By: Michael L. Moskowitz and Michele K. Jaspan

On August 12, 2021, the U.S. Supreme Court granted a request from a group of New York landlords to block a part of the state's eviction moratorium, enacted due to the COVID-19 pandemic. Landlords claimed they did not have a way to challenge tenants who sought protection from eviction by submitting a hardship claim form which tenants were allowed to complete citing they experienced economic hardship because of the pandemic. Property owners argued that tenants could use the hardship claims to avoid paying rent even when they have the ability to do so.

By: Michael L. Moskowitz and Melissa A. Guseynov

We have reported many times on the judicial treatment of student loan dischargeability in bankruptcy. Last year we reported in detail on the January 2020 decision by Chief Bankruptcy Judge Cecilia Morris wherein she analyzed the treatment of student loan debt in bankruptcy under the “undue hardship” exception of section 523(a)(8) of the Bankruptcy Code. See article here. Chief Judge Morris determined that, based on the seminal Brunner test, a debtor with a gross annual income of $37,500 could discharge over $220,000 of student loan debt. In re Rosenberg, Case No. 18-09023 (Bankr. S.D.N.Y. Jan. 7, 2020). Last month, however, District Court Judge Philip M. Halpern overturned Judge Morris’ decision, finding that neither the debtor nor the lender were entitled to summary judgment. Rosenberg v. Educational Credit Management Corp., Case No. 20-cv-00688 (S.D.N.Y. Sept. 29, 2021). Read the full opinion here.  

Weltman & Moskowitz, LLP is proud to announce that founding partners Richard Weltman and Michael Moskowitz have once again been selected as Metro New York Area Super Lawyers for 2021. Both Richard and Michael have been recognized as top bankruptcy and debtor and creditors’ rights attorneys for several years.

By: Michael L. Moskowitz and Melissa A. Guseynov

We have reported extensively over the years regarding the judicial treatment of student loans in bankruptcy, particularly with respect to how federal courts have interpreted section 523(a)(8) of the Bankruptcy Code, which bars a debtor from discharging certain student loan debt. See 11 U.S.C. § 523(a)(8). However, in a recent decision issued by the Court of Appeals for the Second Circuit, the court held that private student loan debt is indeed dischargeable in bankruptcy. In re Hilal K. Homaidan, Case No. 20-1981 (2d. Cir. July 15, 2021).  Read the full opinion here. Significantly, this decision aligns the Second Circuit with the Fifth and Tenth Circuits.

By: Michael L. Moskowitz and Michele K. Jaspan

We have previously written about the rules and procedures pertaining to the COVID-19 pandemic with which lenders must comply.

On June 28, 2021, the Consumer Financial Protection Bureau (CFPB) issued new rules to reinforce the ongoing economic recovery, with an amendment of the Protections for Borrowers Affected by the COVID-19 Emergency Under the Real Estate Settlement Procedures Act (RESPA), Regulation X. The new rule is entitled 2021 Mortgage Servicing COVID-19 Rule or Rule 2021. The rules cover loans on principal residences only, generally exclude small servicers, and will take effect on August 31, 2021.

By: Michael L. Moskowitz and Melissa A. Guseynov

On May 25, 2021, the New York Senate passed Bill S153 (“Bill”), called the “Consumer Credit Fairness Act,” which: (i) establishes a 3-year statute of limitations for commencement of a cause of action arising out of a consumer credit transaction; (ii) sets forth a required notice of lawsuit that must be mailed to a defendant; (iii) establishes certain requirements for a complaint, including but not limited to attaching a copy of the contract or instrument to the complaint; and (iv) provides for arbitration of such actions. The Bill was passed in the Assembly on June 2, 2021, and will now be sent to the Governor’s desk for signature or veto.

By: Michael L. Moskowitz and Michele K. Jaspan

We have previously written about the strict requirements of the requisite notice which must be sent to a borrower before commencement of a residential foreclosure action in New York. New York’s Real Property Actions and Proceedings Law (“RPAPL”) § 1304 requires a mortgage lender to notify a residential home borrower of an impending foreclosure action at least 90 days before the foreclosure action is commenced, using specific statutory language, printed in 14-point type, sent by registered or certified mail, as well as by first class mail, to the borrower (“RPAPL 1304 NOTICE”). The statute does not specifically address whether lender’s counsel may send the RPAPL 1304 NOTICE on behalf of its client. 

By: Michael L. Moskowitz and Michele K. Jaspan

A new rule proposed by the Consumer Financial Protection Bureau (“CFPB”), would create a new pre-eviction review period to grant millions of Americans more time to figure out payment options before Covid-19 federal mortgage protections expire at the end of June. A copy of the proposal can be found here.

This proposal would also prevent mortgage servicers from initiating a foreclosure against delinquent borrowers until after Dec. 31, 2021. The rule would apply to all mortgages, both federal and private, on a principal residence.

By: Michael L. Moskowitz and Melissa A. Guseynov  

In a recent opinion of interest to creditors and debtors alike, on January 14, 2021, the Supreme Court held that passive retention of a debtor’s property does not violate the automatic stay. City of Chicago v. Fulton, Case No. 19-357 (Sup. Ct. Jan. 14, 2021). Read the full opinion here. 

When a debtor files for bankruptcy protection, section 362(a)(3) of the Bankruptcy Code operates to “stay” efforts of creditors to collect from a debtor outside of bankruptcy, with certain limited exceptions. If a creditor willfully violates the automatic stay and there is injury to a debtor, section 362(k) of the Code states that the injured party may recover “actual damages, including costs and attorneys’ fees, and in appropriate circumstances, may recover punitive damages.”  

By: Michael L. Moskowitz and Melissa A. Guseynov

The Court of Appeals for the Second Circuit recently upheld the lower courts’ decisions holding that a debtor’s non-primary residence qualified for the federal “homestead” exemption under section 522(d)(1) of the Bankruptcy Code. In re Maresca, Case No. 19-3331 (2d. Cir. Dec. 14, 2020). Read the full opinion here.

The facts of this case are straightforward and undisputed. After Debtor and her husband purchased a home, they divorced but continued to own the property jointly. Although Debtor no longer resided at the property, it served as her ex-husband’s primary residence and her son spent several days there every week. In 2016, Debtor filed a chapter 7 bankruptcy petition and claimed a federal “homestead” exemption for the property under section 522(d)(1) of the Bankruptcy Code.

By Richard E. Weltman and Michele K. Jaspan

Creditors having significant claims against a bankruptcy debtor often face daunting challenges. Many general practitioners are simply not familiar enough with bankruptcy procedures. Liquidation and reorganization cases have materially different objectives, proceedings move quickly, claims deadlines are strictly observed, and bankruptcy statutes and rules typically favor debtors over creditors. When matrimonial disputes are added to the mix, the bankruptcy court is charged with balancing public policy—protecting the child and custodial parent and deferring to state family court expertise—with the interests of a financially troubled debtor seeking a fresh start. Despite the initial disadvantage, Creditor preparation, diligence and expert help can turn things around.

By: Michael L. Moskowitz and Melissa A. Guseynov

In a recent opinion of interest, the Bankruptcy Court for the District of New Mexico held that a federal credit union constitutes an “instrumentality of the United States” as included in the definition of “governmental unit” pursuant to section 101(27) of the Bankruptcy Code. In re Marquez, Case No. 19-10284-j7 (Bankr. D. N.M. Sept. 30, 2020). Read the full opinion here.  

In this chapter 7 case, the general bar date (the deadline by which a creditor must file a proof of claim) was July 19, while the bar date for governmental units was October 8. When the trustee contended a federal credit union’s proof of claim was untimely because it was filed on July 22, the credit union objected, stating it was subject to the later governmental bar date.