Sun Trust sued to collect on deficiencies following a foreclosure in North Carolina. The Debtors raised defenses challenging the validity of the debt and the default. The Court of Appeals held that the determination of a valid debt and default at the foreclosure hearing was res judicata.   While the Debtors could not have raised these equitable defenses in the hearing under N.C.G.S. § 45-21.16, they could have raised such defenses in a proceeding to enjoin the foreclosure under N.C.G.S.
Debtor was the beneficiary of two Spendthrift Trusts. The Spendthrift Trusts, which were governed by Pennsylvania law, protected both the income and corpus/principal of the trusts for the beneficiaries. As such, 11 U.S.C. § 541(c)(2) provides that "[a] restriction on the transfer of a beneficial interest of the debtor in a trust that is enforceable under applicable nonbankruptcy law is enforceable in a case under this title" and the trusts were outside the reach of the bankruptcy estate.
Summary:
The Debtors executed an adjustable rate mortgage note on May 5, 2006, and received several disclosures, including a Truth in Lending Disclosure Statement, a Notice of Right to Cancel, a Variable Rate Mortgage Program Disclosure, a HUD-1 Settlement Statement and a First Payment Letter.