Consumer Bankruptcy Committee

ABI Committee News

In Oklahoma, It's "All Er Nuthin'" [1]: Representation for Reaffirmation Required as a "Core Service"

Earlier this year, the U.S. Bankruptcy Court for the Northern District of Oklahoma refused to approve a reaffirmation agreement because, although the debtor was represented, it lacked the declaration or affidavit required by 11 U.S.C. §524(c)(3).[2] Apprehensive of the potentially crippling liability that was seemingly imposed by the provisions of subparagraphs (A) through (C), the debtor's attorney, in his engagement letter, excluded the services related to the reaffirmation agreements. Although the court characterized the case as one of first impression, the attorney was not alone in this tactic, according to the court. It is important to note that the court emphasized that the debtor's attorney's conduct in the case was above reproach (honest and straightforward), and held that it should not be inferred "as a criticism of the integrity of [the attorney] or his law practice."

Before analyzing the two major bases for its holding, the court emphasized the critical importance of the attorney's declaration to the reaffirmation agreement review and approval process, especially given the agreement's moment to a debtor's fresh start. The court made it clear that it would normally presume that counsel provided requisite advice and assistance regarding any reaffirmation agreement executed by the attorney's debtor-client.

The court reminded that Oklahoma's Rules of Professional Conduct required an attorney to provide competent representation to a client. Case law, according to the court, showed that advice and assistance with the reaffirmation agreement decision were among the "core services" that comprise competent representation of a chapter 7 debtor. Any mutually acceptable limitation of services could not include the debt-reaffirmation decision because such limitation could be neither reasonable nor the result of a debtor's informed consent in light of the complexity and criticality of such a decision.

The court based its holding on the Bankruptcy Code and showed that it clearly placed a duty to represent a debtor in the negotiation of a reaffirmation agreement on the debtor's attorney, and required that the attorney declare that he did so. Such a requirement, reasoned the court, grew out of an obvious and logical shifting of the oversight of reaffirmation agreements from the sole province of the court, in the 1978 Code, to the debtor's attorney, in the 1994 amendments.

The court recognized that the attorney's effort to avoid involvement in the debtor's reaffirmation process arose not out of concern over sufficiency of his fees.  Rather, the attorney's apprehension arose from the potential liability that he felt the Code forced him to bear in the event of his client's defaulting on a reaffirmed debt. The court showed that the Code did not give rise to such a liability and that it knew of no decision holding an attorney personally liable for a debtor's default of a reaffirmed debt. This was of no consequence because, the court opined, an attorney's putative potential liability cannot vitiate his duties arising under the Code or the Rules of Professional Conduct.
Ultimately, the court determined, it's "all er nuthin'":

This Court will not allow counsel to offer services in a piecemeal fashion that leaves debtors vulnerable and unrepresented at the exact moment they need professional legal advice, especially for routine and fully anticipated matters. Let there be no doubt: in the eyes of this judge, counsel for a debtor may not exclude advice regarding and negotiation of reaffirmation agreements from the scope of services provided to a Chapter 7 debtor. Counsel that are unwilling to undertake and follow through on such duties should not accept employment in a Chapter 7 case, or if currently employed, should withdraw from all further representation of the debtor.[3]


1. Acknowledgement to composer Richard Rodgers and librettist Oscar Hammerstein II, creators of Oklahoma!.

2. In re Minardi, No. 08-11774-M, 2009 Bankr. LEXIS 228 (Bankr. N.D. Okla. Jan. 23, 2009).

3. Id. at *22.