Skip to main content

Search

Home Foreclosures: 9.3.7.6 Debtor Must Conduct Speedy Discovery

Discovery is available concerning motions for relief from stay based on Federal Rule of Civil Procedure 9014. Obtaining discovery on a motion for relief from stay may provide an early opportunity not just to obtain materials related to the motion, but also to obtain other items which may be useful if litigation against the creditor is contemplated.

Home Foreclosures: 9.3.7.7 Burden of Proof

The Bankruptcy Code provides that the burden of proof in stay litigation is on the party seeking relief from the stay as to the issue of the debtor’s equity in property.221 In other words, if the question of equity is central to whether a creditor’s interest is adequately protected from harm due to the stay, the creditor must prove that the debtor lacks sufficient equity to provide adequate protection.222 The burden of proof for all other issues is on the party opposing relief from the stay.

Home Foreclosures: 9.3.7.8.1 Generally

A common problem in bankruptcy cases involving disputed secured claims arises when the creditor files an early motion for relief from the automatic stay to proceed with a foreclosure. For example, suppose you file a chapter 13 case for a client who has defaulted on both a first mortgage and a home equity loan.

Home Foreclosures: 9.3.7.8.2 Responding to the motion

Although it is generally true that you cannot raise counterclaims directly to a motion for relief from stay, it is clear that defenses are permitted.226 It is thus possible to plead that the motion should be denied because the creditor has no cognizable claim, or has a claim which is substantially less than the amount asserted. It is helpful, if possible, to set out the actual defenses fully and to explain how they would reduce or eliminate the creditor’s claim in an accompanying memorandum of law.

Home Foreclosures: 9.3.7.8.3 The applicable legal standard for evaluating consumer defenses to a motion for relief

A number of courts have held that the existence of defenses to a creditor’s claim is relevant to a determination of that creditor’s motion for relief.227 Commonly, upon a showing of “likelihood of success on the merits” courts will continue the stay until the objection to claim can be heard and finally determined.228 These courts liken the process of continuing the automatic stay to a request for preliminary injunctive relief.

Home Foreclosures: 9.3.7.8.4 Practice tips

1. Make sure the underlying issues are joined quickly. Often the court is more comfortable continuing the stay if it is convinced that the underlying issues can be resolved relatively quickly. Thus, it is a good idea to file an adversary proceeding challenging the creditor’s claim at an early stage, preferably before the hearing on the motion for relief. You can then point to the existence of that proceeding and your willingness to expedite it as evidence that the creditor will not be required to wait too long before a determination of its rights.

Student Loan Law: 17.3.2.4 Manipulation of Outcome Measures

Unfortunately, profit and growth motives create incentives for schools to inflate or otherwise misrepresent performance data—such as completion and job placement rates—in order to maintain and grow profits.449 According to a complaint filed by the California Attorney General against Corinthian, Corinthian’s “marketing studies show that student ‘[e]nrollment largely hinges on selling affordability & [job] placement.’ . . .

Student Loan Law: 4.3.7 Deferments for FFEL Program Loans Extended Before July 1, 1993

A different set of rules applies to those with FFEL Program loans extended before July 1, 1993. Although loans incurred in 1993 and before are now quite old, advocates may still see clients with these loans. The elimination of the statute of limitations for student loan collections makes it very difficult to escape a student loan, no matter how old it is.

The grounds for deferment under these loans include:

Home Foreclosures: 14.4.5 Protection from Foreclosure for Military Personnel

The Servicemembers Civil Relief Act restricts foreclosure sales of real property owned and occupied by a servicemember or their dependents while the servicemember is on active duty.395 If state law requires that an assessment lien be enforced through a judicial proceeding, the Act would apply as it provides general procedural protections to servicemembers who are parties to civil litigation.

Home Foreclosures: 14.4.6 Protection from Foreclosure During a Government Shutdown

Nevada law was amended in 2019 to provide that if a unit owner or the owner’s successor in interest is a federal worker, tribal worker, or state worker, or a household member or landlord of a federal worker, tribal worker, or state worker, an association shall not initiate the foreclosure of a lien by sale during the period starting on the date that a government shutdown405 begins and ending ninety days after the date the shutdown ends.406 This prohibition does not apply if a court determines th

Home Foreclosures: 14.4.7 Mortgage Holder or Servicer Liability for Unpaid Assessments

Due to a mortgage holder’s negligence or malfeasance, or that of its servicer, a unit owner who is paying condominium assessments through an escrow account set up by the mortgage servicer will sometimes nevertheless receive notice of a delinquency. Escrow payments may have been misdirected, lost, or retained by the servicer. When this occurs, further investigation is necessary to find out whether payments were sent in a timely fashion by the servicer.410

Home Foreclosures: 14.5.2 Priority of Claims to Foreclosure Proceeds

State laws differ regarding the order in which various liens are settled from funds that are available after the property has been sold through foreclosure. These laws often refer to the dates the liens at issue were recorded and to what kinds of liens are involved. Certain kinds of liens are generally superior to a condominium association lien, such as a lien for real property taxes and a first mortgage on the property, provided the mortgage was recorded before the association lien.

Home Foreclosures: 14.5.3 Superpriority Lien Provisions in Condominium Acts

A number of states have enacted laws that give the condominium association’s lien “superpriority” or “super lien” status under certain circumstances.427 These laws, which are fashioned after a provision in the Uniform Common Interest Ownership Act,428 bestow the association’s lien with a higher priority than various other types of liens.

Home Foreclosures: 14.5.6 Third Party’s Liability for Assessments Following Sale

When a condominium unit is sold at a foreclosure sale, a question often arises as to who is responsible for paying any remaining unpaid assessments on the unit. Is the purchaser at the foreclosure sale responsible for making those payments to the association?

The answer to this question may depend largely upon whether or not the purchaser at foreclosure is the first mortgagee.

Home Foreclosures: 14.5.7 Dischargeability of Assessments in Bankruptcy

Section 523(a)(16) of the Bankruptcy Code makes nondischargeable certain condominium and cooperative fees or assessments in chapter 7 cases.532 The provision was amended in 2005 to add fees and assessments with respect to a lot in a homeowners’ association and to change the language concerning when fees are nondischargeable. The prior standard had been limited to fees incurred during a period that the debtor occupied the dwelling.

Home Foreclosures: 14.6 Obligations of Tenants Where Owner Is Delinquent in Payments

A handful of condominium acts specifically address the obligations of tenants in the situation where a unit owner is delinquent in making payments to the condominium association.549 Generally speaking, these provisions state that if a unit is occupied by a tenant and the unit owner is delinquent in paying any monetary obligation due to the association for a specified period of time, the association may demand payments directly from the tenant.550 The obligation to make payments is thereafter a c

Home Foreclosures: 14.7 Condominium Owner Bill of Rights and Responsibilities

The District of Columbia recently amended its condominium statute to include the Condominium Association Bill of Rights and Responsibilities. This Bill of Rights essentially restates the rights and obligations already articulated in the statute, and it also requires that this summary be provided to new condominium unit owners and be posted on the District’s Department of Housing and Community Development website, in at least 12-point type.

Student Loan Law: 18.4.3 Developing a Case

One of the best ways to develop evidence of school malfeasance is to find disgruntled former employees. Employee names, school misconduct, and other information about the school’s operation are sometimes revealed in litigation against the school for labor and employment disputes or Americans with Disabilities Act (ADA) violations.

Bankruptcy Basics: About the Form

The statement of financial affairs (Official Form 107) is required to be completed by all individual debtors. 11 U.S.C. § 521(a)(1)(B)(iii); Bankruptcy Rule 1007(b)(1). The form contains detailed questions that must be answered, but it is relatively simple to fill out. It is important to pay careful attention to the specific time period requested, as various questions ask for information about several different time periods. Most of the questions include a box labeled “no” which should be checked if that is the appropriate response to the given question.

Student Loan Law: 9.3.8 Bankruptcy and Tax Offsets

Filing a personal bankruptcy petition before the offset occurs triggers the automatic stay provision of the U.S. Bankruptcy Code.98 The stay prohibits virtually all actions against the debtor’s property, including intercepts of owed tax refunds based on a student loan default.99 The Department claims it will always readily and promptly return any amount taken by an offset during a pending bankruptcy.

Student Loan Law: 10.6.2.5.4.1 The group discharge process

The 2016 borrower defense regulations that went into effect in October 2018 established specific procedures through which the Department may provide relief to groups of borrowers who attended a school where widespread school misconduct is found, or where there are otherwise “common facts and claims” that support providing relief through a group process.593 Unfortunately, only the Secretary may initiate a group process under these regulations, and a Department official—rather than a borrower’s lawyer or