As I have discussed recently here and at the National Bankruptcy Forum, the U.S. Bankruptcy Court for the Eastern District of Michigan has recently made a number of changes to the procedures for practicing in its courts.  On December 16, 2009, the Court's website announced the adoption of a new Administrative Order (available here) regarding the responsibilities of debtor's counsel with respect to reaffirmation agreements.  Individuals who file for Chapter 7 bankruptcy typically have large consumer debt in the form of credit card bills, unsecured loans, utility bills and various expenses associated with unsecured assets. In many situations the debtor may wish to keep specific secured assets such as a vehicle, home or furniture. This can be accomplished by reaffirming the debtor's commitment to continue paying for these debts, under the current terms of the existing agreement with the creditor or under new terms if the creditor will negotiate. The purpose of a reaffirmation agreement is to reaffirm that the debtor will continue to pay for the assets.  In so doing, however, the debtor is prohibited from discharging that debt for a certain period of time. 

The new Administrative Order states that, in order to fulfil their obligations as counsel for the debtor in a Chapter 7 case, counsel may not exclude services relating to a reaffirmation agreement from the scope of their representation.  Also, counsel for the debtor must appear and represent the debtor at any hearing relating to a reaffirmation agreement. In other words, the attorney you retain to file the Chapter 7 petition for you must also handle any reaffirmation agreements pertaining to that case.

Related to this issue, the Eastern District of Michigan also recently adopted a new form for reaffirmation agreements. The form is required for all reaffirmation agreements filed on or after December 1, 2009. Failure to file the reaffirmation agreement cover sheet with a reaffirmation agreement will result in a notice of deficiency from the Bankruptcy Court Clerk providing seven days within which to correct the deficiency. Failure to correct the deficiency may result in striking the reaffirmation agreement or the scheduling of a hearing by the Court.

Detroit bankruptcy lawyers must be aware of these notices as well as other local rules and practices in the Eastern District, which covers Detroit, Bay City, and Flint.

-Drew Broaddus