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Stop Garnishment by Filing Bankruptcy

Get help from experienced and affordable Maryland Bankruptcy attorney to stop your garnishment.

If your wages are about to be garnished or have been garnished it is not the end of the world. An experienced Maryland bankruptcy lawyer can help you to stop the garnishment by filing bankruptcy.

What is a Wage Garnishment?

In order for most creditors to be able to garnish your wages they have to file a law suit and receive a judgment against you. Once the creditor has a judgement it can get an order garnishing your wages. The wage garnishment usually is forwarded to your employer. The employer then has to pay a percentage of your pay to creditor until the total amount of the judgment is fully paid.

Amount of Garnishment in Maryland

Federal Law has a limit on wage garnishment amount. In the maximum amount of garnishment cannot exceed 25% of your disposable earnings? The amount of garnishment can be less than 25%. Most federal government institutions like US Department of Education can garnish 15% of your wage as administrative garnishment without a judgment. If you have several garnishments the total amount garnished amount cannot exceed 25% of the disposable income or the amount by which your weekly wages exceed 30 times the minimum wage, whichever is lower.

There are some exceptions for child support garnishment that allow a garnishment of up to 50% of your disposable income if you are supporting a spouse or a child who is not the subject to the wage garnishment order and up to 60% of your disposable earning if you are not supporting a child or a spouse.

Maryland Garnishment Exemptions

Social Security is always exempt from the most garnishment unless it is garnishment for child support, alimony, or some taxes.

There are several other exemptions from garnishment such as: retirement benefits, pension, workers’ compensation, unemployment benefits, student financial aid, aid to the blind, disabled, and other public benefits and aids.

How Bankruptcy Can Help?

As soon as you file bankruptcy you get protection from creditors and their collection activities with an automatic stay while you are in bankruptcy. All wage garnishments and collections must stop immediately after filing bankruptcy. There are exceptions to this rule that include collection of child support. Those debts have to be paid and do not go away even with the bankruptcy.

When the Employer Stops a Garnishment?

After your bankruptcy case is filed the court sends notifications to all creditors that you included in your bankruptcy informing them that you have filed bankruptcy. After that the creditors are prohibited from garnishing your wages and they have to stop all garnishment except the child support. An experienced Maryland bankruptcy lawyer can help make the garnishment stop faster once the case is filed.

What Happens to the Garnishment After the Bankruptcy is Over?

The automatic stay ends with closing of the bankruptcy case. Creditors cannot garnish your pay check after the bankruptcy if the bankruptcy discharges the debt that was subject to the wage garnishment.

If you did not receive a discharge due to dismissal of your bankruptcy case then the creditors can continue to garnish your pay.

What to do then?

The automatic stay ends when the case is dismissed. After that the creditors will be able to garnish your wages again. There is a solution for this situation though. You can file bankruptcy again and prove that the second filing is done in a good faith.

Maryland Bankruptcy Lawyer Can Help

Get help from experienced and affordable Maryland Bankruptcy attorney to stop your garnishment.

 

Getting a Fresh Start This New Year by Filing Bankruptcy

                One of the things that people find out when they come to meet with an experienced Maryland bankruptcy attorney is that in most cases filing a bankruptcy actually has a positive effect on their credit. This comes most often as a surprise. The word on the street is often conflicting on this subject. Much of the faulty information comes from debt consolidation companies who see bankruptcy lawyers as competitors. It is true that a bankruptcy will appear on your credit report for 10 years. The importance of that is dwarfed by the reality that paying back tens of thousands of dollars with interest at 21% plus for people with normal income will take a lifetime.  All the while the delinquent accounts will continue to report and your credit score will suffer. This just makes no practical sense.

            One nice benefit we can offer a client is a special credit report created specially for people contemplating bankruptcy. This report will give our clients a prediction for what their credit score will look at in a year after filing a bankruptcy. Most clients are pleasantly surprised that their credit score will improve between 30 and 130 point within a year of filing bankruptcy.  It is sad to see so many living a terrible life under the yolk of debt that can be lifted in a few minutes mostly because of pride or false information provided to support the debt consolidation industry. You might be surprised to find out that the debt consolidation industry is actually promoted by the credit card companies. They are definitely not looking out for you.

            The exception to the rule that credit will improve is the poor soul who is in denial. This client comes to see me and has been “Robbing Peter to pay Paul.”  When they tell me this I have come to understand what it usually means: the client has finally exhausted all possible lines of credit, borrowing more and more money to pay living expenses so they can manage the minimum payments on the cards and loans. Sadly all good things must come to an end including the artificial 700 credit score when the credit limits are no longer available and sadly when the debt has grown exponentially each month to cover interest on the old debt. Don’t do this to yourself. Call us now for a free consultation with affordable bankruptcy lawyer. Start the New Year with hope and a fresh start for the future.

How Bankruptcy Can Save Your Marriage

The Angry Spouse 

bankruptcy lawyer marylandAs a Maryland bankruptcy attorney who has been practicing for over 30 years we run across many situations that seem to repeat themselves on a regular basis. 

·         The angry spouse who cannot understand why the mortgage, credit cards, car loans were not paid on time.

·         The angry spouse who cannot understand why their partner has incredibly high credit card bills.

·         The angry spouse who is shocked that they were not informed over the course of several months that the bills were becoming unmanageable.

 

A Story about My Fireman Friend

bankruptcy-firemanMy favorite story is my friend the fireman. He lived in a nice home in a good neighborhood. If you look out front he had a camper, a Harley, and a four wheeler.  He prided himself on paying his bills on time, and on having excellent credit.

The farthest thing from his mind was the possibility that he might have to get help from a bankruptcy lawyer. As is often the case he felt filing bankruptcy is wrong.

My fireman friend was a hard worker, put in overtime and made great money. His spouse also worked and was responsible for the household expenses, kids’ activities and paying the bills.

When they came to see me they were several months behind on the mortgage, the credit cards were “maxed out” and husband was furious, making a scene about the state of the bills and the importance in his family of paying them on time. Filing bankruptcy resolved their financial difficulties and their conflicts.  

 

Bankruptcy as a Solution for Financial Problems and Personal Relationship Issues

bankruptcy-counselingThis scene repeats itself almost on a weekly basis in our office. The meeting is often more of a marital counseling session to help people who are terribly overloaded with debt to realize that the solution of filing bankruptcy makes sense and will help rebuild the credit  as well as make the family better able to communicate about the  bills and finances.

The angry spouse in most on these cases is either uninvolved with the household expenses and does not attend to all the things that need to be paid of the household. Or in some cases the household is managed with a relatively “separate” budget system when the spouse doing mostly the household chores and duties does not have enough funds to pay for all the things that need to be provided. 

 

Bring Your Angry Spouse to a Bankruptcy Lawyer

bankruptcy-attorney-marylandIn many cases an experienced bankruptcy lawyer can help deal with the angry spouse by helping the parties communicate better, helping the spouse who gets blamed deal with their very upset partner. A quick glance at the statements will show the cards have been used to pay normal household expenses not things the family does not need. It is usually process of educating the angry spouse so they can accept some responsibility for the problem.

 

Forcing A Lender to Take Title to Real Estate in Chapter 13

Does Surrendering the Property End the Ownership of the Property?

maryland bankruptcy attorneyAn experienced Maryland bankruptcy attorney can help you force a lender to take title to unwanted real estate. One serious problem some clients encounter is how to get real estate out of their name when they do not want it.  Most clients think once they file a Chapter 7 bankruptcy and express their intention to surrender their real estate that ends their ownership in the house and they are free from the obligations of homeownership. Chapter 13  bankruptcy can provide a better alternative.

There is no question the clients obligations on the mortgage will be discharged (though the mortgage will not be removed from the property) and once the mortgage company forecloses they will not owe the mortgage company a balance. What happens if the mortgage company does not want to foreclose and lets the property sit idle in the clients name for years?

 

Rent Free Option

Not everyone sees this as a problem. Many clients simply stay in the house until the foreclosure sale is imminent and live “rent free” for months or years. Others who are more enterprising might decide to rent the property out on a month to month basis until foreclosure and use the income to take care of upkeep and as extra income without paying the mortgage. Not everyone is happy with this. For the client who just wants all the mess to be over with and wants to be completely free, or who does not want to live in the house or rent it these options do not work.

 

Obligations for Real Estate Owners

bankruptcy lawyer marylandWhy should the client care? Real estate ownership carries with it multiple obligations. City water bills, taxes, city and county regulations regarding upkeep, keeping the lawn mowed, clearing trash and debris and possibly boarding the property up. What if unwanted squatters move in and use the home as a drug haven.

Then there are the HOA fees and condo fees. Those pesky HOA and condo fee obligations only are discharged up to the date of the bankruptcy filing. Post bankruptcy fees become due immediately each month until the property is not titled in the client’s name.

 

Condo Fees

The Bankruptcy Code allows to Court to “provide for the vesting of property of the estate, on confirmation of the plan or at a later time, in the debtor or in any other entity;” 11 U.S.C. § 1122(b)(9). Until recently the bankruptcy courts in Maryland had not had to deal with the issue. We were able to free a client from burdensome condo fees of more than $700.00 per month by providing in the plan that the confirmation of the Chapter 13 plan would fully transfer title to the mortgage company once the plan was approved. The Chapter 13 plan was approved after a hearing.

  

Other Alternatives

There are other alternatives to this novel procedure. A sale of the property “free and clear” of the mortgage companies interest if the client is no longer living at the property to a buyer who offers less than the amount of the mortgage can also be used to force a change of title.

This option however requires that a buyer be found at some price and often properties that lenders refuse to foreclose are not desirable at any price.

 

Discrimination by Public and Private Employers Based on Credit Reports and Bankruptcy

AMERICAN DREAM AND BANKRUPTCY

Jefferson Bankruptcy

Thomas Jefferson

Lincoln Bankruptcy

Abraham Lincoln

As a Maryland Bankruptcy lawyer I feel we are blessed to live in a country founded on principles that promote the rights of the individual, personal freedom and the right to privacy in our homes and personal lives. This country has nurtured many great political leaders, great entrepreneurs and creative geniuses. Among them one of our founding fathers and drafter of the United States Constitution, Thomas Jefferson, our countries 16th and possibly greatest president, Abraham Lincoln, who helped preserve this great country.

Bankruptcy Lawyer

Ulysses Grant

Bankruptcy Attorney

Henry Ford

Bankruptcy Layer

Walt Disney

bankruptcy attorney

Mark Twain

Our 18th President Ulysses Grant, Great entrepreneurs and businessmen like Henry Ford, who invented the automobile and revolutionized the modern factory to mass produce those cars.

Walt Disney, a brilliant creative businessman who changed the world of entertainment. Great writers such as Samuel Clemens (Mark Twain). All these great people share at least one thing in common: they all had to file bankruptcy. All of these people would be unemployed and unable to make a living in this great country if we decided whether to hire them based on a modern credit report.

 

NEW SOCIAL CANCER

business bankruptcy

Donald Trump

One of our current presidential candidates, billionaire, Donald Trump filed bankruptcy for his casino business (Mr. Trump did not file personal bankruptcy however). It is against this backdrop that we start a discussion of a new social cancer: The misuse of people’s private credit information to keep them from working and achieving the American dream. Private employers will often request a credit report as part of their pre-employment process. Most people who are in financial trouble are in that situation because of things that are beyond their control, loss of a job, illness, divorce. Why is it reasonable or fair to deny these people a chance to have a normal life?

 

ACCESS TO YOUR PRIVATE INFORMATION

maryland bankruptcyLeaving aside the unfairness, we have all seen people in the workplace share confidential information about co-workers with their friends. Is it right to give the clerical staff in H.R. access to information about how much you pay your mortgage company, what cars you drive, where you shop. Who wants to give these minions sitting in cubicles in the back office access to our private information? They are not lawyers, CPA’s or for that matter regulated by anyone. They don’t lose a license if they violate ethical standards. In fact the people handling these private records are not regulated at all.

 

MARYLAND JOB APPLICANT FAIRNESS ACT

maryland bankruptcyThis Orwellian practice puts many people in a terrible situation especially when their financial troubles are caused by situations that are beyond their control. Many states are enacting laws to counter this unfair practice. Maryland recently enacted the Job Applicant Fairness Act which limits access to credit reports in the context of employment to employers who are

  1. Required by state of Federal law to check credit of prospective employees;
  2. Federally insured banks;
  3. Certain credit unions;
  4. Employers who are registered as investment advisors with the SEC;
  5. An employer with a bona fide reason for requesting or using the information that is substantially job-related and disclosed in writing to the employee or applicant.

The last category will allow employers to obtain credit reports on employees who are “managerial” setting direction and control of a business, department, division etc.; persons who are fiduciaries; persons with access to expense accounts or company credit cards and persons with access to sensitive personal information.

 

BANKRUPTCY PROTECTION AGAINST EMPLOYER ABUSE

 

PUBLIC SECTOR – GOVERNMENT

Bankruptcy law has similar and seemingly broader protections from employer abuse. All Federal, State and local governments are prohibited from discriminating against an individual for filing bankruptcy or because that individual was insolvent before filing the bankruptcy:

a governmental unit may not deny, revoke, suspend, or refuse to renew a license, permit, charter, franchise, or other similar grant to, condition such a grant to, discriminate with respect to such a grant against, deny employment to, terminate the employment of, or discriminate with respect to employment against, a person that is or has been a debtor under this title or a bankrupt or a debtor under the Bankruptcy Act, or another person with whom such bankrupt or debtor has been associated, solely because such bankrupt or debtor is or has been a debtor under this title or a bankrupt or debtor under the Bankruptcy Act, has been insolvent before the commencement of the case under this title, or during the case but before the debtor is granted or denied a discharge, or has not paid a debt that is dischargeable in the case under this title or that was discharged under the Bankruptcy Act.

With respect to any government job it seems pretty clear that the employer cannot in any way discriminate against an employee or a prospective employee.

 

PRIVATE SECTOR EMPLOYERS

In 1984 Congress added a new anti-discrimination section targeting private employers. This section of the Bankruptcy code pretty clearly prohibits discrimination by private employers when dealing with employment solely because the person filed bankruptcy or was insolvent before the bankruptcy was filed:

No private employer may terminate the employment of, or discriminate with respect to employment against, an individual who is or has been a debtor under this title, a debtor or bankrupt under the Bankruptcy Act, or an individual associated with such debtor or bankrupt, solely because such debtor or bankrupt

(1) is or has been a debtor under this title or a debtor or bankrupt under the Bankruptcy Act;

(2) has been insolvent before the commencement of a case under this title or during the case but before the grant or denial of a discharge; or

(3) has not paid a debt that is dischargeable in a case under this title or that was discharged under the Bankruptcy Act.

 

INTERPRETATION OF THE LAW

If you walk down the street and ask passersby what the text of this section means they would tell you its obvious. The person on the street would tell you confidently the employer cannot refuse you employment for filing bankruptcy, because they would be discriminating with respect to employment.At least one Court agreed with this common sense approach. In Leary v. Warnaco, Inc., 251 B.R. 656 (S.D.N.Y. 2000) the plaintiff, Ms. Leary was denied employment based on a credit report that showed she had filed bankruptcy. Deciding in favor of Ms. Leary the court stated:

maryland bankruptcy lawThe plain meaning of the statute does not support such a gloss. Section 525(b) prohibits an employer from discriminating “with respect to employment.” Such language is clearly broad enough to extend to discriminating with respect to extending an offer of employment. Such an application of the plain meaning of the statute makes sense. The evil being legislated against is no different when an employer fires a debtor simply for seeking refuge in bankruptcy, as contrasted with refusing to hire a person who does so. The “fresh start” policy is impaired in either case. A Court should not go out of its way to place such an absurd gloss on a remedial statute, simply because the scrivener was more verbose in writing § 525(a).

Unfortunately this court is in the minority. Lawyers do not always read plain English the way everyone else does. Most courts deciding the issue have gone the other way to say that the language is only clear with regard to existing employees, not prospective employees. They reach this result because the statute that deals with governmental discrimination is very specific when it says the government shall not “deny employment” and the one dealing with private employment discrimination does not.

 

NON-BANKRUPTCY ALTERNATIVE

Despite the controversy the alternative to filing bankruptcy is in most cases much worse. At least when you file bankruptcy your credit starts to improve. The employers using credit reports will now, more than ever be sensitive to the restrictions on the use of credit reports as States such a Maryland restrict the practice.

In most cases there are no viable non-bankruptcy alternatives. If the employer is uses a credit report to make decisions about hiring the bad credit will be there forever unless the client files bankruptcy and wipes it away. Credit counseling does little to fix the problem in 99% of cases. The clients do not have money left over to pay a costly payment plan. Moreover, the plans are not only not affordable, they only deal with a small number of consumer debts, and the program is voluntary for the lenders. Because interest is often still charged by the lenders that do participate it often takes years before any noticeable balance reduction happens. At least if you file bankruptcy and are discriminated against there is a potential for liability based at least on one courts interpretation of the law.

 

FAMOUS BANKRUPTCY FILERS

Below is a list of other famous, successful Americans who filed bankruptcy:

cheap bankruptcy attorneycheap bankruptcy lawyerfree bankruptcyfree bankruptcy marylandJohn Connally – Former US Secretary of the Treasury and Former Governor of Texas.

Daniel Webster – Former Secretary of State

William McKinley – 25th United States President

P.T. Barnum – Founder of Barnum and Bailey Circus

free bankruptcy marylandmaryland bankruptcy lawyerbankruptcy lawyerH.J Heinz – Founder of the H.J Heinz Ketchup Company

William Durant – Founder of General Motors

William Fox – Founder of 20th Century Fox Film Corporation

 

EXPERIENCED MARYLAND BANKRUPTCY LAWYER

A lot of people who come to our office for bankruptcy help feel very guilty about the fact that they need to go through the bankruptcy process. It is understandable and our experienced Maryland Bankruptcy attorney is here to provide our clients with different bankruptcy and non-bankruptcy options to help our clients resolve their financial mess. Allowing people to get rid of debt and have a fresh start is a great option that many other countries do not offer. You deserve a chance to fulfill your American dream and be successful. Take your first step.

 

Can Gambling Debts be Discharged in Bankruptcy.

Three bankruptcy Code sections are of concern if the client has incurred substantial gambling debts. The section which excepts from a discharge debts incurred fraudulently, the section barring discharge of debts for willful malicious injury and the general objection to discharge provision regarding transfers of assets with actual intent to hinder delay or defraud creditors or failure to explain loss of assets. The last, Section 727 (a) (2), (3) or (6) of the Bankruptcy Code would be a possible issue if there is a substantial depletion of the clients assets within a year before the bankruptcy filing, either as a failure to explain the disappearance of assets or just as a deliberate attempt to divest himself from the assets in contemplation of filing bankruptcy by gambling them away.

gambling-debtMost casinos will have records of the winnings and losses that were incurred by the client and it is unlikely anyone would deliberately lose substantial assets by gambling them away for the sake of harming their creditors. The Objections to discharge under Section 727 of the Bankruptcy Code are of concern but the client may weather this challenge more easily than the ones addressed below. The client should expect to provide documentation that the funds were actually used and lost. The client should also realize the Chapter 7 trustee might give them a difficult time.

The Casinos who have gambling markers will pose a greater challenge as they often have the gambler sign markers that are much like a check and often have representations by the client that funds are available to pay the marker. These false representations unfortunately might be sufficient to put the client in a bad situation. Often these markers are signed with full knowledge by the casino that the gambler in fact has no funds to cover them. This becomes a matter of proof – Showing the casino did not rely on the representations on the markers and has the gambler sign them deliberately so the casino can later bring a fraud action

The fraud action is made worse when the gambler incurs a mountain of debt far in excess of what he could possibly pay back. A person on a teacher’s salary would have little hope of ever paying back $200,000 in gambling debts. The magnitude of the debt would provide some proof that the client never intended to pay the debt back. This however has not been an insurmountable problem. There are cases where the Court has found that the gambler had an unrealistic but honest expectation that he would win and pay the money back.

gamblingThe final area of concern is the willful malicious injury section in Section 523 (a)(6) of the Bankruptcy Code. This section requires that the client have actual intent to harm the casino. The late Honorable Judge Mannes in out district wrote a helpful opinion in Desert Palace, Inc. v. Rich (In re Rich) (Bankr.Md., 2014) where the court determined that there was no subjective intent by the client to harm the casino. He just had unreal expectations that he would win.

If you have substantial gambling debts you have a serious problem. Those debts may or may not be discharged. To handle the complicated process and litigation that will likely have to be done as part of the bankruptcy you will need to consult an experienced Maryland bankruptcy attorney.

Dealing with Fines in Bankruptcy

PROBLEM RENEWING DRIVER LICENSE – BANKRUPTCY COULD HELP

One of the worst situations faced by clients is when their driving privileges or tags are flagged as a result of fines or other obligations due to the State of Maryland. Clients at times come to our Maryland bankruptcy attorney complaining that they cannot drive because they are unable to renew their license. This is unfortunate and in some cases may not be something that can be fixed by filing a bankruptcy. The clearest example of what can be remedied if the situation where the license is either revoked or cannot be renewed because the client was in an accident without insurance and there was damage that had to be paid by either the state of Maryland or another insurer. These uninsured motorist cases will easily be resolved by the State once either a Chapter 7 or Chapter 13 is filed.

 

TICKETS, PENALTIES – DIFFERENT TREATMENT IN CHAPTER 7 AND CHAPTER 13

parking ticket

More difficult are cases where the suspension or flag is due to a fine for having an insurance lapse, parking tickets, camera tickets or toll penalties. The problem discharging these obligations is that the fines are specifically excluded from being discharged in Chapter 7 cases by Section 523(a) (7) of the bankruptcy code.  This section prevents a discharge of civil fines unless those fines are designed to compensate the government entity for the damage caused by the violation. Thus parking fines, insurance lapse penalties and the like are most likely not going to go away with a Chapter 7 case.

In a Chapter 13 case the result for clients may be different depending on the nature of the fines or penalties. The discharge provisions of Chapter 13 are slightly broader than in Chapter 7. In Chapter 13 civil fines and penalties can be discharged based on Section 1328 (a) (2) of the bankruptcy Code. Interpretation of this section is not as simple as it might seem however since one still needs to determine if the fines or penalties are civil or criminal in nature or will not go away for other reasons. Criminal fines, criminal restitution awards will not be discharged under Section 1328 (a) (3) of the Bankruptcy Code.

 

FRAUD PROVISION IN BANKRUPTCY

The fraud provisions and the exclusion from discharge for “willful, malicious injury” still might apply depending on the circumstances. For example if the client is a scofflaw and has so many fines that it shocks the conscience the Bankruptcy court might have a harder time letting these debts get discharged even in a chapter 13 case.

 

EXPERIENCED MARYLAND BANKRUPTCY ATTORNEY

This is a complicated area requiring careful analyses of the particular situation by an experienced Maryland Bankruptcy lawyer before any determination can be made whether the fines or penalties will be dealt with in the bankruptcy and discharged. The other consideration is can whether the State will be required to issue a drivers license or to remove flags. This again will require assistance by an experienced bankruptcy lawyer.

 

Ellicott City Flood 2016

flood-Ellicott-City-Bankruptcy-Law flooding-Ellicott City-bankruptcy-help-maryland

Within two hours last Saturday much of historic Ellicott City was devastated by a flash flood. While the Broumas Law Group Law office is up on the hill and was not directly affected the scene of devastation in this lovely historic city is heart breaking. Within those two hours the city had a normal month’s quota of rain. The flood took everyone by surprise, visitors were seen driving on the street while the flood waters were rising until cars were ultimately engulfed and swept down the road with their occupants still in them.

ellicott-city-flood-20160731-bankruptcy-attorney ellicott-city-flood-20160731-bankruptcy-help ellicott-city-flood-20160801-bankruptcy-lawyer-MD ellicott-city-flood-20160801-bankruptcy-attorney-MD

The aftermath of the disaster is significant. Two people lost their lives, twenty five buildings were seriously damaged and cars were strewn everywhere some even left resting on top of trees. While the clean-up was started immediately, the effect of the storm will be long lasting. More than twenty cars are still in the Patapsco River. It is a sad day for all those who live and love Ellicott City.

ellicott-city-flood-20160731-chapter-13-bankruptcy-attorney ellicott-city-flood-20160731-bankruptcy-lawyer-maryland ellicott-city-flood-20160731-bankruptcy-chapter-13 ellicott-city-flood-20160731-bankruptcy-chapter-7

This is not the first time Ellicott City has had a substantial and destructive flood. There have been major floods in the city in 1817, 1837, 1868, 1923, 1952, 1972 and 2016. In 2011 there was another flash flood of lesser magnitude also causing significant damage to the city. That 2011 flood weakened a 200 year old retaining wall at the historic Saint Paul’s Church causing the rock retaining wall to fall and destroy several cars including two of ours. This time we were more fortunate.

ellicott-city-flood-20160731-bankruptcy-attorney-MD ellicott-city-flood-20160731-bankruptcy-attorney-maryland

Many of our bankruptcy clients are calling after seeing the reports of devastation to make sure the office is still alright. Fortunately our law office is up on the hill by the Circuit Court and did not suffer any damage from the storm.

WHAT TO DO IF YOU FORGOT TO INCLUDE SOME CREDITORS IN BANKRUPTCY BY MISTAKE.

When we file a bankruptcy the client has an obligation to list everyone that they owe in the bankruptcy schedules. This document is filed under oath and when you sign it you certify under penalty of perjury that it includes all your creditors. Clients often ask if they can just file some of the credit cards and not others. It just does not work this way. It’s not the debts that are being filed but the person. When a person files a Chapter 7 case or any other bankruptcy case all the debts are required to be listed and are dealt with in some way.

It is unavoidable that on occasion a debt will not be listed. Most experienced Maryland bankruptcy lawyers will either have the ability to get a credit report from all three credit bureaus or at least will require the client provide one. This tends to insure that most of the debts that are still valid will be included in the schedules. Credit reports however are not 100% accurate and certain creditors do not report to the bureaus. Individuals who have loaned money to the client, some doctors, small service providers are typically not going to be there. Ex-spouses or former partners may also be part of that often overlooked list.

Once the case is fully administered and closed there is really not much that can be done. Maryland bankruptcy courts have been pretty clear that a case will not be reopened just to add a creditor who did not make it onto the bankruptcy schedules. This does not mean that all is lost in a Chapter 7 case. The normal creditors will still be discharged in almost all cases. Most Chapter 7 cases are “no asset” cases. This means that there are no non-exempt assets for the Chapter 7 trustee to administer and distribute to creditors. In those cases the normal debts that would have been discharged in the Chapter 7 case will still be discharged. This however assumes that the omission is not deliberate.

In “asset” cases there is a deadline that is very important for creditors. It is the deadline for them to file a proof of claim. If the creditor does not get notice of the bankruptcy and therefore misses the deadline to file claims then this debt will not be discharged. Similarly if a creditor has potential fraud or other claims involving wrongdoing by the debtor then there is a deadline to file a lawsuit to determine if the debt will not be discharged. As in the case with the proof of claim deadline if the lack of notice causes the creditor to miss the deadline then they can still file a fraud, conversion, assault etc. type of claim in State Court and those debts will not be discharged.

Paying Back Family Members Just Before Filing Chapter 7 Bankruptcy.

What happens when we repay legitimate loans from family members shortly before filing a bankruptcy case? It is not unusual for a client to have repaid money to a family member, a friend or even a regular creditor within a few months of before meeting with counsel to file a bankruptcy case. The scenario is like this: Mom loaned me $4000.00 to get an apartment a couple of years ago and I have been paying her back $200.00 a month for the last year to repay the loan. Or, I just got my tax refund and repaid my brother the $2,000.00 loan he gave me as a down payment on my car”

Normally there will be no documentation of this as a loan and in often if you would call Mom or Brother they might say her daughter can pay back the money if they can or even that there is little expectation of repayment at all. Assuming the client really did borrow the funds. There nothing wrong with paying back a real loan to family members or others. Once you file bankruptcy the process has as one of its functions a mechanism to make sure all creditors are treated fairly. For regular creditors like a Visa card if you pay back more than $600.00 within 90 days before a bankruptcy is filed those funds can be recovered for the benefit of creditors. With relatives this time period is expanded to 1 year from the date the bankruptcy is filed.

The client is often surprised: “Mom really did loan me the money”. The purpose is not to punish you or the family member. The purpose of this feature is to make sure creditors we like don’t get a better deal than the ones we don’t care about. There are defenses to preferences as these recoveries are called. The ordinary curse of business defense in the case of family members will not be of much help since loans between family members are probably not “in the ordinary course of business”.

In most cases a relatively small preferential transfer to a family member may be so small that it is not worth it for the Chapter 7 trustee to go after. An experienced Maryland Bankruptcy lawyer can help you evaluate the risk associated with these repayments. An experienced Maryland Bankruptcy attorney can also help you figure out other options to deal with the transfers such as determining whether it would pay for the chapter 7 trustee to go after the relative. There are other options including a negotiated repayment plan by the relative or by the debtor and the possibility of a reduction of the total that needs to be repaid. An experienced Maryland bankruptcy attorney might even be able to help you insulate the transaction legitimately from being recovered, with proper planning.

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