What should a borrower or guarantor bring to a first meeting about a loan dispute?

This page explains what matters under New York law and why. A first meeting goes furthest when the lawyer can see the actual signed documents rather than a description of them, because guaranties and loan agreements are read as contracts, word by word (Navarro, 2015). KOR Law LLP's debtor and creditor practice meets with borrowers, guarantors and lenders at every stage, from the first default letter to a deficiency motion. If your matter is a home foreclosure, the companion list is what to bring to a foreclosure defense consultation in New York.

Which documents matter most, and why?

If you signed something you no longer have, write down what it was, roughly when you signed it and who sent it. The lawyer can usually work out how to get a copy.

How should you prepare, step by step?

1. Gather the signed set. Put the note, the collateral documents and every guaranty in one folder, followed by each amendment in date order. A guaranty that bars oral changes can only be changed by a signed writing (General Obligations Law 15-301(1)), so the signed set is what counts.
2. Build a one-page timeline. Loan date, first missed payment, each notice, any acceleration, each payment after default, each lawsuit and each sale.
3. Mark the deadlines. A motion return date, an answer date, an auction date, a deed delivery date and the end of any cure period go at the top.
4. Request a statement from a secured lender if you need one. A debtor can send a signed request for an accounting of the unpaid secured obligations, and the secured party must respond within 14 days; one response every six months is free, and additional ones can cost up to $25 each (UCC 9-210(b), (f)).
5. List your communications. Emails and letters with the lender, especially anything that discusses a workout, an extension or the amount owed.
6. Be ready to talk about assets and transfers. The lawyer needs to know what you own, how it is titled, and whether anything was transferred after trouble began, because transfers can be challenged as voidable (Debtor and Creditor Law 273); see whether a creditor can undo a property transfer.
7. Write down your questions. What you most need to know, and what outcome you are hoping for.

Which dates matter most?

• A CPLR 3213 return date. If you were served with a summons and a motion for summary judgment instead of a complaint, your opposition is due by the date the notice of motion sets, which can be as early as ten days before the hearing (CPLR 3213). See what a CPLR 3213 motion is.
• An answer deadline. Twenty or thirty days depending on how you were served (CPLR 320(a)).
• The deed delivery date after a foreclosure sale. A deficiency motion must be made within 90 days after it (RPAPL 1371(2)); otherwise the sale proceeds are full satisfaction (RPAPL 1371(3)). The rules are in whether a lender can get a deficiency judgment after a New York foreclosure sale.
• A UCC sale date. In a non-consumer transaction, notice sent 10 days or more before the earliest sale date is timely (UCC 9-612(b)), and the right to redeem ends once the lender disposes of the collateral or contracts to (UCC 9-623(c)).
• The acceleration date. Once a loan is accelerated, six years runs on the whole balance (Van Dyke; CPLR 213); see how long a lender has to sue on a note or guaranty in New York.

What if you are the lender?

KOR Law LLP also represents lenders. A lender preparing for a first meeting should bring the full loan file: the signed note and collateral documents, every guaranty, the UCC financing statements, the payment history, every notice sent with proof of how it was sent, and any prior suits. The order of a lender's remedies matters, as explained in how a lender enforces a defaulted commercial loan, because a second action on a mortgage debt while a foreclosure is pending needs leave of the foreclosure court (RPAPL 1301(3)), and a deficiency after a sale must be sought within 90 days of deed delivery (RPAPL 1371(2)).

What does the first meeting usually cover?

Expect three passes through your folder. The first is about time: which deadline comes first, whether service was proper, and whether any claim is already late. The second is about liability: what you actually signed, in what capacity, with what caps and waivers, and what the lender can prove about the debt and the amount. The third is about options, which usually fall into three groups:

• Negotiate. A forbearance, a payoff at a discount, a deed or collateral surrender, or a release of guarantors, each documented in a signed writing (General Obligations Law 5-1103).
• Defend. Opposition to a motion, an answer with every defense raised, or a challenge to a valuation or a sale.
• Protect. Redeeming collateral before a sale (UCC 9-623), preserving evidence of value for a deficiency hearing, and avoiding steps that create new problems, such as transfers of property.

What changes the answer?

• What you signed, and how. Personally or for a company; a guaranty must be a signed writing (General Obligations Law 5-701(a)(2)).
• The waiver language. An absolute and unconditional guaranty narrows the defenses (Navarro); see what defenses a personal guarantor has when a New York lender sues.
• What you signed after the default. Acknowledgments and waivers can restart the limitations period (General Obligations Law 17-101, 17-103).
• The collateral. Real property follows RPAPL Article 13; personal property and pledged ownership interests follow UCC Article 9.
• How far the case has gone. A pending motion, a judgment or a completed sale each narrows the options and changes the deadlines.

For example: two folders for one guarantor

Common mistakes before a first meeting

• Bringing summaries instead of signed documents. The signed guaranty and its amendments are what a court will read.
• Throwing away envelopes. How and when papers were served decides the deadlines (CPLR 308, 320).
• Calling the lender to "explain" first. A signed written acknowledgment of the debt can restart the limitations period (General Obligations Law 17-101).
• Leaving out later agreements. Forbearance and reaffirmation agreements often change the analysis; see what you give up when you sign a forbearance agreement.
• Waiting for the auction or the motion date. Options narrow quickly after a sale, a judgment or a 3213 hearing.

What to do this week

1. Collect every signed loan, collateral and guaranty document, plus all amendments.
2. Collect every notice and court paper, with envelopes and any proof of service.
3. Write a one-page timeline from the loan date to today.
4. Put every deadline you know of at the top of that page.
5. If the debt is secured and you lack a statement of the balance, send the lender a signed request for an accounting (UCC 9-210).
6. Schedule the meeting before the earliest deadline, not after it.

Frequently asked questions

What if the lender is selling my company's interest in the property?

That is an Article 9 disposition, and it has its own notice, timing and commercial reasonableness rules (UCC 9-610 to 9-613). Bring the pledge agreement and the notice; the process is explained in what a UCC foreclosure sale of an ownership interest is in New York.

Should I bring financial statements?

Yes, if you have them. They bear on settlement, on exemptions if a judgment is entered, and on whether past transfers could be attacked; insolvency is an element of some voidable transfer claims (Debtor and Creditor Law 271, 274).

What if a deficiency motion has already been served?

Bring the motion, the lender's appraisal, the auction date and the deed delivery date. The value the court finds controls the amount; see how to challenge the appraisal behind a New York deficiency judgment.

What if a judgment has already been entered against me?

Bring the judgment and anything served since, such as a restraining notice or an information subpoena. The list for that stage is in what to gather when a creditor starts enforcing a judgment.

Is a lender required to tell me what I owe?

For obligations secured by personal property collateral, a debtor can request an accounting, and the secured party must respond within 14 days (UCC 9-210(b)). The loan documents may give other rights to payoff statements.

What if the business has defaulted but nothing has been filed yet?

That is often the best time to meet. What typically happens next is laid out in what happens after a lender declares a commercial loan in default.