Notes on 11 U.S.C. § 524 : US Code - Notes

Search Notes on 11 U.S.C. § 524 : US Code - Notes

(Pub. L. 95-598, Nov. 6, 1978, 92 Stat. 2592; Pub. L. 98-353, title
III, Secs. 308, 455, July 10, 1984, 98 Stat. 354, 376; Pub. L. 99-
554, title II, Secs. 257(o), 282, 283(k), Oct. 27, 1986, 100 Stat.
3115-3117; Pub. L. 103-394, title I, Secs. 103, 111(a), title V,
Sec. 501(d)(14), Oct. 22, 1994, 108 Stat. 4108, 4113, 4145; Pub. L.
109-8, title II, Secs. 202, 203(a), title XII, Sec. 1210, Apr. 20,
2005, 119 Stat. 43, 194.)
HISTORICAL AND REVISION NOTES
LEGISLATIVE STATEMENTS
Section 524(a) of the House amendment represents a compromise
between the House bill and the Senate amendment. Section 524(b) of
the House amendment is new, and represents standards clarifying the
operation of section 524(a)(3) with respect to community property.
Sections 524(c) and (d) represent a compromise between the House
bill and Senate amendment on the issue of reaffirmation of a debt
discharged in bankruptcy. Every reaffirmation to be enforceable
must be approved by the court, and any debtor may rescind a
reaffirmation for 30 days from the time the reaffirmation becomes
enforceable. If the debtor is an individual the court must advise
the debtor of various effects of reaffirmation at a hearing. In
addition, to any extent the debt is a consumer debt that is not
secured by real property of the debtor reaffirmation is permitted
only if the court approves the reaffirmation agreement, before
granting a discharge under section 727, 1141, or 1328, as not
imposing a hardship on the debtor or a dependent of the debtor and
in the best interest of the debtor; alternatively, the court may
approve an agreement entered into in good faith that is in
settlement of litigation of a complaint to determine
dischargeability or that is entered into in connection with
redemption under section 722. The hearing on discharge under
section 524(d) will be held whether or not the debtor desires to
reaffirm any debts.
SENATE REPORT NO. 95-989
Subsection (a) specifies that a discharge in a bankruptcy case
voids any judgment to the extent that it is a determination of the
personal liability of the debtor with respect to a prepetition
debt, and operates as an injunction against the commencement or
continuation of an action, the employment of process, or any act,
including telephone calls, letters, and personal contacts, to
collect, recover, or offset any discharged debt as a personal
liability of the debtor, or from property of the debtor, whether or
not the debtor has waived discharge of the debt involved. The
injunction is to give complete effect to the discharge and to
eliminate any doubt concerning the effect of the discharge as a
total prohibition on debt collection efforts. This paragraph has
been expanded over a comparable provision in Bankruptcy Act Sec.
14f [section 32(f) of former title 11] to cover any act to collect,
such as dunning by telephone or letter, or indirectly through
friends, relatives, or employers, harassment, threats of
repossession, and the like. The change is consonant with the new
policy forbidding binding reaffirmation agreements under proposed
11 U.S.C. 524(b), and is intended to insure that once a debt is
discharged, the debtor will not be pressured in any way to repay
it. In effect, the discharge extinguishes the debt, and creditors
may not attempt to avoid that. The language "whether or not
discharge of such debt is waived" is intended to prevent waiver of
discharge of a particular debt from defeating the purposes of this
section. It is directed at waiver of discharge of a particular
debt, not waiver of discharge in toto as permitted under section
727(a)(9).
Subsection (a) also codifies the split discharge for debtors in
community property states. If community property was in the estate
and community claims were discharged, the discharge is effective
against community creditors of the nondebtor spouse as well as of
the debtor spouse.
Subsection (b) gives further effect to the discharge. It
prohibits reaffirmation agreements after the commencement of the
case with respect to any dischargeable debt. The prohibition
extends to agreements the consideration for which in whole or in
part is based on a dischargeable debt, and it applies whether or
not discharge of the debt involved in the agreement has been
waived. Thus, the prohibition on reaffirmation agreements extends
to debts that are based on discharged debts. Thus, "second
generation" debts, which included all or a part of a discharged
debt could not be included in any new agreement for new money. This
subsection will not have any effect on reaffirmations of debts
discharged under the Bankruptcy Act [former title 11]. It will only
apply to discharges granted if commenced under the new title 11
bankruptcy code.
Subsection (c) grants an exception to the anti-reaffirmation
provision. It permits reaffirmation in connection with the
settlement of a proceeding to determine the dischargeability of the
debt being reaffirmed, or in connection with a redemption agreement
permitted under section 722. In either case, the reaffirmation
agreement must be entered into in good faith and must be approved
by the court.
Subsection (d) provides the discharge of the debtor does not
affect co-debtors or guarantors.
REFERENCES IN TEXT
The Bankruptcy Act, referred to in subsec. (b)(1), is act July 1,
1898, ch. 541, 30 Stat. 544, as amended, which was classified
generally to former Title 11.
The date of the enactment of this subsection, referred to in
subsec. (g)(7), is the date of enactment of Pub. L. 103-394, which
enacted subsec. (g) and was approved Oct. 22, 1994.
The date of the enactment of this Act, referred to in subsec.
(h), probably means the date of enactment of Pub. L. 103-394, which
enacted subsec. (h) and was approved Oct. 22, 1994.
The Truth in Lending Act, referred to in subsec. (k), is title I
of Pub. L. 90-321, May 29, 1968, 82 Stat. 146, as amended, which is
classified generally to subchapter I (Sec. 1601 et seq.) of chapter
41 of Title 15, Commerce and Trade. Sections 103, 127(b), and
128(a)(4) of the Act are classified to sections 1602, 1637(b), and
1638(a)(4), respectively, of Title 15. For complete classification
of this Act to the Code, see Short Title note set out under section
1601 of Title 15 and Tables.
Section 19(b)(1)(A)(iv) of the Federal Reserve Act, referred to
in subsecs. (k)(6)(B) and (m)(2), is classified to section
461(b)(1)(A)(iv) of Title 12, Banks and Banking.
AMENDMENTS
2005 - Subsec. (a)(3). Pub. L. 109-8, Sec. 1210, substituted
"section 523, 1228(a)(1), or 1328(a)(1), or that" for "section 523,
1228(a)(1), or 1328(a)(1) of this title, or that".
Subsec. (c)(2). Pub. L. 109-8, Sec. 203(a)(1), added par. (2) and
struck out former par. (2) which read as follows:
"(2)(A) such agreement contains a clear and conspicuous statement
which advises the debtor that the agreement may be rescinded at any
time prior to discharge or within sixty days after such agreement
is filed with the court, whichever occurs later, by giving notice
of rescission to the holder of such claim; and
"(B) such agreement contains a clear and conspicuous statement
which advises the debtor that such agreement is not required under
this title, under nonbankruptcy law, or under any agreement not in
accordance with the provisions of this subsection;".
Subsecs. (i), (j). Pub. L. 109-8, Sec. 202, added subsecs. (i)
and (j).
Subsecs. (k) to (m). Pub. L. 109-8, Sec. 203(a)(2), added
subsecs. (k) to (m).
1994 - Subsec. (a)(3). Pub. L. 103-394, Sec. 501(d)(14)(A),
substituted "1328(a)(1)" for "1328(c)(1)". See 1986 Amendment note
below.
Subsec. (c)(2). Pub. L. 103-394, Sec. 103(a)(1), designated
existing provisions as subpar. (A), inserted "and" at end, and
added subpar. (B).
Subsec. (c)(3). Pub. L. 103-394, Sec. 103(a)(2), struck out "such
agreement" after "which states that" in introductory provisions,
struck out "and" at end of subpar. (A), inserted "such agreement"
in subpars. (A) and (B), and added subpar. (C).
Subsec. (c)(4). Pub. L. 103-394, Sec. 501(d)(14)(B), substituted
"rescission" for "recission".
Subsec. (d). Pub. L. 103-394, Sec. 103(b), inserted "and was not
represented by an attorney during the course of negotiating such
agreement" after "this section" in introductory provisions.
Subsec. (d)(1)(B)(ii). Pub. L. 103-394, Sec. 501(d)(14)(C),
inserted "and" at end.
Subsecs. (g), (h). Pub. L. 103-394, Sec. 111(a), added subsecs.
(g) and (h).
1986 - Subsec. (a)(1). Pub. L. 99-554, Sec. 257(o)(1), inserted
reference to section 1228 of this title.
Subsec. (a)(3). Pub. L. 99-554, Sec. 257(o)(2), which directed
the substitution of ", 1228(a)(1), or 1328(a)(1)" for "or
1328(a)(1)" was executed by making the substitution for "or
1328(c)(1)" to reflect the probable intent of Congress. See 1994
Amendment note above.
Subsec. (c)(1). Pub. L. 99-554, Sec. 257(o)(1), inserted
reference to section 1228 of this title.
Subsec. (d). Pub. L. 99-554, Sec. 257(o)(1), inserted reference
to section 1228 of this title.
Pub. L. 99-554, Sec. 282, substituted "shall" for "may" before
"hold" in first sentence, inserted "any" after "At" in second
sentence, and inserted "the court shall hold a hearing at which the
debtor shall appear in person and" after "then" in third sentence.
Subsec. (d)(2). Pub. L. 99-554, Sec. 283(k), substituted
"section" for "subsection" after "subsection (c)(6) of this".
1984 - Subsec. (a)(2). Pub. L. 98-353, Secs. 308(a), 455, struck
out "or from property of the debtor," before "whether or not
discharge", and substituted "an act" for "any act".
Subsec. (a)(3). Pub. L. 98-353, Sec. 455, substituted "an act"
for "any act".
Subsec. (c)(2). Pub. L. 98-353, Sec. 308(b)(1), (3), added par.
(2). Former par. (2), which related to situations where the debtor
had not rescinded the agreement within 30 days after the agreement
became enforceable, was struck out.
Subsec. (c)(3), (4). Pub. L. 98-352, Sec. 308(b)(3), added pars.
(3) and (4). Former pars. (3) and (4) redesignated (5) and (6),
respectively.
Subsec. (c)(5). Pub. L. 98-353, Sec. 308(b)(2), redesignated
former par. (3) as (5).
Subsec. (c)(6). Pub. L. 98-353, Sec. 308(b)(2), (4), redesignated
former par. (4) as (6) and generally amended par. (6), as so
redesignated, thereby striking out provisions relating to court
approval of such agreements as are entered into in good faith and
are in settlement of litigation under section 523 of this title or
provide for redemption under section 722 of this title.
Subsec. (d)(2). Pub. L. 98-353, Sec. 308(c), substituted
"subsection (c)(6)" for "subsection (c)(4)".
Subsec. (f). Pub. L. 98-353, Sec. 308(d), added subsec. (f).
EFFECTIVE DATE OF 2005 AMENDMENT
Amendment by Pub. L. 109-8 effective 180 days after Apr. 20,
2005, and not applicable with respect to cases commenced under this
title before such effective date, except as otherwise provided, see
section 1501 of Pub. L. 109-8, set out as a note under section 101
of this title.
EFFECTIVE DATE OF 1994 AMENDMENT
Amendment by Pub. L. 103-394 effective Oct. 22, 1994, and, except
with respect to amendment by section 111(a) of Pub. L. 103-394,
amendment by Pub. L. 103-394 not applicable with respect to cases
commenced under this title before Oct. 22, 1994, see section 702 of
Pub. L. 103-394, set out as a note under section 101 of this title.
EFFECTIVE DATE OF 1986 AMENDMENT
Amendment by section 257 of Pub. L. 99-554 effective 30 days
after Oct. 27, 1986, but not applicable to cases commenced under
this title before that date, see section 302(a), (c)(1) of Pub. L.
99-554, set out as a note under section 581 of Title 28, Judiciary
and Judicial Procedure.
Amendment by sections 282 and 283 of Pub. L. 99-554 effective 30
days after Oct. 27, 1986, see section 302(a) of Pub. L. 99-554.
EFFECTIVE DATE OF 1984 AMENDMENT
Amendment by Pub. L. 98-353 effective with respect to cases filed
90 days after July 10, 1984, see section 552(a) of Pub. L. 98-353,
set out as a note under section 101 of this title.
CONSTRUCTION
Section 111(b) of Pub. L. 103-394 provided that: "Nothing in
subsection (a), or in the amendments made by subsection (a)
[amending this section], shall be construed to modify, impair, or
supersede any other authority the court has to issue injunctions in
connection with an order confirming a plan of reorganization."