In Re Jones

591 F.3d 308 (2010)


D purchased a vehicle under a Retail Installment Contract from D. D got a security interest in the vehicle, which was perfected. D will be in default if they file a bankruptcy petition or if one is filed against them. D, the husband, filed a petition for relief under Chapter 7 of the Bankruptcy Code. Kirsten, the wife, did not file for bankruptcy but brought this adversary proceeding as the co-owner of the vehicle. D filed a statement of intention that indicated that he would 'Continue Payments' on the vehicle but did not state whether he intended to redeem the vehicle or reaffirm the debt as required by 11 U.S.C. §§ 362(h) and 521(a)(2). D also failed to redeem the vehicle or enter into a reaffirmation agreement with P within 45 days of the first meeting of creditors. D made a payment after the 45 days was up, which was the only payment made after the § 521(a)(6) 45-day period to either redeem or reaffirm expired on July 31, 2006. P moved to confirm termination of the automatic stay so that it could enforce its security interest by repossessing the vehicle pursuant to the default-upon-bankruptcy clause, also called an 'ipso facto' clause. After a hearing, the bankruptcy court entered an order confirming that the automatic stay was terminated. Without providing written notice of default and right to cure, P repossessed the vehicle pursuant to the ipso facto clause. D then commenced this adversary proceeding. The bankruptcy court enjoined the sale of the vehicle and required its return. It held that P did not have the right under the Bankruptcy Code to repossess the vehicle even with the failure of D to indicate either his intent to redeem the vehicle or reaffirm the debt on his statement of intention. The bankruptcy court relied on the 'ride-through' option where those who are current on their installment payments to continue making payments and retain collateral after discharge without redeeming the collateral or reaffirming the debt. The bankruptcy court also held that West Virginia Code § 46A-2-106 required P to first give D notice of the right to cure default before repossessing the vehicle. The district court reversed; the BAPCPA eliminated the ride-through option.