,                            title.
       and a statement of the
                                                    11 U.S.C. § 521(1), (2) (emphasis added).
       debtor's financial affairs;
                                                           The meaning of section 521(2) has
       (2) if an individual debtor's
                                                    been contested since its insertion into the
       schedule of assets and
                                                    Bankruptcy Code in 1984. It is clear that
       liabilities includes consumer
                                                    debtors must inform the bankruptcy court
       debts which are secured by
                                                    whether they intend to retain or surrender
       property of the estate--
                                                    collateral. Of these two general options,

                                                5
surrender is straightforward. The options           retain personal property by remaining
available in order to retain property,              current on the payments under a loan
however, are complicated by the phrase “if          agreement.
applicable, specifying that such property is
claimed as exempt, that the debtor intends
to redeem such property, or that the debtor                             A.
intends to reaffirm debts secured by such
                                                             As noted at the outset, opinions of
property.”     11 U.S.C. § 521(2)(A).
                                                    the courts of appeals abound on this
Without a doubt, a debtor intent on
                                                    question, with the courts being evenly
retaining collateral has at least these three
                                                    divided. Both the Bankruptcy Court and
specified options, and may redeem the
                                                    the District Court aligned themselves with
property, reaffirm the underlying debt, or
                                                    the Courts of Appeals for the First, Fifth,
claim the property as exempt under section
                                                    Seventh and Eleventh Circuits, and
522(b). Redemption permits a debtor,
                                                    concluded that the “plain language” of
subject to court approval, to keep secured
                                                    section 521 allowed only three options for
property by paying the creditor, ordinarily
                                                    retaining property, i.e., redemption,
in lump-sum, either the fair market value
                                                    reaffirmation, and exemption. See Bank
or the “allowed secured claim.” 11 U.S.C.
                                                    of Boston v. Burr (In re Burr), 160 F.3d
§ 722. Reaffirmation, on the other hand, is
                                                    843, 847 (1 st Cir. 1998); Johnson v. Sun
retention effected through the negotiation
                                                    Fin. Co. (In re Johnson), 89 F.3d 249, 252
of a new loan agreement that would then
                                                    (5 th Cir. 1996); Taylor v. AGE Fed. Credit
survive any eventual discharge from
                                                    Union (In re Taylor), 3 F.3d 1512, 1516
bankruptcy. Finally, property can be
                                                    (11th Cir. 1993); In re Edwards, 901 F.2d
exempted pursuant to section 522(b). 3 The
                                                    1383, 1387 (7 th Cir. 1990). In so doing,
thorny question which we decide today is
                                                    the Bankruptcy Court and the District
whether these three options are exclusive,
                                                    Court rejected the views expressed by the
or whether section 521(2) contemplates
                                                    Courts of Appeals for the Second, Fourth,
additional choices, including the one
                                                    Ninth, and Tenth Circuits that section
asserted by the Prices, namely the ability to
                                                    521(2) does not set out an exhaustive list
                                                    of options for retention, and permits
                                                    debtors to retain property while keeping
    3
     Property may be “exempted” under               payments current. See McClellan Fed.
section 522 if it fits within the class and         Credit Union v. Parker (In re Parker), 139
amount specified therein. 11 U.S.C.                 F.3d 668, 673 (9 th Cir. 1998); Capital
§ 522. Up to $2,400 in value in motor               Communs. Fed. Credit Union v. Boodrow
vehicles can be exempted, as can interests          (In re Boodrow), 126 F.3d 43, 53 (2d Cir.
in household items up to $8,000 in                  1997); In re Belanger, 962 F.2d 345, 348
aggregate value, and certain liens can be           (4 th Cir. 1992); Lowry Fed. Credit Union
avoided to enable the debtor to have the            v. West, 882 F.2d 1543, 1546 (10th Cir.
benefit of the exemption. Id. § 522(d).

                                                6
1989).                                               Credit Union v. Boodrow, 197 B.R. 409
                                                     (N.D.N.Y. 1996); Home Owners Funding
        Not only have the appellate courts
                                                     Corp. v. Belanger, 128 B.R. 142 (E.D.N.C.
been divided as to the result, but their
                                                     1990). But precisely this difficulty, and
statutory interpretations and methods of
                                                     the reticulated nature of the Bankruptcy
construction have differed as well.
                                                     Code more generally, necessitates careful
Several courts have found the meaning of
                                                     attention to our method of statutory
section 521(2)(A)’s “if applicable”
                                                     construction. In this vein, we respectfully
language to be perfectly clear. Yet like
                                                     disagree with the interpretive approaches
beauty, clarity is often in the eye of the
                                                     taken by our fellow courts of appeals, for
beholder.      And notwithstanding their
                                                     we find that none are thoroughly consistent
perception of a plain meaning, these courts
                                                     with the mode of analysis followed by the
have arrived at polar opposite results: as
                                                     Supreme Court when it interprets the
plainly limiting a debtor’s ability to retain
                                                     Bankruptcy Code.         While noting the
collateral to the three options enumerated
                                                     difficulty of discerning such meaning, see
in the provision—exemption, redemption,
                                                     Dewsnup v. Timm, 502 U.S. 410, 435
or reaffirmation—versus plainly leaving
                                                     (1992) (“I have the greatest sympathy for
open other unmentioned options, including
                                                     the Courts of Appeals who must predict
the ability to retain collateral by
                                                     which manner of statutory construction we
maintaining current payments with a
                                                     shall use for the next Bankruptcy Code
creditor. Compare, e.g., Burr, 160 F.3d at
                                                     case”) (Scalia, J., dissenting), the Supreme
843 with Parker, 139 F.3d at 668. Yet
                                                     Court has followed certain ground rules,
another court of appeals has held, in
                                                     which guide our construction of section
contradistinction to the courts employing a
                                                     521(2) and lead us to the result we
plain meaning analysis, that section 521(2)
                                                     announce today.
is ambiguous and requiring consideration
of legislative history and policy for
clarification of congressional intent. See
                                                                         B.
Boodrow, 126 F.3d at 43.
                                                            We are to begin with the text of a
        Given the range of views among the
                                                     provision and, if its meaning is clear, end
courts of appeals, not to mention the
                                                     there. Hartford Underwriters Ins. Co. v.
opinions of the several able district and
                                                     Union Planters Bank, N.A., 530 U.S. 1, 6
bankruptcy courts that have confronted
                                                     (2000) (“Congress ‘says in a statute what
this issue, it is beyond question that section
                                                     it means and means in a statute what it
521(2) poses tough interpretive challenges.
                                                     says there.’” (quoting Connecticut Nat’l
See, e.g., Ramirez v. GM AC (In re
                                                     Bank v. Germain, 503 U.S. 249, 254
Ramirez), 280 B.R. 252 (C.D. Cal. 2002);
                                                     (1992)).     This truism of statutory
Am. Nat’l Bank & Trust Co. v.
                                                     construction may settle the matter in the
DeJournette, 222 B.R. 86 (W.D. Va.
                                                     run of the mill case, but when the plain
1998); Capital Communications Fed.

                                                 7
meaning of a provision is not self-evident,         Assocs., Ltd., 484 U.S. 365, 371 (1988))). 4
this prescription is merely a starting point.
Given the division among the courts, such
                                                            Thus, ambiguity does not arise
is the case here. But just because a
                                                    merely because a particular provision can,
particular provision may be, by itself,
                                                    in isolation, be read in several ways or
susceptible to differing constructions does
                                                    because a Code provision contains an
not mean that the provision is therefore
                                                    obvious scrivener’s error. Lamie v. United
ambiguous. “The plainness or ambiguity
                                                    States Trustee, 124 S. Ct. 1023 (2004).
of statutory language is determined by
                                                    Nor does it arise if the ostensible plain
reference to the language itself, the
                                                    meaning renders another provision of the
specific context in which that language is
                                                    Code superfluous. Id. at 1031. Rather, a
used, and the broader context of the statute
                                                    provision is ambiguous when, despite a
as a whole.” Robinson v. Shell Oil Co.,
                                                    studied examination of the statutory
519 U.S. 337, 341 (1997). Statutory
                                                    context, the natural reading of a provision
context can suggest the natural reading of
                                                    remains elusive. In such situations of
a provision that in isolation might yield
                                                    unclarity, “[w]here the mind labours to
contestable interpretations. Specifically, in
                                                    discover the design of the legislature, it
interpreting the Bankruptcy Code, the
                                                    seizes every thing from which aid can be
Supreme Court has been reluctant to
                                                    derived,” United States v. Fisher, 6 U.S. (2
decla re its provisions ambiguous,
                                                    Cranch) 358, 386 (1805) (Marshall, C.J.),
preferring instead to take a broader,
                                                    including pre-Code practice, policy, and
contextual view, and urging courts to “not
                                                    legislative history.
be guided by a single sentence or member
of a sentence, but look to the provisions of               Yet policy, pre-Code practice, and
the whole law, and to its object and                such other tools of construction are to be
policy.” Kelly v. Robinson, 479 U.S. 36,            relied upon only when, ultimately, the
43 (1986); see also Official Comm. of               meaning of a provision is not plain.
Unsecured Creditors of Cybergenics Corp.,           When, however, we can arrive at a natural
ex rel. Cybergenics Corp. v. Chinery, 330           reading of a Code provision, informed not
F.3d 548, 559 (3d Cir. 2003) (en banc)
(hereinafter Cybergenics) (“As the
Supreme Court has often noted,                        4
                                                      In Cybergenics, for example, this Court
‘[s]tatutory construction [] is a holistic
                                                    analyzed the meaning of a Bankruptcy
endeavor,’ and this is especially true of the
                                                    Code provision with reference to several
Bankruptcy Code.” (quoting United Sav.
                                                    contextual features including related
Ass’n of Tex. v. Timbers of Inwood Forest
                                                    provisions, the role of creditors in chapter
                                                    11 bankruptcy proceedings, and the
                                                    equitable powers of bankruptcy courts to
                                                    achieve the goals of th e Code.
                                                    Cybergenics, 330 F.3d at 559–69.

                                                8
only by the language of the provision itself
but also by its context, the burden to
                                                                        C.
persuade us to adopt a different reading is
“exc eption ally hea vy.”          Hartford               We begin with the pertinent text of
Underwriters, 530 U.S. at 9 (quoting               section 521(2)(A).           Congress has
Patterson v. Shumate, 504 U.S. 753, 760            mandated that a debtor must file a
(1992)). In Hartford Underwriters, the             statement of intention “with respect to the
Supreme Court faced the question whether           retention or surrender of such property
section 506(c) of the Code, which                  and, if applicable, specifying that such
specified that a “trustee may” recover             property is claimed as exempt, that the
certain costs from property securing a             debtor intends to redeem such property, or
claim, authorized parties other than the           that the debtor intends to reaffirm debts
trustee to seek recovery. Petitioner argued        secured by such property.” 11 U.S.C.
that the mention of only “trustee” did not         § 521(2)(A) (emphasis added).             The
foreclose the possibility that other parties       trouble lies with the phrase “if applicable.”
may also invoke section 506(c). While              Do those words merely indicate that the
conceding that this expansive reading was          three options—exemption, redemption,
possible, the Court found that the more            and reaffirmation—are relevant when a
“natural reading” was that the section             debtor intends to retain and not applicable
limited the availability to recover to             when a debtor chooses to surrender the
trustees alone. The Court noted that               collateral? If so, section 521(2)(A) sets
“[s]everal contextual features” supported          out an exhaustive set of retention options.
its conclusion, including an examination of        Or does “if applicable” mean “if” the
other related provisions in the Code. Id. at       debtor wishes to choose any of the three
6. Having settled on what was the most             options that follow on its heels, i.e., when
plausible reading in light of the statutory        redemption, reaffirmation, and exemption
context, the Court dismissed petitioner’s          “apply,” that intention must be specifically
arguments concerning pre-Code practice             stated? If the latter construction is correct,
and policy considerations. The Court               then section 521(2)(A) leaves available
found that the language of section 506(c)          other methods of retention, such as by
left “no room for clarification by pre-Code        keeping the loan current.
practice.” Id. at 11. The Court further
                                                          The Courts of Appeals for the First,
concluded that its “natural reading of the
                                                   Fifth, Tenth, and Eleventh Circuits have
text” could not be overcome by an
                                                   concluded that the plain meaning of
alternative interpretation’s superior policy
                                                   section 521(2)(A) limits a debtor to
consequences. Id. at 13. We approach
                                                   specifying one of the three options
section 521(2) guided by the above
                                                   enumerated in the provision if retention is
principles of construction.
                                                   “applicable.”     The First Circuit, for
                                                   instance, has reasoned that “it is perfectly


                                               9
conventional usage, and perfectly good                   supports the opposite conclusion. In
English, for Congress to have phrased                    Parker, the Court of Appeals for the Ninth
§ 521(2)(A) in the way it did because it                 Circuit found it plain that section
intended chapter 7 debtors to elect                      521(2)(A) did not limit debtors to the three
surrender or retention, and then, ‘if’                   options set forth in the statute, i.e.,
retention is ‘applicable,’ to specify which              redemption, reaffirmation, and exemption.
of the following three retention options                 139 F.3d at 673. The court held that the
they intend to employ.” Burr, 160 F.3d at                provision only mandated the filing of a
848 (citing Boodrow, 126 F.3d at 59                      statement of intention.          “Then, ‘if
(Shadur, J., dissenting)); see also Taylor, 3            applicable,’ —that is, if the debtor plans to
F.3d at 1516 (finding that plain language                choose any of the three options listed later
of section 521 provides a debtor with only               in the statute . . . the debtor must so
three option to retain collateral); Johnson,             specify in the statement of intention.” Id.
89 F.3d at 252 (holding that the “clear                  The court concluded that other retention
language” of section 521(2) limits a debtor              options, including retaining property while
to the options enumerated in the                         keeping a loan current, were unaffected by
provision); Lowry, 882 F.2d at 1545 (“The                section 521(2)(A). Having found the
plain English of the section requires every              meaning of section 521(2)(A) to be plain
debtor [intent on retaining collateral] . . . .          on its face, the court found no reason to
to elect whether to redeem or reaffirm.”). 5             wade into legislative history or policy.
                                                         Similarly, the Court of Appeals for the
      By contrast to these courts, the
                                                         Fourth Circuit has held that if Congress
Courts of Appeals for the Fourth and
                                                         had intended to limit a debtor to the three
Ninth Circuits have found that the plain
                                                         options in section 521(2), it could have
language of section 521(2)(A) clearly
                                                         said so. See Belanger, 962 F.2d at 345.
                                                         Section 521(2)(A) “would have simply
  5                                                      provided: ‘and specifying that such
    Notwithstanding this restrictive reading
                                                         property is claimed as exempt, that the
of section 521(2)(A), the Tenth Circuit in
                                                         debtor intends to redeem such, or that the
Lowry held that bankruptcy courts had the
                                                         debtor intends to reaffirm debts secured by
discretion to permit a debtor to choose
                                                         such property.’” Id. at 348. Moreover, the
other retention options.           The court’s
                                                         leading bankruptcy treatise is in accord
reasoning emphasized the absence of any
                                                         with this reading of section 521(2):
express means to enforce section 521(2).
                                                         “Nothing in section 521(2) requires the
Lowry, 882 F.2d at 1547 (“[A]lthough we
                                                         debtor to choose redemption, reaffirmation
regard as mandatory the provisions of
                                                         or surrender of the property to the
[section 521(2)], we do not believe those
                                                         exclusion of all other alternatives. Section
p r o v i s io n s m a k e r e d e m p t io n o r
                                                         521(2) merely requires a statement of
reaffirmation the exclusive means by
                                                         whether the debtor intends to choose any
which a bankruptcy court can allow a
                                                         of those options, if applicable.” 5 Collier
debtor to retain secured property.”).

                                                    10
on Bankruptcy ¶ 521.10[2] (15th rev. ed.            to “perform his intention with respect to
2004) (emphasis in original) (footnote              s u c h p r o p e rty, as spe c i f ie d b y
omitted).                                           subparagraph (A)” within forty-five days.
                                                    This time-limit has been cited by appellees
        Thus, an isolated reading of the “if
                                                    and several of our fellow courts of appeals
applicable” phrase has led to diametrically
                                                    as strong support for reading section
opposed results. “If applicable” may be
                                                    521(2)(A) as to only permit the three
fairly read to limit a debtor’s retention
                                                    enumerated options for retention. These
options to redemption, reaffirmation, and
                                                    courts have reasoned that the regular
exemption but it may also be fairly read to
                                                    payments to a lender cannot be
leave open the possibility of other options.
                                                    “performed” within forty-five days after
Nothing in the language of section
                                                    the filing of a notice of intent. 11 U.S.C.
521(2)(A) suggests one reading over
                                                    § 521(2)(B); Burr, 160 F.3d at 847 (citing
another, which in part explains the
                                                    Boodrow, 126 F.3d at 59 (Shadur, J.,
contrasting judicial interpretations. In
                                                    dissenting)).       But we do not view
light of this division of opinion, we
                                                    subparagraph (B) as necessarily helpful,
conclude that sec tion 521(2)(A)’s
                                                    one way or the other, in our interpretation
command reasonably admits of two
                                                    of (A).
readings. But such equivocality is not
enough to conclude that the provision is                    Section 521(2)(B) should not be
ambiguous. Proper statutory construction            read as mandating that debtors must
requires us to situate section 521(2)(A) in         entirely consummate their stated intention
the context of the Code. “A provision that          within forty-five days. See 5 Collier on
may seem ambiguous in isolation is often            Bankruptcy ¶ 521.10[3] (15 th rev. ed.
clarified by the remainder of the statutory         2004). Several illustrations make this
scheme— because the same terminology is             clear. While surrender could be made by
used elsewhere in a context that makes its          a debtor, a creditor may decline to accept
meaning clear, or because only one of the           surrendered collateral.      Debtors and
perm issible meanings produces a                    creditors may not agree on the terms of a
substantive effect that is compatible with          reaffirmation agreement. And even if
the rest of the law.” Timbers of Inwood,            negotiation yields an agreement, a court
484 U.S. at 371 (citation omitted). We              may nevertheless decline to approve it if,
therefore turn to other provisions, first           for instance, it concludes that a debtor,
subparagraphs (B) and (C) of section                unrepresented by counsel, negotiated an
521(2), then to the Code in general, to see         agreement that would not be in that
if they help guide our reading of (A).              debtor’s best interests. See 11 U.S.C.
                                                    § 524(c)(6)(A)(ii).      Even with court
                                                    approval, the Code permits debtors to
                    D.                              rescind a reaffirmation agreement any time
                                                    prior to discharge or within sixty days of
       Section 521(2)(B) requires a debtor

                                               11
filing of the agreement with the court.              section 521(A) or (B) as impinging on the
Moreover, a creditor’s challenge to a claim          substantive rights guaranteed by other
for exemption may require more than                  provisions. And, our examination of the
forty-five days. Thus, section 521(2)(B)             substantive rights provided elsewhere in
cannot really mean that a debtor must fully          the Code guides us to conclude that
accomplish the option set out in the                 although unstated in section 521(2),
statement of intention within this time              debtors do have the option to retain
frame. Read reasonably, section 521(2)(B)            property while staying current on loan
requires debtors to take steps to act on an          payments. In other words, the Code
intention to either retain or surrender.             anticipates and affords the retention option
Indeed, the authoritative Collier on                 that the Prices have selected.
Bankruptcy describes the provision as a
                                                             This is because, when viewed as a
“guideline signaling a trustee as to when
                                                     whole, the Bankruptcy Code allows
he or she should take action to move a
                                                     debtors to retain collateral, and keep
chapter 7 case to its conclusion by
                                                     current on their loans, so long as that
ensuring that the debtor takes those steps
                                                     collateral is adequately protected. This
remaining to be taken.” Id. And, steps
                                                     choice is not a “fourth option,” fashioned
toward retention with ongoing payments
                                                     as a novel exception to the Code; it is the
can surely be taken in the required time
                                                     norm of chapter 7 bankruptcy law. See
frame. We, therefore, do not read section
                                                     Burr, 160 F.3d at 847 (characterizing
521(2)(B) as necessarily excluding the
                                                     option to retain and keep current as an
reading the Prices urge. They did perform
                                                     “unstated fourth option”). Upon the filing
their intention to retain within 45 days by
                                                     of a chapter 7 proceeding, all of the
keeping their payments current in that
                                                     property of the debtor becomes property of
period. We next turn to subparagraph (C)
                                                     the estate, and the trustee takes over that
of section 521(2).
                                                     property and administers it.           At the
                                                     moment the petition is filed, all secured
                                                     creditors are held at bay by virtue of the
                     E.
                                                     provisions of the automatic stay. 11
        Section 521(2)(C) provides that              U.S.C. § 362(a). The automatic stay does
“nothing in the subparagraphs (A) and (B)            not, however, confer to a debtor unfettered
of this paragraph shall alter the debtor’s or        rights over collateral; a creditor’s interest
the trustee’s rights with regard to such             in its collateral remains preserved. A
property under this title.” We view this             secured creditor retains the right to
subparagraph to be of enormous aid in our            “adequate protection” of its collateral,
reading of section 521(2)(A). Here,                  which means it is entitled to have the value
Congress has directed that courts afford             of its collateral maintained at all times, and
debtors the rights provided elsewhere in             it can obtain relief from the automatic stay
the Code, specifically telling us not to read        and take back its collateral at any time if


                                                12
that interest is not adequately protected or        Lowry, 882 F.2d at 1546 (“Congress
for other “cause.”        See 11 U.S.C.             provided neither a penalty for a debtor’s
           6
§ 362(d). A persistent failure to make              failure to comply with § 521(2) nor a
monthly payments under loan documents               specific remedy for a creditor as a
can constitute cause for granting relief            consequence of such a failure.” (footnote
from the automatic stay. See, e.g., In re           omitted)). Thus, if permitted to keep their
James River Assoc., 148 B.R. 790, 797               cars and honor their agreements with their
(E.D. Va. 1992); In re Kerns, 111 B.R.              creditors, the Prices would be availing
777, 789-90 (S.D. Ind. 1990); In re                 themselves of rights guaranteed by the
Klepper, 69 B.R. 98, 100 (Bankr. M.D. Pa.           Code.
1987).     If the value of collateral is
                                                           The rest of the Code sets out a
threatened, creditors may seek adequate
                                                    period of time during which it is
protection and relief from the automatic
                                                    anticipated the debtor will retain property.
stay, giving the permission to foreclose on
                                                    Generally applicable provisions of the
the property. However, as long as the
                                                    Bankruptcy Code permit the trustee to
creditor is adequately protected, i.e., the
                                                    move to avoid liens on property, and
debtor is not harming the collateral and its
                                                    permit the debtor to convert the chapter 7
value is being maintained (ideally, through
                                                    proceeding to a chapter 13 proceeding.
the making of regular payments), the
                                                    Also, the trustee is empowered to sell
substantive provisions of the Bankruptcy
                                                    property of the estate pursuant to
Code, and the notice provisions of section
                                                    section 363, and the specific provisions of
521(2), do not give the secured creditor a
                                                    chapter 7 provide that the trustee is
right to take any action whatsoever. See
                                                    obligated to collect and reduce to money
                                                    the property of the estate and to be
                                                    accountable for all such property. 11
  6
   Section 362(d) provides in part that:            U.S.C. § 704(1)(2).
      On request of a party in
                                                             At the close of a chapter 7
      interest and after notice and
                                                    proceeding, but before a final distribution
      a hearing, the court shall
                                                    of property of the estate, the trustee is to
      grant relief from the stay
                                                    dispose of any property in which an entity
      provided under subsection
                                                    other than the estate has an interest, such
      (a) of this section, such as
                                                    as a lien, and that has not been otherwise
      by terminating, annulling,
                                                    disposed of. See id. § 725. In addition,
      modifying, or conditioning
                                                    under section 554, the trustee may
      such stay—
                                                    a b a n d o n p r o p e r t y th a t i s o f
      (1) for cause, including the
                                                    “inconsequential value and benefit to the
      lack of adequate protection
                                                    estate,” which would include property in
      of an interest in property of
                                                    which the estate has little interest by virtue
      such party in interest.
                                                    of the amount of a lien held by a secured
11 U.S.C. § 362(d)(1).

                                               13
creditor. Id. at § 554. Routinely, property          instance, subsection (1) requires the filing
that the debtor desires to keep, the value of        of a list of creditors; subsection (3),
which is less than the lien securing it, is          cooperation with the trustee; subsection
abandoned to the debtor. And, under                  (5), appearing at a hearing; and, subsection
section 727, the debtor is to receive a              (2), notice to the creditor in certain
discharge from all his debts, thus giving            circumstances.
the debtor a “fresh start.” Id. § 727. Thus,
we see that several options for dealing
with property are provided for elsewhere
                                                     either action. The statement of intention
in the Code and are not listed in
                                                     may be amended, and the statute makes
section 521. These provisions lose their
                                                     clear that nothing in section 521(2) may
meaning if the choices available in the first
                                                     alter the debtor's rights, such as the rights
forty-five days are limited by section
                                                     to exempt or redeem property. Even if the
521(2)(A).
                                                     debtor fails to indicate an intent to redeem
         The existence of these other                or exempt property, that failure does not
substantive rights leads us to the                   preclude either action.” 5 Collier on
conclusion that section 521(2), when                 Bankruptcy ¶ 521.10[2] (footnotes
viewed in the context of the entire                  omitted).     Further, Collier notes that
Bankruptcy Code, is not intended to                  “because the statute is intended to affect
deprive the Prices of broad retention                only procedure, and not substantive rights
options.                                             of the debtor, the debtor may still decide
                                                     not to follow through on the stated
                                                     intention, and choose, for example, not to
                     F.                              redeem or reaffirm even though an
                                                     intention to do so was originally stated.”
       We also believe that viewing
                                                     Id. ¶ 521.10[4] (footnote omitted). If
section 521(2) as serving a procedural,
                                                     section 521 is viewed, however, as
rather than substantive, function in the
                                                     limiting the debtor’s options, does that not
Bankruptcy Code makes sense. The
                                                     necessarily mean that the debtor must
provision sets forth a debtor’s obligations
                                                     follow through on one of these three
in all bankruptcy proceedings.7         For
                                                     options (presumably, within 45 days) and
                                                     perhaps suffer loss of the property in a
                                                     motion for relief from the stay – based on
  7
       Viewing section 521 as a notic e              cause – if he fails to do so? It is difficult
provision also makes sense when one                  to reconcile this thinking with the specific
considers the ramifications of not giving            provision that this section is not intended
notice. The leading bankruptcy treatise              to affect substantive rights.            Not
explains that, “even if the debtor fails to          surprisingly, the opinions that proceed
indicate an intent to redeem or exempt               along these lines have not confronted this
property, that failure does not preclude             conundrum.

                                                14
       While several actions taken by                any action other than continuing to receive
debtors necessitate notice, others do not.           the bargained for amounts due.
The notice required in section 521(2) has
                                                            Accordingly, we read the statutory
pragmatic implications. An intention to
                                                     language of section 521 on its own and in
redeem secured property presupposes a
                                                     the context of the Code, as setting forth a
dialogue with the creditor, as does
                                                     notice provision that does not limit a
negotiating the reaffirmation of an
                                                     debtor’s substantive retention options to
underlying debt. Further, creditors and
                                                     the three stated therein.
trustees have the opportunity to object to a
debtor’s claims that certain property is
statutorily exempt from distribution to
                                                                          G.
creditors. See Bankruptcy Rule 4003(b);
Taylor v. Freeland & Kronz, 503 U.S. 638,                   Because our view that section
639 (1992). Consequently, a debtor’s                 521(2)(A) does not bar nondefaulting
intention to redeem, reaffirm, or claim an           debtors from retaining collateral is based
exemption is valuable information for a              on the plain language of the statute, the
secured creditor to learn at the beginning           burden to persuade us to adopt a different
of a chapter 7 proceeding, when a                    reading is “exceptionally heavy.” Hartford
lienholder is deciding whether to contest a          Underwriters, 530 U.S. at 9. We next
bankruptcy, including relief from the                consider whe ther any extratextual
automatic stay. In contrast to these modes           indicators, such as legislative history and
of retention, electing to keep collateral by         policy, would cause us to depart from our
remaining current on o ne’s loan                     conclusion.
obligation—essentially affording the
                                                             There is not a hint in the legislative
protection required by the Code—does not
                                                     history that Congress intended to prevent
require specific creditor action. If the
                                                     the Prices from retaining collateral as the
debtor does not default, “the secured
                                                     Prices have done. Such a significant
creditor has all the information necessary
                                                     alteration in the substantive rights of
to make a decision regarding the collateral.
                                                     debtors is not only doubtful in light of the
Indeed, the secured creditor has little to do
                                                     plain language of the provision, but would
under such circumstances except wait for
                                                     have, we believe, occasioned some
the expiration of the automatic stay.” Scott
                                                     mention in the pages of the Congressional
B. Ehrlich, The Fourth Option of Section
                                                     Record. See Timbers of Inwood, 484 U.S.
521(2)(A)— Reaffirmation Agreements
                                                     at 380 (holding that “it is most improbable
and the Chapter 7 Debtor, 53 Mercer L.
                                                     that [a significant change to bankruptcy
Rev. 613, 656 (2002). Sensibly, section
                                                     procedure] would have been made without
521(2)(A)’s notice requirements do not
                                                     even any mention in the legislative
implicate a debtor’s intention to retain
                                                     history.”). To the contrary, what little
collateral by remaining current because the
                                                     legislative history there is underscores the
option does not require creditors to take

                                                15
correctness of our reading of section               place behind the veil of the automatic stay,
521(2). 8                                           secured creditors possessed virtually no
                                                    information about their collateral.
        Section 521(2) was inserted into the
                                                    Creditors who initiated proceedings to lift
Bankruptcy Code by the Bankruptcy
                                                    the stay often learned that the debtors were
Amendments and Federal Judgeship Act of
                                                    intending to surrender the collateral
1984, Pub. L. No. 98-353, 98 Stat. 333-
                                                    without a contest all along. The coalition
392 (1984). But Congress deliberated over
                                                    of creditors recommended a notice
its basic form as early as 1981, when the
                                                    provision in the Code to remedy this
Senate Judiciary Subcommittee on Courts
                                                    communication failure.
heard testimony concerning the operation
of the Bankruptcy Reform Act of 1978. At                    After extensive debate, earlier
these hearings, a coalition of bankers,             versions of 521 were reported out of the
credit unions, finance companies, oil               Senate Judiciary Committee in both 1982
companies, and retailers introduced a               and 1983. Perhaps the attention this issue
proposal to create a notice provision that          received from Congress from 1981
culminated in the enactment of section              through 1983 explains the paucity of
521(2). 9 These various creditors explained         legislative history surrounding section
that because chapter 7 bankruptcies took            521(2)’s ultimate enactment in 1984, when
                                                    the bill was passed without extensive
                                                    debate or published committee reports.
   8
    See Ehrlich, supra, at 630 (observing           Indeed, the only shred of legislative history
that “detailed” committee reports for               comes in the form of an exchange on the
earlier, similarly drafted versions of              floor of the House of Representatives. The
section 521(2) confirm that a debtor is not         colloquy, between Representative Synar
limited to retention, reaffirmation, and            and Representative Rodino, who was then
exemption).                                         chairman of the House Judiciary
                                                    Committee, is illuminating.            When
       9
      The following discussion relies on            Representative Synar asked for an
Bankruptcy Judge A. Thomas Small’s                  explanation of debtors’ rights under
comprehensive survey of section 521(2)’s            section 521(2)(C), Representative Rodino
legislative history. In re Belanger, 118            replied that “this section is designed to
B.R. 368, 370–72 (Bankr. E.D.N.C. 1990),            make it clear that the newly imposed duty
aff’d, 962 F.2d 345 (4th Cir. 1992); see            on the debtor to act promptly with regard
also Boodrow, 126 F.3d at 50 (relying               to property which is security for a
extensively on Judge Small’s discussion of          creditor’s claim does not affect the
legislative history). Judge Small’s analysis        substantive provisions of the code which
is particularly compelling as he was one of         may grant the trustee or debtor rights with
the witnesses who testified before the              regard to such property.” 130 Cong. Rec.
Senate Subcommittee in 1981. In re                  6204 (1984). These comments underscore
Belanger, 118 B.R. at 371 n.4.

                                               16
our construction of the plain language of            reaffirmation agreement—are to be
section 521(2), confirming that section              celebrated as preferred under the Code. In
521(2) concerned timing and notice and               fact, the opposite is probably more to the
was not intended to alter the substantive            point, as we will discuss below. But, even
rights of debtors or trustees. Cf. Barnhart          if we were concerned as to the
v. Sigmon Coal Co., 534 U.S. 438, 457                disappearance of these options, the Credit
n.15 (2002) (finding that floor statements           Union has simply not shown that this
could not outweigh the clear and                     result will follow. As the Second Circuit
unambiguous language of a statute).                  has recognized, a debtor with an option to
                                                     retain collateral while keeping current may
       The legislative background of
                                                     nevertheless have sound reasons to
section 521(2) indicates that Congress
                                                     reaffirm. “[A] debtor may seek to reaffirm
enacted a notice provision in response to
                                                     in order to reestablish credit standing after
creditors’ complaints that they had
                                                     a bankruptcy discharge, or if the debtor
insufficient information of a debtor’s
                                                     was not current on the loan when the
intentions. There is no hint that the
                                                     bankruptcy petition was filed, to obtain a
provision was to serve another purpose or
                                                     new agreement that would provide for the
to remedy other ills. At the very least,
                                                     right to cure the arrearage and avoid
there is no indication that Congress
                                                     default.” Id. at 52. In short, our decision
enacted section 521(2) to aid creditors
                                                     does not nullify redemption, reaffirmation,
somehow menaced by debtors who
                                                     and exemption as options. Certainly the
dutifully met their payment obligations.
                                                     Credit Union has not adduced any
        Relatedly, a few of our sister courts        evidence of this dramatic result. Given
of appeals have argued that reading section          that over twenty states currently offer
521(2)(A) to permit retention by staying             debtors the retention option the Prices
current would unfairly harm creditors in             have selected, it would not have been
two ways.       First, these courts have             difficult for the Credit Union to advert to
reasoned that no rational debtor would               some evidence that the sky has fallen.
elect to redeem or reaffirm if the debtor            Tellingly, the Credit Union has not done
could exercise the option the Prices have            so. While we do not doubt that retention
chosen. See, e.g., Boodrow, 126 F.3d at              while staying current may be “the most
60 (Shadur, J., dissenting).            This         advantageous option” for some chapter 7
observation lacks persuasive force. First            debtors, id. at 60 (Shadur, J., dissenting),
of all, it is not entirely clear that the            our construction of the plain language of
d r a c o n i an       c h o i c e s      o f        section 521(2) does not turn on the relative
redemption— ordinarily untenable for                 desirability of the various rights provided
chapter 7 debtors who are, by definition,            in the Code.
insolvent and unlikely to possess the funds
                                                            Second, some courts have been
to buy their secured property outright—or
                                                     troubled that allowing this option of
of the negotiation of an onerous

                                                17
retention somehow transforms secured                 cushion’—the value of the property after
loans into nonrecourse debt without any              deducting the claim of the creditor seeking
obligation to maintain collateral in good            relief from the automatic stay and all
condition. See, e.g., Taylor, 3 F.3d at              senior claims.” Nantucket Investors II v.
1515–16 (“Allowing a debtor to retain                California Fed. Bank (In re Indian Palms
property without reaffirming or redeeming            Assocs.), 61 F.3d 197, 207 (3d Cir. 1995).
gives the debtor not a ‘fresh start’ but a
‘head start.’”). The purported evil of
                                                               However, some courts have
discharging personal liability of a debtor is
                                                     questioned whether debtors possess an
not worthy of discussion, as a discharge is
                                                     incentive to maintain secured property
the obvious and inevitable purpose of a
                                                     absent the threat of personal liability. The
bankruptcy proceeding. Further, it is not
                                                     fear is overstated and entirely hypothetical.
clear to us, nor was it clear to the Second
                                                     It is just as reasonable to assume, given the
Circuit, that creditors would be vulnerable
                                                     difficulty insolvent consumers may have in
to financial injury from nondefaulting
                                                     obtaining future financing, that such
debtors who pay their bills. Boodrow, 126
                                                     debtors would have ample incentive to
F.3d at 52 (doubting whether creditors
                                                     maintain their collateral, such as their
“will necessarily or even probably suffer
                                                     a u t o m o biles, in good c ondi tio n.
financial injury when a debtor who is
                                                     Additionally, it is commonplace for
current on a loan retains the collateral and
                                                     creditors to insist on certain maintenance
continues to make the payments required
                                                     requirements in the original loan
under the loan agreement”).
                                                     agreement. “In fact default clauses which
        The loss of personal liability does          permit the lender to declare a default in the
not necessarily mean that creditors are              event that the creditor deems its security
vulnerable. Indeed, a creditor’s financial           interest insecure are specifically authorized
interest in the collateral is already                by the Uniform Commercial Code and may
safeguarded by the adequate protection               be exercised by a secured lender if it has a
provision of the Code. As we have                    good faith belief that the prospect for
discussed above, section 362(d)(1) would             payment is impaired.” Boodrow, 126 F.3d
allow creditors to seek to lift the automatic        at 52 (quoting In re Belanger, 118 B.R. at
stay if collateral is unprotected. See 11            372). Accordingly, a creditor’s financial
U.S.C. § 362(d)(1) (permitting lifting of            interests are not necessarily compromised
automatic stay “for cause, including the             by allowing debtors to retain collateral
lack of adequate protection of an interest           while continuing to make their monthly
in property of such party in interest”). We          payments.
have explained that, “in determining
                                                            In the event that debtors such as the
whether a secured creditor’s interest is
                                                     Prices do default on their payments, we
adequately protected, most courts engage
                                                     agree with the Second Circuit’s conclusion
in an analysis of the property’s ‘equity
                                                     that a bankruptcy court may lift the

                                                18
automatic stay. Id. at 52–53 (“Thus, a               classic evil in bankruptcy law, and is dealt
debtor in default on a loan at the time of           with in the Code so as not to exalt or
the bankruptcy petition or whose behavior            enable it, but, rather, so as to regulate and
indicates that he will not be able to                scrutinize it, in light of its misuse. See 11
continue making scheduled payments                   U.S.C. § 524(c). As one commentator has
might well suffer a lifting of the stay.”).          observed, “[s]ection 524, as enacted in
So, in the absence of a default or an                1978 (and as modified since then in 1984
insufficient equity cushion, a creditor is           and 1986), allows reaffirmations when it
not left high and dry. And when a                    benefits debtors to do so, but requires
creditor’s financial interests are not               extensive procedural safeguards to prevent
impaired, the objections to our                      ill advised reaffirmations.” See Ehrlich,
interpretation of section 521(2)(A) resolve          supra, at 660. We observe that debtors
into a general displeasure with the                  would either have to accept possibly
elimination of personal liability. But as we         onerous terms set by the creditor or
have noted, the discharge of personal                surrender the property. 10 For instance, one
liability is the essence of bankruptcy, the          court of appeals has held that the Code
prerequisite of a “fresh start.” Without a           does not prohib it creditors from
showing of grave financial injury to
creditors, we are not persuaded to depart
from the plain meaning of section                        10
                                                           The Court of Appeals for the First
521(2)(A).
                                                     Circuit reasoned that “strictly speaking,
       Lastly, but importantly, we believe           debtors are never ‘forced’ to enter into
that our reading comports best with the              reaffirmation agreements; they can always
“fresh start” policy of the Code, because a          surrender the property and be discharged
limited reading of section 521(2)(A) would           of the underlying debt.” Burr, 160 F.3d at
practically force debtors to reaffirm their          848. While this interpretation may be
obligations. Accord id. at 51 (“[c]onfining          technically correct, it may be unrealistic.
an individual Chapter 7 debtor to the                For example, although redemption is a
choices of surrender, redemption or                  retention option, the Burr court did “not
reaffirmation can severely interfere with            doubt that redemption is beyond the means
providing the debtor a fresh start”). This is        of most chapter 7 debtors, and that chapter
because redemption is in most cases                  7 debtors wishing to retain consumer
illusory for cash-strapped chapter 7                 goods on which they owe money will, as a
debtors, requiring payment in full, and              practical matter, be compelled to enter into
because the right to exempt property is              reaffirmation agreements with their
very limited. Under the Credit Union’s               secured creditors.” Id. But, also a practical
interpretation, reaffirmation would remain           matter, many debtors may find it difficult
as the only real retention option.                   to surrender property that is vital to them,
However, reaffirmation is viewed as a                such as an automobile used to commute to
                                                     one’s workplace.

                                                19
conditioning reaffirmation on the debtor’s
agreement to reaffirm additional,
                                                                        III.
unsecured debts. Jamo v. Katahdin Fed.
Credit Union (In re Jamo), 283 F.3d 392,            For the foregoing reasons, the order of the
400 (1 st Cir. 2002). Thus, instead of              District Court will be reversed.
fulfilling both parties’ bargain, as is the
case if the debtor keeps up the contractual
payments, reaffirmation in fact nullifies an        SLOVITER, Circuit Judge, Dissenting.
existing bargain and permits creditors to
                                                           I respectfully dissent. I do not
impose terms on debtors that compromise
                                                    reach the court’s conclusion on this
the goals of a fresh start.
                                                    perplexing bankruptcy issue because I am
        To be clear, our construction of            convinced that we have no jurisdiction, as
section 521(2) is supported by, but does            the controversy is plainly moot. That is
not depend on, this policy discussion. In           not a matter of choice but of constitutional
essence, bankruptcy law is bilateral,               necessity.
replete with protections and policy
                                                           It is axiomatic that “this court has a
considerations favoring both debtors and
                                                    ‘special obligation’ to satisfy itself of its
creditors. We leave it for Congress to
                                                    own jurisdiction.” United States v. Touby,
balance these complex and conflicting
                                                    909 F.2d 759, 763 (3d Cir. 1990) (quoting
policy interests. Our task of statutory
                                                    McNasby v. Crown Cork & Seal Co., 832
construction does not depend on
                                                    F.2d 47, 49 (3d Cir. 1987)). “[A] case will
evaluating whether one side or another is
                                                    be considered moot, and therefore
unfairly affected by the plain language of
                                                    nonjusticiable as involving no case or
the section. See Lamie, 124 S. Ct. at 1032
                                                    controversy, if the issues presented are no
(“Our unwillingness to soften the import
                                                    longer live or the parties lack a legally
of Congress’ chosen words even if we
                                                    cognizable interest in the outcome.” In re
believe the words lead to a harsh outcome
                                                    Surrick, 338 F.3d 224, 229 (3d Cir. 2003)
is longstanding.”); Hartford Underwriters,
                                                    (internal quotation marks and citation
530 U.S. at 13 (“[W]e do not sit to assess
                                                    omitted).
the relative merits of different approaches
to various bankruptcy problems.”). It is                   Our analysis of whether a case is
enough for our purposes that the plain              moot must begin with “the requirement of
language of the provision, when viewed in           Article III of the Constitution under which
the context of its section and the Code as a        the exercise of judicial power depends
whole, leads to the result we embrace,              upon the existence of a case or
namely that section 521(2)(A) is a notice           controversy.” North Carolina v. Rice, 404
provision which does not restrict debtors           U.S. 244, 246 (1971) (citation omitted).
from retaining their automobiles while
                                                           This case-or-controversy
staying current on their loan payments.
                                                           requirement subsists
                                                           through all stages of federal

                                               20
                judicial proceedings,                              The issue in the instant case is
                trial and appellate. . .                   whether section 521(2)(A) of the
                . The parties must                         Bankruptcy Code requires the debtors to
                continue to have a                         surrender the automobiles for which they
                personal stake in the                      were making loan payments, purchase
                o u tc o m e of th e                       them in a lump sum payment, renegotiate
                lawsuit. This means                        their respective loan agreements, or claim
                that, throughout the                       a recognized exemption under the
                li t ig a tion, the                        Bankruptcy Code instead of continuing
                plaintiff must have                        their current payments and maintaining
                suffered, or be                            possession. Shortly after this appeal was
                threatened with, an                        argued, counsel for the Debtors/Appellants
                actual       injury                        informed the court by letter that “[n]o
                tracea ble to the                          outstanding balance remains on either of
                defendant and likely                       the two loans at this time” because one car
                to be redressed by a                       was involved in a collision for which the
                favorable judicial                         insurance coverage was sufficient to pay
                decision.                                  the remaining balance on the loan, and the
                                                           other car was paid for in full by the
Spencer v. Kemna, 523 U.S. 1, 7 (1998)
                                                           Appellants. Letter from Andrea G. Green,
(internal quotation marks and citations
                                                           Counsel for Appellants, to Clerk of Court,
omitted) (emphasis added).
                                                           at 1 (Mar. 25, 2004). The creditor did not
           We have previously stated that in               respond by denying “that the other car was
order for there to be a case or controversy,               paid for in full.” Factually, there is no live
there must be “(1) a legal controversy that                controversy--this court’s decision on the
is real and not hypothetical, (2) a legal                  issue will have no impact on either party.
controversy that affects an individual in a
                                                                   In order to satisfy ourselves that we
concrete manner so as to provide the
                                                           continued to have jurisdiction, we directed
f a c t u a l p r e d i c a te f o r r e a so n e d
                                                           that the parties address whether the case is
adjudication, and (3) a legal controversy
                                                           now moot. Surprisingly, the Debtors and
with sufficiently adverse parties so as to
                                                           the Creditor both took the position that the
sharpen the issues for judicial resolution.”
                                                           issue is capable of repetition yet evading
In re Surrick, 338 F.3d at 229-30. The
                                                           review.      The Creditor stated, “The
majority seeks to bring this case into the
                                                           question commonly arises when a
exception to the mootness doctrine
                                                           consumer debtor with a five-year auto loan
recognized in Matter of Kulp Foundry,
                                                           files for bankruptcy relief . . . . Because of
Inc., 691 F.2d 1125, 1129 (3d Cir. 1982),
                                                           the time required to prosecute an appeal to
for issues that are capable of repetition yet
                                                           this Court, the issue would most probably
evading review. I believe that exception is
                                                           become moot in such cases, assuming that
inapplicable.
                                                           the debtor continues to make payments to


                                                      21
the secured creditor, prior to resolution by                subject to the same action
this Court.” Letter from W.J Winterstein,                   again.
Jr., Counsel for Appellee, to Clerk of
                                                     Spencer, 523 U.S. at 17 (internal citations
Court, at 1 (Apr. 28, 2004) (emphasis
                                                     and quotation marks omitted). It is highly
added). Significantly, the Creditor did not
                                                     unlikely that the Prices will again face the
deny that there was nothing more owing in
                                                     same situation.
this case. However, it is understandable
why the Creditor would want this court to                    The Supreme Court has stated there
decide the issue as other debtors may seek           must be an “exceptional situation” present
the same option the Prices sought and the            to “permit departure from the usual rule in
Creditor resists. Why the Prices took that           federal cases that an actual controversy
position is less understandable. One                 must exist at stages of appellate or
would have assumed that they would                   certiorari review, and not simply at the
prefer to have the case behind them, which           date the action is initiated.” DeFunis v.
leads me to wonder whose interest is being           Odegaard, 416 U.S. 312, 319 (1974). The
served by their counsel’s insistence that            Credit Union’s bald assertion that “the
the case is not moot.                                issue would most probably become moot
                                                     in such cases,” supra, is too speculative to
      The exception to mootness on
                                                     warrant characterization as an “exceptional
which the majority relies does not apply
                                                     situation.”
here.
                                                             The Supreme Court has stated,
       As the Supreme Court has stated:
                                                     “The burden of demonstrating mootness
       The capable-of-repetition                     ‘is a heavy one.’” County of Los Angeles
       doctrine applies only in                      v. Davis, 440 U.S. 625, 631 (1979) (citing
       exceptional situations where                  United States v. W.T. Grant Co., 345 U.S.
       the follow ing tw o                           629, 632-33 (1953)). This court, in
       circumstances           are                   Princeton Community Phone Book, 582
       simultaneously present: (1)                   F.2d 706, 710 (3d Cir. 1978), stated that
       the challenged action is in                   the “party arguing that a case is moot must
       its duration too short to be                  bear a heavy burden of demonstrating the
       fully litigated prior to
       cessation or expiration, and
       (2) there is a reasonable                     proceedings in the federal court system.
       expectation that the same                     To protect its interests, the Credit Union
       complaining party 11 will be                  filed the Motion to Compel that the
                                                     District Court granted and the Prices are
                                                     now appealing. Even if the Credit Union
  11
       It is not readily apparent which party        were deemed to be the complaining party,
is the “complaining party” in a bankruptcy           its vague assertion of likelihood of
proceeding. The Prices filed for relief              repetition cannot meet the “exceptional
under Chapter 7, and so initiated                    situations” standard.

                                                22
facts underlying that contention.” Id. The         U.S. at 632-33; Davis, 440 U.S. at 631-32.
majority argues that these “letters from            In the Second Circuit case relied on by the
counsel, containing vague assertions as to         majority, In re Sokolowski, 205 F.3d 532
the satisfaction of the Prices’ loans, [do         (2d Cir. 2000), the debtor alone claimed
not] meet the heavy burden of establishing         mootness. The opinion does not indicate
mootness.” Majority Op. at 4 (citing               that the appellant creditor bank conceded
Princeton). This is not surprising as both         there was no outstanding debt. 12 It was
parties explicitly implore the court to            therefore reasonable to place the burden on
resolve the issue despite the lack of a            the debtor claiming mootness, as the bank
current controversy.                               could have been left with no judicial
                                                   recourse to resolve that issue.       In the
       It may be an open issue as to which
                                                   instant case, both parties concede the fact
party has the burden to show mootness.
                                                   of actual mootness, and we therefore need
The Supreme Court has stated:
                                                   not decide which bears the burden.
       We presume that federal
                                                          We cannot avoid the principle that
       courts lack jurisdiction
                                                   parties cannot stipulate as to whether a
       “ u n l e s s ‘ t h e c o n tr a ry
                                                   matter is moot. Allowing the parties to
       appears affirmatively from
                                                   bypass the mootness issue simply by filing
       the record.’” Bender v.
                                                   factually vague letter briefs because they
       Williamsport Area School
                                                   desire judicial resolution would be
       Dist., 475 U.S. 534, 546
                                                   tantamount to stipulating out of mootness.
       (1986), quoting King Bridge
                                                   The Supreme Court has stated,
       Co. v. Otoe County, 120
       U.S. 225, 226 (1887). “‘It is                      The dissent’s startling
       the responsibility of the                          statement that our insistence
       com plainant clearly to                            on plaintiffs with live claims
       allege facts demonstrating                         is purely a matter of form
       that he is a proper party to
       invoke judicial resolution of
       the dispute and the exercise                  12
                                                         The majority Opinion states that in In
       of the court's remedial
                                                   re Sokolowski, the creditor bank conceded
       powers.’” Bender, supra,
                                                   that the debtor’s obligations were paid in
       475 U.S. at 546 n.8, quoting
                                                   full, but the Sokolowski opinion contains
       Warth v. Seldin, 422 U.S.
                                                   no suggestion of this concession, nor is
       490, 517-518 (1975).
                                                   there any indication that the court
Renne v. Geary, 501 U.S. 312, 316 (1991).          considered or gave credence to any
                                                   concession. One can reasonably assume
       In prior cases, the Court placed the
                                                   that the court decided the mootness issue
burden on the party claiming mootness
                                                   only on the factual deficiency of the
who sought to use that claim defensively
                                                   debtor’s proffer, as that is the only reason
to preclude suit. See W.T. Grant Co., 345
                                                   the opinion provides.

                                              23
              would read . . . Art.               money due it and it can no longer do so at
              III out o f the                     this late date. The Prices have only one
              Constitution.         The           automobile now, and the debt for that has
              availability of                     been fully paid. Accordingly, I would
              thoroughly prepared                 dismiss this appeal as moot.
              attorneys to argue
              both sides of a . . .
              question . . . does not
              dispense with the
              r e q u i r e m e n t th a t
              there be a live
              dispute between live
              parties before we
              decide such a
              question.
               [T]he fact that the
       parties desire a decision on
       the merits does not
       automatically entitle them to
       receive such a decision. It is
       not at all unusual for all
       parties in a case to desire an
       adjudication on the merits
       when the alternative is
       additional litigation; but
       their desires can be scarcely
       thought to dictate the result
       of our inquiry into whether
       the merits should be
       reached.


Kremens v. Bartley, 431 U.S. 119, 134
n.15 (1977) (internal quotation marks and
citations to dissent omitted). It follows
that however learned Judge Rendell’s
opinion on a subject of some interest and
however much light it would spread, it is,
at most, an advisory opinion. The Credit
Union has not argued that there is still


                                             24
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