In In re Sanders, 2012 WL 692549 (Bkrtcy.W.D.Tex. 2012), Judge Clark found that an automobile finance company who, following the debtor’s rescission of a reaffirmation agreement, repossessed a vehicle post-discharge based on the ispo facto clause did not violate the automatic stay or discharge injunction. The facts were as follows:

On August 10, 2011, the captioned Debtors filed a motion for contempt against Ford Motor Credit Company (“FMC”) after FMC repossessed one of the Debtors’ vehicles post-discharge, despite the fact that the Debtors had always been (prior to and throughout the course of their Chapter 13 bankruptcy) current in their car payments. FMC repossessed the vehicle pursuant to an ipso facto clause in the Debtors’ contract. The Debtors filed for Chapter 13 on April 4, 2011. At that time, they said (in their Statement of Intention) that they intended to reaffirm their debt with FMC. The Debtors (and the Debtors’ attorney) signed and filed a reaffirmation agreement with FMC on June 28, 2011. The court did not set the reaffirmation for a hearing, indicating that the court did not perceive that the agreement posed an undue hardship on the Debtors. The following day, June 29, 2011, the Debtors rescinded the reaffirmation agreement, as is their right under section 524(c). The Debtors received their discharge on July 20, 2011. On August 7, 2011, FMC repossessed the Debtors’ vehicle-a 2006 Ford Expedition. The Debtors were not (and indeed never had been) behind on their car payments. For this, the Debtors seek to hold FMC in contempt. Essentially, the Debtors’ position is that they should have been permitted to “pay and drive” post-discharge as long as they remained current on the debt. ¶ FMC responded to the Debtors’ contempt motion by arguing that the Debtors’ rescission of the reaffirmation agreement meant that the stay terminated with respect to the vehicle pursuant to sections 521(a)(2) and 362(h) of the Code, and that FMC was thus free to enforce the ipso facto clause of the Debtors’ contract pursuant to section 521(d) and to repossess the vehicle.

The bankruptcy court agreed with the finance company, finding no impropriety.

A wrinkle arises here in that FMC did not act on its section 362(h) remedy pre-discharge. Rather, FMC waited until after the Debtors’ discharge had been entered to repossess the vehicle. The Bankruptcy Code does not address anything other than the rights and remedies available to creditors under the Code in the event a reaffirmation agreement is not made (or, as the case may be, un-made). Section 362(h) thus only applies pre-discharge, while a bankruptcy case still exists. There is no automatic stay post-discharge. Section 362(h) is a bankruptcy-related remedy; it does not survive the bankruptcy. However, for so long as the debtor is still in bankruptcy (i.e., for so long as the debtor has not received a discharge), the remedial section is operative. Thus, if the debtor reaffirms a car loan debt of the type under discussion here, but rescinds that agreement prior to discharge, then it can be said that the contract has been “unmade,” triggering section 362(h). That FMC failed to act pursuant to the rights granted by section 362(h)—i.e. failed to act during the Debtors’ bankruptcy case—should not change the outcome, however. Section 521(d) specifically states that, “[i]f the debtor fails timely to take the action specified in … paragraphs (1) and (2) of section 362(h) [which includes the requirement that the debtor “either redeem [or] enter into an agreement of the kind specified in section 524(c)”—i.e. an agreement that has not been rescinded], with respect to property … as to which a creditor holds a security interest … nothing in this title shall prevent or limit the operation of a provision in the underlying … agreement by reason of the occurrence, pendency, or existence of a proceeding under this title or the insolvency of the debtor. Nothing in this subsection shall be deemed to justify limiting such a provision in any other circumstance.” 11 U.S.C. § 521(d). It is this last sentence that dictates the result here. While the remedy of section 362(h) might not apply post-discharge, the Debtors’ failure to enter into “an agreement of the kind specified in section 524(c)” nonetheless had the same effect as if the stay had been lifted. Under section 521(d), the ipso facto clause essentially sprang back into effect, entitling FMC (in the absence of a new agreement) to repossess the vehicle. Accordingly, the court will not hold FMC in contempt—although the court remains confused as to why FMC would want to repossess the vehicle in this situation considering the Debtors have always been current in their payments.