Jamo v. Katahdin Federal Credit Union

United States Court of Appeals
For the First Circuit

No. 01-9010

IN RE: STEPHEN J. JAMO AND LYNN M. JAMO,
Debtors.
___________________

STEPHEN J. JAMO AND LYNN M. JAMO,
Plaintiffs, Appellees,

v.

KATAHDIN FEDERAL CREDIT UNION,
Defendant, Appellant.

APPEAL FROM THE BANKRUPTCY APPELLATE PANEL
OF THE FIRST CIRCUIT

Before

Selya, Circuit Judge,

Stahl, Senior Circuit Judge,

and Lipez, Circuit Judge.

Daniel L. Cummings, with whom Norman, Hanson & DeTroy, LLC
was on brief, for appellant.
George J. Marcus, with whom Lee H. Bals and Marcus, Clegg
& Mistretta, P.A. were on brief, for Maine Credit Union League
and Credit Union National Association, amici curiae.
Richard D. Violette, Jr. for appellees.

March 26, 2002
 SELYA, Circuit Judge. This bankruptcy appeal requires

us to decide an issue of first impression at the circuit level:

In a Chapter 7 case, may a lender who is owed both secured and

unsecured debts insist upon reaffirmation of the latter as a

condition to reaffirmation of the former? The bankruptcy court

ruled that such an "all or nothing" negotiating posture amounted

to a per se violation of the automatic stay, Jamo v. Katahdin

Fed. Credit Union, 253 B.R. 115 (Bankr. D. Me. 2000) [Jamo I],

and the bankruptcy appellate panel (the BAP) agreed, Katahdin

Fed. Credit Union v. Jamo, 262 B.R. 159 (B.A.P. 1st Cir. 2001)

[Jamo II]. We reverse.

I. BACKGROUND

The critical facts are not in dispute. On March 18,

1999, the debtors, Stephen J. Jamo and Lynn M. Jamo (husband and

wife), initiated proceedings under Chapter 7 of the Bankruptcy

Code, 11 U.S.C. §§ 701-766. On the filing date, they owed

$61,010 to Katahdin Federal Credit Union (the credit union).

This indebtedness was composed of $37,079 owed on a promissory

note secured by a first mortgage on their residence in

Millinocket, Maine; $12,731 owed on unsecured personal loans;

and $11,200 owed on credit cards.

In their bankruptcy petition, the debtors indicated

that they desired to reaffirm the mortgage obligation. When

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their attorney inquired about reaffirmation, the credit union

responded, through counsel, that it would not enter into a

reaffirmation agreement unless the debtors also agreed to

reaffirm their other indebtedness with the credit union. In

taking this position, the credit union cited a "long-standing"

policy that stated in relevant part:

It shall be the policy of [the credit union]
to allow members to reaffirm debts owed to
the credit union. If members have more than
one debt with [the credit union], all debts
must be reaffirmed or re-written (post-
petition). Reaffirmation will not be
granted to members who wish to have some
debts excused (discharged), and to reaffirm
others.

Initially, the debtors' counsel tried to get the credit

union to accept a reaffirmation of the secured indebtedness

alone. When that effort failed, he signaled that the debtors

would consider reaffirming all of their obligations to the

credit union. The credit union then proposed a comprehensive

reaffirmation package that bundled the debtors' outstanding

obligations into two loans (each secured by a home mortgage) and

dramatically reduced the debtors' total monthly payments. The

debtors executed the papers presented by the credit union.

The deal came a cropper when the debtors' counsel

balked. See 11 U.S.C. § 524(c)(3)(A)-(B) (stipulating that, as

a condition precedent to reaffirmation, counsel for a

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represented debtor must certify that the agreement "represents

a fully informed and voluntary agreement by the debtor . . .

[and] does not impose an undue hardship on the debtor"). In

refusing to approve the arrangement, the lawyer singled out the

proposed reaffirmation of the unsecured debts and questioned

whether his clients were "succumbing to the extortion that is

inherently present in the Credit Union's all or nothing approach

to reaffirmation."

The "linked" reaffirmation agreements were filed with

the bankruptcy court. Absent counsel's stamp of approval,

however, the court had no choice but to reject them.1

The debtors promptly notified the credit union that

they remained willing to reaffirm the mortgage, shorn of any

linkage to the unsecured debts. Further negotiations ensued.

The credit union and the debtors reached a second accord, this

time purposing to reaffirm the secured indebtedness on its

original terms and to reaffirm the unsecured debts without

interest. Despite these changes, the debtors' lawyer remained

adamant in his refusal to endorse the arrangement.

1The reaffirmation papers were presented to the bankruptcy
court eighteen days after the court entered a general discharge.
Because this sequencing violated 11 U.S.C. § 524(c)(1), the
debtors moved to vacate the discharge for the limited purpose of
allowing consideration of the reaffirmation agreements. There
being no objection, the bankruptcy court granted the motion.
See 11 U.S.C. § 727(a)(10).

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 Although the revised agreements lacked the imprimatur

of the debtors' counsel, the debtors filed them with the

bankruptcy court. The debtors then commenced an adversary

proceeding charging the credit union with a violation of the

automatic stay, 11 U.S.C. § 362(a)(6), and seeking sanctions.

After some skirmishing (not relevant here), the bankruptcy court

concluded that the credit union's efforts to condition

reaffirmation of the mortgage debt upon the simultaneous

reaffirmation of other (unsecured) debts violated the automatic

stay in two ways. Jamo I, 253 B.R. at 127-30. First, the

credit union's insistence upon linkage constituted an

impermissibly coercive attempt to "strong-arm" the debtors into

reaffirming their separate, unsecured obligations. Id. at 127-

29. Second, the credit union had engaged in prohibited conduct

by threatening to foreclose on the debtors' home. Id. at 129-

30.

Consistent with these conclusions, the court enjoined

the credit union from (1) foreclosing on the mortgage for any

bankruptcy-related reason, (2) calling the mortgage on account

of an asserted payment default for at least one year, (3)

collecting (or attempting to collect) any attorneys' fees or

costs accruing prior to the effective date of the injunction,

(4) conditioning any reaffirmation of the mortgage debt upon the

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debtors' reaffirmation of their unsecured obligations, and (5)

withholding its consent to reaffirmation of the mortgage debt on

the terms specified in the original loan documents. Id. at 130.

Effectively, then, the bankruptcy court overrode the parties'

agreement to reaffirm the unsecured debts and (as a sanction)

compelled reaffirmation of the mortgage debt on its original

terms. To cap matters, the court awarded attorneys' fees and

costs to the debtors. Id. at 130-31.

The credit union appealed, but the BAP affirmed the

judgment. Jamo II, 262 B.R. at 165-68. This further appeal

ensued.

II. THE MERITS

We traverse an analytical path that delineates the

structure of, and the relationship between, two mainstays of the

Bankruptcy Code: reaffirmation and the automatic stay. We turn

then to the question of whether the credit union transgressed

the automatic stay either by conditioning reaffirmation of the

mortgage indebtedness upon the reaffirmation of separate,

unsecured obligations, or by engaging in strong-arm tactics.

A. The Statutory Interface.

To put this case into perspective, it is necessary to

understand how the practice of reaffirmation and the operation

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of the automatic stay implicate bankruptcy practice. We turn to

that task.

1. Reaffirmation. Within thirty days of filing a

bankruptcy petition, a Chapter 7 debtor must serve a statement

of intention with respect to outstanding consumer debts that are

secured by property of the bankrupt estate. 11 U.S.C. §

521(2)(A). The debtor may, of course, surrender the collateral

to the secured creditor. Id. To retain it, however, he must

(a) demonstrate the applicability of a recognized bankruptcy

exemption, (b) pay off the secured creditor in full (thereby

redeeming the collateral), or (c) reaffirm the secured debt.2

Id. The focus here is on reaffirmation.

The reaffirmation option is spelled out in 11 U.S.C.

§ 524(c). We recently explained that section 524(c) requires

reaffirmation agreements to satisfy five general criteria. Such

an agreement must

(i) be executed before the [general]
discharge has been granted;
(ii) be in consideration for a dischargeable
debt, whether or not the debtor waived
discharge of the debt;

2
The case law in this circuit indicates that these three
options are exclusive. Bank of Boston v. Burr (In re Burr), 160
F.3d 843, 847-48 (1st Cir. 1998). That view is contradicted by
other authority. E.g., McClellan Fed. Credit Union v. Parker
(In re Parker), 139 F.3d 668, 673 (9th Cir. 1998). We need not
explore that conflict today.

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 (iii) include clear and conspicuous
statements that the debtor may rescind the
reaffirmation agreement at any time prior to
the granting of the general discharge, or
within sixty days after the execution of the
reaffirmation agreement, whichever occurs
later, and that reaffirmation is neither
required by the Bankruptcy Code nor by
nonbankruptcy law;
(iv) be filed with the bankruptcy court; and
(v) be accompanied by an affidavit of the
debtor's attorney attesting that the debtor
was fully advised of the legal consequences
of the reaffirmation agreement, that the
debtor executed the reaffirmation agreement
knowingly and voluntarily, and that the
reaffirmation agreement would not cause the
debtor "undue [e.g., financial] hardship."

Whitehouse v. LaRoche, 277 F.3d 568, 574 (1st Cir. 2002).

There is, however, an overarching requirement. Section

524(c) makes manifest that reaffirmation requires a meeting of

the minds. The statutory text uses the word "agreement" no less

than nineteen separate times, and this pervasive emphasis can

only mean that Congress envisioned reaffirmations as consensual.

In conventional legal parlance the essence of an agreement is

the existence of mutual consent, e.g., Black's Law Dict. 67 (7th

ed. 1999); Restatement (Second) of Contracts § 3 (1981), and the

presumption is "that Congress knew and adopted the widely

accepted legal definitions of meanings associated with the

specific words enshrined in the statute," United States v.

Nason, 269 F.3d 10, 16 (1st Cir. 2001).

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 We conclude, therefore, that section 524(c) envisions

reaffirmation agreements as the product of fully voluntary

negotiations by all parties. Whitehouse, 277 F.3d at 575; Bell

v. Gen. Motors Acceptance Corp. (In re Bell), 700 F.2d 1053,

1056 (6th Cir. 1983). Two things follow from this conclusion.

First, both the creditor and the debtor must consent to

reaffirmation. See In re Turner, 156 F.3d 713, 718 (7th Cir.

1998); Home Owners Funding Corp. v. Belanger (In re Belanger),

962 F.2d 345, 348 (4th Cir. 1992); see also 4 Collier on

Bankruptcy ¶ 524.04[1] (15th rev. ed. 2001) ("[T]o be an

enforceable agreement, the reaffirmation agreement must . . . be

one to which both the debtor and creditor agree."). Second,

just as a debtor is not obliged to seek reaffirmation, so too a

creditor retains the right to reject any and all reaffirmation

proposals, for whatever reason. In re Turner, 156 F.3d at 718-

19; Brown v. Pa. State Employees Credit Union (In re Brown), 851

F.2d 81, 85 (3d Cir. 1988); In re Bell, 700 F.2d at 1056.

We add a caveat. Although reaffirmation is consensual

in nature, the myriad safeguards erected by Congress reflect its

recognition that a debtor's decision to enter into a

reaffirmation agreement is likely to be fraught with

consequence. In point of fact, reaffirmation represents the

only vehicle through which an otherwise dischargeable debt can

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survive the successful completion of Chapter 7 proceedings.

Moreover, once a debt is reaffirmed, the creditor can proceed to

enforce its rights as if bankruptcy had not intervened. Because

reaffirmation constitutes a debtor-invoked exception to the

tenet that underpins the bankruptcy system — the "fresh start"

principle — a reaffirming debtor must be afforded some

protection against his own (potentially) short-sighted

decisions.

Section 524(c) reflects Congress's intent to provide

this protection, thereby safeguarding debtors against unsound or

unduly pressured judgments about whether to attempt to repay

dischargeable debts. In re Duke, 79 F.3d 43, 44 (7th Cir.

1996); 4 Collier on Bankruptcy, supra, ¶ 524.04. To cloak

debtors in this protective garb, courts generally have insisted

that reaffirmation agreements strictly comply with the

conditions enumerated in the statute. E.g., Whitehouse, 277

F.3d at 575; DuBois v. Ford Motor Credit Co., 276 F.3d 1019,

1022 (8th Cir. 2002); Bessette v. Avco Fin. Svcs., 230 F.3d 439,

444 (1st Cir. 2000), cert. denied, 532 U.S. 1048 (2001). By

like token, courts have insisted upon a showing that a

reaffirmation agreement is not the product of abusive creditor

practices. In re Duke, 79 F.3d at 44-45.

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 2. The Automatic Stay. The automatic stay is one of

the fundamental protections that the Bankruptcy Code affords to

debtors. As its name suggests, the stay springs into effect

upon the filing of a bankruptcy petition. Sunshine Dev., Inc.

v. FDIC, 33 F.3d 106, 113 (1st Cir. 1994). The stay effectively

suspends all collection efforts (including foreclosures), thus

giving the debtor breathing room. See Soares v. Brockton Credit

Union (In re Soares), 107 F.3d 969, 975 (1st Cir. 1997); see

also 11 U.S.C. § 362(a)(6) (prohibiting "any act to collect,

assess, or recover a claim against the debtor that arose before

the commencement of the [bankruptcy proceeding]"). The

automatic stay remains in effect unless and until a federal

court either disposes of the underlying case, 11 U.S.C. §

362(c)(2), or grants relief to a particular creditor, id. §

362(d)-(f).

3. The Interplay. Congress's encouragement to

creditors and debtors alike to move expeditiously to negotiate

reaffirmation agreements is in some tension with the automatic

stay. Although Congress has explicitly excepted a handful of

actions from the purview of the stay, see id. § 362(b)(1)-(18),

this enumeration does not include the negotiation of

reaffirmation agreements. Taken to an extreme, the automatic

stay could be construed to prohibit all post-petition contact

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between creditors and debtors pertaining to dischargeable debts,

including the negotiation of reaffirmation agreements. But the

Bankruptcy Code should be read as a whole, with a view toward

effectuating Congress's discerned intent. MSR Exploration, Ltd.

v. Meridian Oil, Inc., 74 F.3d 910, 914 (9th Cir. 1996). Such

a commonsense approach leads us to reject a reading of the

automatic stay provision that would effectively preclude all

post-petition negotiations anent reaffirmation. To read the

automatic stay provision that expansively would emasculate

section 524(c) and thwart Congress's evinced intent of allowing

parties to reach arm's-length reaffirmation agreements without

undue delay. As the Seventh Circuit astutely observed:

The option of reaffirming would be empty if
creditors were forbidden to engage in any
communication whatsoever with debtors who
have pre-petition obligations. If that were
the rule, it is also hard to see what
purpose the detailed rules governing
enforceability of reaffirmation agreements
contained in § 524(c) would serve.

In re Duke, 79 F.3d at 45.

To be sure, there is a fine line between hard-nosed

negotiations and predatory tactics — and if the automatic stay

is to have any bite, it must forfend against the latter. Courts

have labored long to plot this line. The most sensible rule —

and one that we endorse — is that a creditor may discuss and

negotiate terms for reaffirmation with a debtor without

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violating the automatic stay as long as the creditor refrains

from coercion or harassment. Cox v. Zale Del., Inc., 239 F.3d

910, 912 (7th Cir. 2001); Pertuso v. Ford Motor Credit Co., 233

F.3d 417, 423 (6th Cir. 2000). We believe that this measured

approach gives effect to all parts of the statutory scheme,

affording all parties a reasonable opportunity to consummate

binding reaffirmation agreements while at the same time

shielding debtors from unseemly creditor practices.

Accordingly, we hold that, while the automatic stay is in

effect, a creditor may engage in post-petition negotiations

pertaining to a bankruptcy-related reaffirmation agreement so

long as the creditor does not engage in coercive or harassing

tactics.

B. The Attempt at Linkage.

This brings us to the question of linkage: whether a

creditor's attempt to condition reaffirmation of a secured debt

upon reaffirmation of separate, unsecured debts crosses the line

and should be deemed coercive as a matter of law. Both the

bankruptcy court, Jamo I, 253 B.R. at 127-29, and the BAP, Jamo

II, 262 B.R. at 165-66, answered that question affirmatively.

For purposes of our review, "we focus on the bankruptcy court's

decision, scrutinize that court's findings of fact for clear

error, and afford de novo review to its conclusions of law,"

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without according any special deference to the BAP's

pronouncements. Brandt v. Repco Printers & Litho., Inc. (In re

Healthco Int'l, Inc.), 132 F.3d 104, 107 (1st Cir. 1997).

There are two different ways in which a debtor might

prevail on the linkage issue. The first is if a per se rule

applies, that is, if any and all efforts by creditors to

construct such a tie are deemed inherently coercive (and,

therefore, violative of the automatic stay). The second is

fact-specific; even if an "all or nothing" negotiating posture

is not per se coercive, a creditor still might violate the

automatic stay by articulating or acting upon that policy in an

inappropriate manner during the course of negotiations. We

examine both alternatives.

1. The Per Se Rule. Both lower courts took the

position that a creditor's refusal to reaffirm a secured debt

unless the debtor simultaneously agrees to reaffirm additional,

unsecured debts constitutes a per se violation of the automatic

stay. Jamo II, 262 B.R. at 165-66; Jamo I, 253 B.R. at 127-29.

This is an abstract legal proposition, and, as such, engenders

de novo review. 229 Main St. Ltd. P'ship v. Mass. Dep't of

Envtl. Prot. (In re 229 Main St. Ltd. P'Ship), 262 F.3d 1, 3

(1st Cir. 2001); In re Soares, 107 F.3d at 973.

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 To some extent, we write on a pristine page: no

federal court of appeals has spoken to the issue. There is,

however, a smattering of apposite case law. The bankruptcy

courts that have addressed the question mostly reject a per se

rule. See, e.g., In re Brady, 171 B.R. 635, 639-40 (Bankr. N.D.

Ind. 1994); In re Briggs, 143 B.R. 438, 460 (Bankr. E.D. Mich.

1992); Schmidt v. Am. Fletcher Nat'l Bank & Trust Co. (In re

Schmidt), 64 B.R. 226, 228-29 (Bankr. S.D. Ind. 1986); but see

Green v. Nat'l Cash Register Co. CI Corp. Sys. (In re Green), 15

B.R. 75, 78 (Bankr. S.D. Ohio 1981) (holding that such an

attempt at linkage is inherently coercive and, therefore,

violates the automatic stay).

We too reject a per se rule. When an individual debtor

voluntarily files for bankruptcy, he usually has the option of

proceeding under either Chapter 7 or Chapter 13. Unlike Chapter

7, Chapter 13 contains a "cram down" provision, 11 U.S.C. §

1325(a)(5)(B), which permits a debtor to retain the collateral

underlying a secured obligation without the creditor's approval.

Bank of Boston v. Burr (In re Burr), 160 F.3d 843, 848 (1st Cir.

1998). Even if a debtor belatedly decides that "cramming down"

is in his best interest, a decision to file under Chapter 7

ordinarily is not irrevocable. The Bankruptcy Code, with only

a few exceptions, see 11 U.S.C. § 706(a), allows a debtor who

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initially has filed for Chapter 7 relief to jump midstream to

Chapter 13.

Conversely, a debtor who persists in traveling the

Chapter 7 route knows that reaffirmation depends entirely on his

ability to come to terms with the secured creditor. He also

knows (or, at least, has every reason to expect) that the

creditor may drive a hard bargain. Hence, a debtor must bear

some degree of responsibility for choosing to proceed under

Chapter 7.

Perhaps more important, the Bankruptcy Code does not

outlaw linkage as an element of reaffirmation negotiations. The

absence of such a prohibition makes sense, for a secured

creditor's insistence on linkage does not force a debtor to

reaffirm unsecured obligations. As we have explained,

reaffirmation agreements are consensual, and a debtor always has

the option of walking away from an unattractive proposal.3

Of course, a debtor whose home is at stake is in an

unenviable position. But a Chapter 7 discharge is not a walk in

the park; it is "a benefit that comes with certain costs." In

re Burr, 160 F.3d at 848. Consequently, a Chapter 7 debtor is

3In point of fact, a debtor is the only party empowered to
seek the bankruptcy court's approval of a reaffirmation
agreement. See Fed. R. Bankr. P. 4008; see also Whitehouse, 277
F.3d at 571 n.1; 4 Collier on Bankruptcy, supra, ¶ 524.04.

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not inoculated against the necessity for making hard choices.

If the debtor surrenders his home, he is entitled to erase all

his debts (secured and unsecured) and start afresh. If,

however, his paramount interest is in keeping his home and he

cannot redeem the collateral, he must come to terms with the

mortgagee. Bankruptcy, as life itself, is a series of

tradeoffs.

The debtors argue for a per se rule on policy grounds,

but we doubt the prophylactic effects of such a rule.

Creditors, as a class, have a highly developed instinct for

self-protection, and, as the amici point out, such a rule could

open Pandora's jar and produce a distinctly unfavorable climate

for debtors. Creditors might become more reluctant to extend

both secured and unsecured loans to a particular debtor, or

might insist upon cross-collateralization clauses in all loans,

or might categorically decide that foreclosure is a more

judicious option than reaffirmation negotiations restricted to

a single secured debt. Then, too, a creditor intent on

negotiating for a "linked" reaffirmation arrangement simply

could petition for relief from the automatic stay and refuse to

negotiate until such relief had been obtained. This would not

only delay the Chapter 7 proceedings, but also increase the

ultimate cost of reaffirmation to the debtor. For these

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reasons, we find the debtors' policy-based arguments lacking in

force.

That ends this inquiry. Based on the foregoing

analysis, we reject the proposition that a creditor's decision

to withhold reaffirmation of a secured debt unless the debtor

agrees to reaffirm other, unsecured debts amounts to a per se

violation of the automatic stay.

2. The Credit Union's Conduct. Even if a creditor's

attempt to condition reaffirmation of a secured debt upon

reaffirmation of other, unsecured obligations does not

constitute a per se violation of the automatic stay, the

question remains whether the creditor's conduct in a particular

instance amounts to a violation of the automatic stay. While we

review the bankruptcy court's findings of fact for clear error,

Boroff v. Tully (In re Tully), 818 F.2d 106, 108 (1st Cir.

1987), we afford plenary review to the question of whether the

evidence is legally sufficient to support particular findings.

Here, the bankruptcy court calumnized the credit union for

improperly bringing "leverage" to bear on the debtors'

reaffirmation decision and, relatedly, for menacing the debtors

with threats of foreclosure. Jamo I, 253 B.R. at 129-30. To

the extent that these are findings that the credit union engaged

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in impermissibly coercive conduct, they lack adequate record

support. We explain briefly.

The bankruptcy court's condemnation of the credit union

for using its leverage manifests a fundamental misunderstanding

of a creditor's rights vis-à-vis a debtor. In and of itself,

the act of filing a bankruptcy petition negates the original

pre-bankruptcy bargain between debtor and creditor. In re Burr,

160 F.3d at 848 (explaining that Chapter 7 debtors have no right

"to maintain with their secured creditors advantageous

arrangements in place prior to filing"). Thus, subject only to

the constraints imposed by section 524(c) or by other provisions

of the Bankruptcy Code, the parties to a secured obligation are

free to strike a new bargain.

So viewed, the bankruptcy court's condemnation of the

credit union's use of leverage amounts to a variation of its per

se rule — a rule that we already have rejected. See supra Part

II(B)(1). A reaffirmation negotiation — like any other

negotiation — contemplates give and take between the

participants. The fact that one party has a superior bargaining

position does not warrant a court in placing a thumb on the

scales. See In re Burr, 160 F.3d at 848 (recognizing that an

oversecured creditor may attempt to use its "superior bargaining

power" to obtain creditor-favorable terms in negotiating

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reaffirmation agreements without violating the automatic stay);

see also In re Briggs, 143 B.R. at 454 (declaring that it would

be "absurd" to interpret the Bankruptcy Code as prohibiting a

secured creditor from using its leverage in negotiating a

reaffirmation agreement).

That leaves the so-called threats of foreclosure. In

theory, threats of foreclosure or repossession might justify a

finding that a secured creditor has violated the automatic stay.

See In re Duke, 79 F.3d at 44-45; see also In re Brown, 851 F.2d

at 86 (noting that the automatic stay continues to preclude

creditor communications that "threat[en] immediate action by

creditors, such as a foreclosure or a lawsuit"). The facts of

this case, however, do not support such a finding.

The bankruptcy court focused on written, rather than

oral, communications. In corresponding with the debtors (or,

more precisely, with the debtors' counsel), the credit union

sent a total of nine separate reaffirmation-related letters. In

those letters, it referred three times to foreclosure. The

question, then, is whether these references, read favorably to

the bankruptcy court's finding, plausibly can be deemed

coercive. We think not.

The first mention of foreclosure came in a response to

the debtors' initial request for reaffirmation of the mortgage

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indebtedness. After outlining the credit union's "all or

nothing" policy, its lawyer asked the debtors' counsel to

ascertain whether the debtors "will be discharging all their

obligations," and if so, whether "they would be amenable to a

deed in lieu of foreclosure."

The second foreclosure reference transpired after the

bankruptcy court rejected the initial reaffirmation proposal.

At that point, the debtors' attorney declared that his clients

were willing to reaffirm the mortgage indebtedness (but no other

obligations) and vowed "to fully litigate any foreclosure

action" instituted by the credit union. Responding to this vow,

the credit union's counsel wrote that:

[I]t was the Credit Union's desire that the
Parties could have arrived at a mutually
agreeable resolution. As foreclosing was
not on the Credit Union's agenda, it would
be premature to extensively respond to your
assertions . . . . Should the Credit Union
eventually foreclose, however, the terms of
the Jamos' note and mortgage are that the
Jamos are liable for the Credit Union's
costs and fees of enforcing the obligation,
and therefore, should the Credit Union
prevail, the amount due increases rapidly as
a result of all this litigation. Of course,
the Jamos are not personally exposed to this
liability, but such sums are secured by the
mortgage.

The third reference came in a letter to the debtors

that limned the terms of the second reaffirmation proposal. In

that epistle, the credit union's lawyer expressed his belief

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that the contemplated overall reduction in payments would

"eliminat[e] the risks of future litigation, including

foreclosure."

These references were unarguably benign. The first

letter merely inquired whether the debtors, if they decided to

discharge all their debts (including the mortgage indebtedness),

would be willing to deliver a deed to the credit union in lieu

of foreclosure. The next letter was nothing more than a

temperate response to statements made by the debtors' counsel.

Far from hanging the Damoclean sword of foreclosure over the

debtors' heads, the credit union accurately delineated the

debtors' foreclosure-related liability and made clear that

foreclosure "was not on [its] agenda." The final reference to

foreclosure was likewise innocuous; in context, it cannot

reasonably be deemed tantamount to a threat.

To say more on this point would be supererogatory.

Because the credit union's passing references to foreclosure

cannot reasonably be construed as threatening "immediate action"

against the debtors, In re Brown, 851 F.2d at 86, those

references were not impermissibly coercive. Accordingly, the

credit union did not violate the automatic stay.

III. THE REMEDY

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 The question of remedy remains. Although the

bankruptcy court erred in finding a violation of the automatic

stay, its disapproval of the linked reaffirmation agreements is

supportable on an independent ground. The critical datum is

that the debtors' attorney, believing that reaffirmation on the

agreed terms was not in the debtors' best interest, refused to

approve the arrangement. Absent counsel's approbation, no valid

reaffirmation could occur.4 11 U.S.C. § 524(c)(3); Whitehouse,

277 F.3d at 575 (explaining that a represented debtor must

strictly comport with section 524(c) criteria to effect a valid

reaffirmation).

The bankruptcy court's granting of injunctive relief,

attorneys' fees, and costs against the credit union is less

easily defended. We review a bankruptcy court's imposition of

sanctions for abuse of discretion. Schwartz v. Kujawa (In re

Kujawa), 270 F.3d 578, 581 (8th Cir. 2001). Here, however, both

the injunctive relief and the assessment of fees and costs rest

4 There is an interesting question as to whether section 524
requires bankruptcy court approval of a reaffirmation agreement
if the debtor's counsel has approved it. See Rein v. Providian
Fin. Corp., 270 F.3d 895, 901 n.9 (9th Cir. 2001) (discussing
this point); see also BankBoston, N.A. v. Nanton, 239 B.R. 419,
423-25 (Bankr. D. Mass. 1999) (asserting that the bankruptcy
court retains the authority to approve or disapprove
reaffirmation agreements involving a represented debtor,
notwithstanding approval by the debtor's counsel). We have no
occasion to reach that question here.

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squarely on the court's erroneous determination that the credit

union violated the automatic stay. Thus, these aspects of the

court's order cannot endure. See Sunshine Dev., 33 F.3d at 117

(dissolving injunction that erroneously restrained FDIC from

exercising its lawful powers); see also In re Grand Jury

Subpoena, 138 F.3d 442, 444 (1st Cir. 1998) (explaining that "a

court that predicates a discretionary ruling on an erroneous

view of the law inevitably abuses its discretion").

In an attempt to keep the remedial order intact, the

debtors rely upon 11 U.S.C. § 105(a). Their reliance is

mislaid.

Section 105(a) — a statute that empowers bankruptcy courts to

"issue any order, process, or judgment that is necessary or

appropriate" to effectuate the provisions of the Bankruptcy Code

— supplies a source of authority for the bankruptcy court's

imposition of sanctions in an appropriate case. See Bessette,

230 F.3d at 445; Hardy v. United States ex rel. IRS (In re

Hardy), 97 F.3d 1384, 1389-90 (11th Cir. 1996). But section

105(a) does not provide bankruptcy courts with a roving writ,

much less a free hand. The authority bestowed thereunder may be

invoked only if, and to the extent that, the equitable remedy

dispensed by the court is necessary to preserve an identifiable

right conferred elsewhere in the Bankruptcy Code. See Norwest

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Bank Worthington v. Ahlers, 485 U.S. 197, 206 (1988) (explaining

that a bankruptcy court's equitable powers "can only be

exercised within the confines of the Bankruptcy Code"); Noonan

v. Sec'y of HHS (In re Ludlow Hosp. Soc'y, Inc.), 124 F.3d 22,

27 (1st Cir. 1997) (similar).

The relief ordered below falls short of this benchmark.

The bankruptcy court's order was designed to implement the

reaffirmation option limned in section 524(c). As said, see

supra Part II(B), the order failed in this endeavor: forced to

operate without much precedential guidance, the court

misapprehended the interplay between section 524(c) and section

362(a), mischaracterized lawful conduct as impermissibly

coercive, and issued a flawed order. Absent any antecedent

violation either of the automatic stay or of some other

independent provision of the Bankruptcy Code, the bankruptcy

court lacked the power, section 105(a) notwithstanding, to

modify the proposed reaffirmation arrangement, compel the credit

union to enter into a judicially-crafted reaffirmation

agreement, or award monetary sanctions in the form of attorneys'

fees and costs.

IV. CONCLUSION

We need go no further. We neither underestimate the

difficulty of the question presented nor disparage the lower

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courts' thoughtful attempts to resolve it. In the end, however,

we see the matter differently. Consequently, we reverse the

decision of the BAP and remand the case to that tribunal with

directions to vacate the bankruptcy court's judgment and to

remand the matter to the bankruptcy court for further

proceedings consistent with this opinion.

Reversed.

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