In a very detailed 91-page Order entered in the Northern District of Georgia- and adopted by all Judges in the District – Judge Sacca addressed serious concerns of the United States Trustee over the handling of a Chapter 13 case by the Debtor’s lawyer. The United States Trustee is also investigating several other cases with similar fact patterns, and it appears that multiple debtors in this District have potentially lost well over $1 million in equity in their homes. The case is In re Day, Ch. 13 Case No. 23-52197-jrs, 2024 WL 1506791 (Bankr. N.D. Ga., entered April 5, 2024) (click here for .pdf). I will attempt to summarize the lengthy order and the fact pattern that appears in several other cases the US Trustee has identified so far, but one really should read the Order to understand the scope of the issues that will likely be investigated beyond Bankruptcy Court.

The Debtor is an 80-year widower who worked as a union iron worker for 41 years before retiring. His physical and mental health are declining, he is still recovering from a heart attack, and he is still grieving the loss of his wife in December 2021. He requires assistance from his family for his daily needs. His residence was titled solely in his wife’s name and it was encumbered by a 2009 reverse mortgage. The death of his wife triggered a default in the reverse mortgage and a foreclosure was scheduled for December 2022. The Debtor was overwhelmed with mail and phone calls that typically arise from foreclosure advertisements.

One of the flyers the Debtor received was from a “Local Investor,” and a representative of the Investor actually came to the Debtor’s house and told him he could save the Debtor’s house from foreclosure. On the same day, the Debtor signed a Contract for the Purchase and Sale of Real Estate (the “Sale Contract”), although Debtor was apparently not aware of what he was actually signing. The purchase price was “the exact payoff amount, plus $2,500.00” – thus, Debtor would get $2,500.00 from the sale. Judge Sacca would later determine that the actual equity in the house was likely between $80,000.00 and $200.000.00 and the default in the reverse mortgage could easily have been cured by completing forms.

As the foreclosure sale was looming, the Sale Contract required that Debtor file a bankruptcy case and probate his wife’s estate, and it provided the names of lawyers. The Debtor retained the “recommended” lawyers for bankruptcy and to probate his wife’s estate. In fact, the Investor paid the filing fee and attorneys fees for the Bankruptcy Lawyer. The Probate Lawyers told the Bankruptcy Lawyer they needed more time so the Bankruptcy Lawyer filed the first Chapter 13 petition to stop the foreclosure. Judge found that it was the Investor who first contacted the Bankruptcy Lawyer and explained the situation and the contemplated purchase of the Debtor’s house. Judge Sacca also determined that the Bankruptcy Lawyer’s conduct and representation was deficient in several ways, including the Lawyer’s belief that his only role was to stop the foreclosure so the sale could close rather than review all the facts and circumstances and consider the best interests of the Debtor. The Bankruptcy Lawyer never asked about the proposed sale or Sale Contract, as he did not believe he was hired to do anything more than stop the foreclosure. Judge Sacca determined that the Bankruptcy Lawyer’s representation was to stop the foreclosure and facilitate the sale without regard to whether it was in the Debtor’s best interests. Judge Sacca’s Order spends ~25 pages on the initial series of events and background of the matter.

The first Chapter 13 case was dismissed on December 30, 2022 for failure to cure filing deficiencies. In February 2023, the Investor contacted the Bankruptcy Lawyer to tell him another foreclosure was scheduled for March 2023. The Investor again paid the fees for the Bankruptcy Lawyer and a second Chapter 13 petition was filed in March. The second case was also dismissed and the Reverse Mortgage company again scheduled a foreclosure for May 2023. In April 2023, Debtor’s family contacted a lawyer for the Senior Citizens Law Project in Atlanta. They assisted Debtor and his family in reviewing the facts, and quickly determined that Debtor never wanted or intended to sell his house, and was confused and had limited understanding about what was going on. The US Trustee was then contacted and an investigation was initiated.

The US Trustee’s office subsequently discovered more than 25 other cases the Bankruptcy Lawyer had filed involving the Investor, with the same or similar fact pattern. Public records revealed that with respect to just nine of the debtors, the Investor purchased properties for $1,054,726.00 and sold them for $2,289,055.00. In a subsequent filing, the US Trustee added several more cases to the list, representing significant potential lost equity of the debtors. The investigation will continue in Misc. Proceeding 24-mp-00502.

After significant discovery and hearings, Judge Sacca found numerous violations on the part of the Bankruptcy Lawyer and discussed them in detail over more than 40 pages of the Order. The Lawyer was suspended from filing new cases for one year – an Order that was adopted as an Order of all judges in the Northern District and “co-signed” by Chief Judge Ellis Monro. The Lawyer currently has almost 800 open cases so I can imagine the disaster had the Lawyer been banned from all practice for any length of time. I am told by real estate lawyers that there may have been over 400 real estate transactions involving the same or related parties, the overwhelming majority of which were closed by the same law firm. I expect this investigation will go beyond Bankruptcy Court.

Scott Riddle’s practice focuses on bankruptcy and reorganization. Scott has represented businesses and other parties in Bankruptcy cases for over 30 years.  You can contact Scott at 404-815-0164 or  For more information, click here.