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Rightful Exercise of Pre-Petition Setoff or Conversion? Removal.
Debtor owes real property (vacant land)out of state mortgaged to Bank.
Debtor sells house also in the same state, also mortgaged to Bank.
Sale results in net sale proceeds.
Debtor is contemplating bankruptcy and Bank knows it.
Buyer of house is getting his mortgage loan from same Bank. It is unclear how
escrow works in this state, it looks like the broker handled the sale through
some in house escrow. The only thing that matters is the net sale proceeds from
the sale of the house wind up in Debtor's Bank.
Debtor is behind on the vacant land mortgages.
Bank is holding all of the net sale proceeds,and wants Debtor to sign a letter
agreement stating Bank can bring the vacant land loans current (there are
several lots) and hold some extra in reserve. Well, that's what they wanted at
first. Now, the Bank is asserting the right of setoff and saying the Bank will
just give him back the mortgages. There is a dispute over the value of the
vacant lots. Bank says they are worthless, Debtor says no, and desires to keep
paying them after his bankruptcy.
So, the Bank may, or may not, be over secured. There has been on adjudication,
and I have yet to receive notice of an ex parte application for a writ of
attachment. (The Bank opines it does not want the proceeds to leave the state).
Is the Bank exercising dominion and control over the net sale proceeds or is it
a correct pre-petition set off?
If Debtor files his bankruptcy here, can the Bank successfully remove the action
to Federal District Court in State?
Debtor was a California resident when he obtained the loans.
Any and all opinions would be appreciated.
Debtor owes real property (vacant land) out of state mortgaged to Bank.
Debtor sells house also in the same state, also mortgaged to Bank.
Sale results in net sale proceeds.
Debtor is contemplating bankruptcy and Bank knows it.
Buyer of house is getting his mortgage loan from same Bank. It is unclear how escrow works in this state, it looks like the broker handled the sale through some in house escrow. The only thing that matters is the net sale proceeds from the sale of the house wind up in Debtor's Bank.
Debtor is behind on the vacant land mortgages.
Bank is holding all of the net sale proceeds, and wants Debtor to sign a letter agreement stating Bank can bring the vacant land loans current (there are several lots) and hold some extra in reserve. Well, that's what they wanted at first. Now, the Bank is asserting the right of setoff and saying the Bank will just give him back the mortgages. There is a dispute over the value of the vacant lots. Bank says they are worthless, Debtor says no, and desires to keep paying them after his bankruptcy.
So, the Bank may, or may not, be over secured. There has been on adjudication, and I have yet to receive notice of an ex parte application for a writ of attachment. (The Bank opines it does not want the proceeds to leave the state).
Is the Bank exercising dominion and control over the net sale proceeds or is it a correct pre-petition set off?
If Debtor files his bankruptcy here, can the Bank successfully remove the action to Federal District Court in State?
Debtor was a California resident when he obtained the loans.
Any and all opinions would be appreciated.
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