Statement of Intentions Regarding Leases or Collateral Securing a Creditor's Claim

Assistance Beyond Filing the Statement of Intention Not Included in Basic Chapter 7 Fee

Within 30 days after filing a bankruptcy case, a debtor must file a statement of intention with respect to leased property or property securing a creditor’s claim.  The options mentioned in the bankruptcy code are as follows:
  • Surrender or Rejection:  Collateral can be surrendered and returned to a creditor, and leases can be rejected.  After surrender or rejection, a debtor usually has no further obligation to the creditor if the debt is dischargeable.
  • Assumption:  A lease may be assumed or continued under its original terms, leaving the debtor liable for the lease after the bankruptcy discharge. 
  • Redemption:  A debtor can redeem or pay the current value of collateral and pay a creditor’s lien in full in one lump sum.  The redemption value may be agreed to by a debtor and a creditor or determined by the court after an evidentiary hearing. 
  • Reaffirmation:  A debtor can reaffirm a debt and retain collateral. Reaffirmation puts the debtor “back on the hook” for the debt after discharge. 
    • In some instances, a debtor may be able to negotiate better terms (interest rate, loan balance, etc.) in the reaffirmation agreement than were part of the original loan. 
    • Reaffirmation agreements must be signed by the debtor and must strictly comply with other requirements of the bankruptcy code. 
    • A reaffirmation agreement can be rescinded or canceled by a debtor by giving notice to the creditor before discharge or within 60 days after the agreement is filed with the court, whichever is later. 
    • If a debtor reaffirms and does not complete payments, a creditor can repossess collateral because the lien survives the bankruptcy, and the creditor can pursue a debtor for any deficiency balance owed under the reaffirmation agreement. 
(There is no provision in the Bankruptcy Code for reaffirmation of a loan secured by real estate, and the bankruptcy judges in Colorado are unlikely to approve such reaffirmation.) 
  • Exempt:  If a debtor is eligible to exempt collateral from a creditor’s claim, the property may be protected by filing a motion to avoid the creditor’s lien. See Motion to Avoid Judicial Lien and Motion to Avoid Nonpossessory, Nonpurchase-Money Security Interest below.
A debtor can change his or her mind and amend or change the statement of intentions. However, a debtor must perform his or her intention with respect to property securing a creditor’s claim within 30 days after the first scheduled meeting of creditors.  

In general, if a debtor does not perform his or her intentions within 45 days after the first scheduled meeting of creditors, the automatic stay terminates with respect to personal property (not real estate). Once the stay terminates, a secured creditor may be able to repossess or recover collateral if allowed under non-bankruptcy, state law. 

Statement of intentions must be filed within 30 days post petition and sent to any secured creditors.

Intentions should be performed within 30 days after 341 meeting.

Bankruptcy stay terminates on 46th day after 341 meeting if intentions are not performed.

After termination of the stay, a secured creditor may be able to take action allowed by non-bankruptcy law against personal property (not real estate).