In re Husain

Akhter and Farah Husain (debtors) jointly filed for chapter 7 bankruptcy. The Husains were represented by counsel during the bankruptcy proceedings. The Husains wanted to reaffirm their debt on their two cars, and Mr. Husain asked the court to approve reaffirmation agreements between the Husains and their creditors. In one agreement, between Mr. Husain and Toyota Motor Credit Corporation, Mr. Husain agreed to reaffirm a debt of $15,438.92 at a 15.6 percent interest rate, to be paid in 61 monthly installments of $388.15. The agreement provided that the debt would be secured by the Husains’ 2003 Toyota Avalon, which was valued at $8,415. Under § 524(c)(3) of the Bankruptcy Code, if a debtor is represented by counsel while negotiating a reaffirmation agreement, the debtor’s counsel must certify to the court that the agreement does not impose an undue hardship on the debtor and that the debtor has been fully advised of the agreement’s consequences. The Husains’ bankruptcy lawyer declined to execute this certification. The Husains argued that their lawyer’s failure to execute the certification meant that the bankruptcy court should treat them as debtors who were not represented by counsel and should approve the reaffirmation agreements based on Mr. Husain’s own certification that the reaffirmation agreements were in his best interest and would not impose an undue hardship. Mr. Husain acknowledged that his monthly expenses exceeded his monthly income by roughly $4,000, but he asserted that he could make up the difference with a raise and by working more hours. At a hearing on the Husains’ motion to approve the reaffirmation agreements, the Husains’ lawyer stood by his decision not to execute the certification but argued for the Husains’ position that the court should approve the reaffirmation agreements so the Husains could keep their cars. The lawyer also presented Mr. Husain’s testimony that he would soon be starting a new job that would increase his monthly income by $1,000.