Dealing with the Post-Discharge Debtor

A borrower or personal guarantor who has been discharged in a bankruptcy case sometimes wants to extend a loan or to receive forbearance from the bank. Otherwise, for example, the debtor might face losing property to foreclosure. The bank might also prefer to extend or forbear on the loan. This scenario puts the bank at risk of violating the debtor's bankruptcy discharge, which can have serious consequences.

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U.S. Supreme Court and 4th Circuit Each Rules for Creditors in Recent Notable Opinions

This month we report on two very recent court decisions that are noteworthy for creditors. In the first decision, the U.S. Supreme Court defined “actual fraud” in a way that allows a creditor’s claim against the recipient of a fraudulent transfer to be declared nondischargeable in bankruptcy. In the second decision, the federal Fourth Circuit Court of Appeals clarified that a Chapter 13 debtor’s right to “cure” his mortgage default doesn’t mean that he gets to reinstate a pre-default interest rate.

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