The Bamberger Blog » nonpayment http://www.bamberger.com/blog Fri, 03 Feb 2012 13:30:25 +0000 en hourly 1 http://wordpress.org/?v=3.3.1 Borrower Found to Have Filed Bankruptcy in Bad Faith http://www.bamberger.com/blog/2010/02/borrower-found-to-have-filed-bankruptcy-in-bad-faith/ http://www.bamberger.com/blog/2010/02/borrower-found-to-have-filed-bankruptcy-in-bad-faith/#comments Fri, 19 Feb 2010 13:56:30 +0000 kjewell http://www.bamberger.com/blog/?p=326 In a New York case, a borrower was found to have filed a Chapter 11 bankruptcy in bad faith in order to avoid a foreclosure action filed by the lender.  In this case, the borrower owned an apartment building and had been sued by the lender for nonpayment.

The court found that the filing was done in bad faith because:

  1. The borrower had only owned one asset, the apartment building
  2. The borrower had only a few unsecured creditors with small claims
  3. The apartment building had only a few employees
  4. The property was subject to a pending foreclosure action
  5. The borrower’s financial problems pertained to the loan by the secured creditor and could have been resolved in the state court
  6. Filing immediately prior to the sheriff’s sale evidenced an intent to frustrate the lender from enforcing its rights

Although this case was decided in New York, the factors set forth in the case are applicable in Indiana, Illinois and Kentucky.

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