The debtor, Judy Emely Edwards, filed for bankruptcy under Chapter 7, but wanted to continue paying off the installment loans secured by two cars without reaffirming the debts and thus without continuing to be personally liable on the loans. The question presented by this case is, therefore, whether the options of surrender, redemption or reaffirmation provided in 11 U.S.C. Sec. 521 are exclusive or whether a debtor may retain secured property without doing more, so long as she is not in default on the underlying loans. Both the bankruptcy court and the district court held the Sec. 521 options to be exclusive because both the language of the Bankruptcy Code and the intent of its drafters contradict the view that a debtor may retain possession of collateral while continuing to make regularly scheduled installment payments, absent the creditor's consent. Edwards appeals. We affirm.

Merchants National Bank holds two promissory notes executed by the debtor, Judy Emely Edwards.1 These two notes are secured by a 1981 Plymouth Reliant and a 1981 GMC truck. Although Edwards has had trouble making timely payments on these loans in the past, she is presently current on all of her loan obligations to Merchants.2

On January 22, 1988, Edwards filed for relief under Chapter 7 of the United States Bankruptcy Code. Pursuant to 11 U.S.C. Sec. 521, she filed a statement of intention setting forth a plan to reaffirm the debts owing to Merchants.3 Edwards failed, however, to execute the corresponding reaffirmation agreements within the time period set out in 11 U.S.C. Sec. 521(2)(B).

Thereafter, a meeting of Edwards creditors was held as required by 11 U.S.C. Sec. 341. Following this meeting, the interim trustee entered his Report of No Assets/No Distribution, and abandoned the secured collateral from the bankruptcy estate. Subsequently, Edwards filed an amended statement of intention which evidenced an intent to retain possession of Merchants' collateral without reaffirming the debts for the car or the truck, but while continuing to make regularly scheduled payments.

Merchants, however, wanted Edwards' personal liability to continue and sought to compel her to perform according to her original statement of intention. A hearing was held before a bankruptcy judge and evidence was introduced. The bankruptcy court refused to compel Edwards to reaffirm the debts because it found that the Bankruptcy Code's policy of protecting debtors from the burdens of improvident reaffirmation agreements argued against compelling her to reaffirm. The bankruptcy court did, however, order Edwards to make a choice between reaffirming the debt, redeeming the collateral or surrendering the automobile and truck to Merchants, as set forth in Sec. 521. Edwards appealed to the district court, which affirmed the decision of the bankruptcy court. 95 B.R. 97. Edwards now appeals to this court.

11 U.S.C. Sec. 521(2)4 directs a debtor to file a statement of intention of his or her plans either for keeping or for relinquishing property abandoned by the estate or exempted from discharge. The Bankruptcy Code provides a debtor with three clear options in this regard. First, a debtor may choose to surrender the collateral to the creditor. If a debtor goes this route, the amount by which the debtor's obligations exceed the value of the collateral, if any, will be discharged. If, on the other hand, a debtor chooses to retain possession of secured collateral, he or she may choose to reaffirm the debt and enter into a new agreement with the creditor for repayment, 11 U.S.C. Sec. 524(c), or the debtor may redeem the collateral by paying the creditor the amount of the secured claim or the fair market value of the collateral, whichever is less, 11 U.S.C. Sec. 722.5

The question presented by this case is whether a debtor who files for relief under Chapter 7 of the Bankruptcy Code must make the choice provided in Sec. 521. Must the debtor, as a condition of retaining the property which secures an installment loan, either redeem it by paying for it lump-sum or expressly reaffirm the debt underlying the collateral--even though the debtor has performed, and continues to perform, all of the obligations of the installment loan agreement?6 At first glance, there appears to be a pronounced split of authority on this question. But a closer look at the decisions reveals that any existing split is narrow and inconclusive. Many of the cases cited on the point are largely inapposite.

For the proposition that the debtor may keep the collateral without reaffirming the agreement, for example, the appellant has cited Riggs Nat. Bank of Washington, D.C. v. Perry, 729 F.2d 982 (4th Cir.1984). Riggs is not, however, in point. The Riggs case addresses the question whether an ipso facto, or "default-upon-filing," clause in a loan agreement provides sufficient "cause" to allow an over-secured creditor to have an automatic stay modified or lifted. Riggs holds that a "default-upon-filing" clause alone does not justify the modification of a stay. Consequently, a debtor may retain oversecured property--without choosing between reaffirmation, redemption and the like--until the expiration of the automatic stay.

Riggs does not address the circumstances under which a debtor may retain property after the stay has been lifted and after discharge. In fact, the Riggs court refused to reach the question whether the options set forth in Sec. 521 were mandatory or discretionary. 729 F.2d at 986. Thus, Riggs does not deal with the issue presented by the case before us.7 Here, Merchants is not attempting to have the automatic stay lifted. Rather, it is asking that Edwards be required to select, and to perform, one of the options provided in the Bankruptcy Code. This is quite a different issue. The question before us is whether the scheme provided in Sec. 521 was intended to be exclusive and mandatory.

In answer to this question, the Sixth Circuit has held that a debtor who wishes to retain secured property must redeem or reaffirm, and that redemption cannot be accomplished through installment payments. In re Bell, 700 F.2d 1053, 1056-1057, 1058 (6th Cir.1983).8 We think this conclusion is correct. The language of Sec. 521 is mandatory ("The debtor shall ...") (emphasis added). Moreover, the statute clearly contemplates performance--within a specified period of time--of the alternatives outlined by it. ("The debtor shall ... perform his intention ..."). Id. (emphasis added).

In addition, as the Bell court states, reaffirmation is supposed to involve a fully voluntary negotiation on both sides. Permitting a debtor to retain property while keeping up installment payments without a reaffirmation of personal liability allows a debtor to force a new arrangement on a creditor. This negates the voluntarism contemplated by the statute. In re Bell, 700 F.2d at 1056. No debtor would reaffirm personal liability unless required to do so.

The 1984 Consumer Finance Amendments to the Bankruptcy Code were intended, inter alia, to protect creditors from the risks of quickly depreciating assets and to keep credit costs from escalating because of the too-ready availability of discharge. See In re White, 49 B.R. 869, 872 (Bankr.W.D.N.C.1985). This legislative purpose speaks strongly against permitting debtors to improve their position dramatically against secured creditors by relieving them of personal liability. When a debtor is relieved of personal liability on loans secured by collateral, the debtor has little or no incentive to insure or maintain the property in which a creditor retains a security interest. The value of the collateral may fall below the level of the loan, leaving the creditor undersecured and driving up future costs of credit.9

The Tenth Circuit has, however, recently decided that a bankruptcy court has discretion, as the facts warrant, to permit a debtor to retain collateral without either reaffirming or redeeming. Lowry Federal Credit Union v. West, 882 F.2d 1543, 1544, 1546 (10th Cir.1989). Lowry is, of course, distinguishable because here the bankruptcy court did not exercise its discretion to permit retention of collateral without reaffirmation or redemption. The Lowry court seemed to think that Sec. 521 was mandatory but that the trustee of the estate lacked any power to compel the debtor to act. 882 F.2d at 1546. This aspect of Lowry is not consonant with the plain language of the Bankruptcy Code. Lowry also renders the statutory scheme set up by Sec. 521 and Sec. 524 (the specific reaffirmation provision) nugatory. And Lowry does not comport with the spirit of the 1984 Amendments to the Bankruptcy Code. Hence, we decline to follow it.

For these reasons, we hold that 11 U.S.C. Sec. 521 requires a debtor to choose between the reaffirmation, redemption or surrender of property abandoned from the estate or exempted from discharge. The judgment of the district court is, therefore, AFFIRMED.