In this time of economic downturn, New Yorkers have accumulated a significant amount of debt. This debt may come from student loans, credit cards, loans and mortgages. Chapter 7 bankruptcy offers an alternative to rectify oneâ€™s credit history. It gives a debtor the ability to erase nearly all debt, without paying back the money owed. Section 542 of the Bankruptcy Code states that one who owed a debt that is matured, must pay the debt to the trustee.
In Geron v. Peebler, the former being the trustee, used Section 542 to seek the turnover of financial gain of a promissory note that was executed by the debtor, Peebler. A promissory note is an unconditional, written declaration that a specified sum will be paid, by the payer to the payee, on a specific date. According to a March 25, 2013 New York Law Journal article, the debtor agreed that he did not pay the note, but attempted to contest summary judgment.Â A summary judgment is a motion by a party stating that factual issues have been resolved. Thus, all causes of action in a complaint can be decided without a trial.Â One of the debtor’s defenses was that he was under the impression that the note was a non-recourse debt. A non-recourse debt is a loan secured only by collateral. The borrower does not have personal liability past the collateral. Due to unsatisfactory defenses, the court determined that Section 542 was correctly invoked. The debtor must turn over the proceeds from the promissory note to the trustee.
In these financially unnerving times, it is advised to seek aid from experienced professionals. If you have any questions or concerns, then Jayson Lutzky is here for you and your family. You may contact him at 1-800-660-5299, for a free initial consultation. You may also visit www.MyNewYorkCityLawyer.com.