So you are chugging along with a foreclosure action (either on real and/or personal property) only to be stopped in your tracks by the borrower filing a voluntary Chapter 7 bankruptcy petition. The usual, immediate thought is – “better contact our bankruptcy counsel to obtain relief from the automatic stay.” Well, perhaps, or perhaps you might want to contact the Chapter 7 Trustee first (either directly or through your bankruptcy counsel). Why? Maybe the Chapter 7 Trustee would be interested in liquidating that collateral for you though the bankruptcy system.

You just got your committee approvals for a new relation. It is a borrower you have been after for some time. Approvals are fairly standard and call for a secured credit facility with a priority all business asset lien.

The borrower is moving nearly all of its accounts to your bank for cash management too. But the borrower claims he needs to keep one account at a mutual since he is holding his breath that there will be demutualization and he will hit it big with stock redemption. You do not have the heart to crush his retirement dreams so you let him keep that other account.

For secured lenders, a consumer debtor’s chapter 13 bankruptcy filing can be a mixed bag.

It always starts so easy. Borrower comes in and wants to borrow money. Lenders want some form of collateral to secure (potentially) a loan and the Borrower happily agrees to provide, or pledge, collateral to secure a loan. Common examples are the Borrower pledging inventory, equipment or receivables (assuming of course there is no real estate to lien with a mortgage). Lender, either internally, or with outside counsel, prepares the necessary security agreement to document the pledge of collateral. This is generally the description of a secured transaction.

Lenders of troubled mortgages upon Massachusetts real property should carefully review their mortgages to avoid potential invalidation of such mortgages in bankruptcy. Bankruptcy courts in Massachusetts have led the charge in avoiding mortgages containing defects in notary clauses.

Massachusetts law requires that a validly executed acknowledgement be attached to a mortgage as a prerequisite to recording the mortgage in the registry of deeds.

For secured lenders, the single most dangerous provision of the U.S. Bankruptcy Code is section 506(c). This section permits the bankruptcy court to collect from the lender’s collateral the bankruptcy estate’s necessary expenses of preserving and disposing of the collateral, "to the extent of any benefit" to the lender.

As of December 1, 2015, many of the Official Forms for use in Bankruptcy Courts were updated. The changes were made as part of a forms modernization effort. Among the forms updated was the Official Proof of Claim Form (formerly Form B 10) used to assert a creditor’s claim in a bankruptcy case. The new Proof of Claim Form (Form 410) is particularly worth noting.

A recent and emerging trend in Chapter 7 bankruptcy cases is lawsuits brought by Chapter 7 trustees to recover from colleges and universities pre-petition tuition payments made by Chapter 7 debtors for their adult children’s post-secondary education. While many of these cases have settled, thus not resulting in reported decisions, there are four written decisions to date on this subject.¹ This article discusses the legal theory behind these avoidance actions and explores the universe of case law.