Rob Goldman Legal Solutions

When you have no place else to turn and cannot afford to pay your debts, you need to do what is best for you. Delay will result in increasing creditor harassment, lawsuits, judgments, garnishments, repossessions, foreclosures and overwhelming stress.

Sometimes the crisis is a result of your own mistakes, and sometimes due to events beyond your control. This is not a time for guilt. It is a time to act! Rather than dwell on the problem, focus on the solution. The bankruptcy laws are designed to provide relief!

In evaluating your case, we consider the viability of credit counseling, debt work-outs and other options. Don't be mislead by credit-counselling advertisements. Sometimes it works well and in many cases it just does not make sense, even if you can manage the payments. And just because you can get a debt consolidation loan does not mean it is the right or smart thing to do.
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ALTERNATIVES TO BANKRUPTCY

Debt work-outs
Consumer Credit Counseling
Refinancing and home equity loan counseling

In appropriate cases, we can assist you to negotiate a debt reduction or modification agreement, refer you to a consumer credit counselling service, or assist you to obtain home equity financing.

Our goal is to help you make a fresh start and get the maximum possible benefit. We care. And we back up our promise to bring you Peace of Mind with a

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Can I Save my House From Foreclosure?

The filing of bankruptcy triggers the automatic stay which stops all creditors from any action to collect their claim including foreclosure.

In Chapter 7, the stay lasts only as long as the property is not abandoned by the trustee as either valueless to the estate or as exempt, or until the case is closed. A creditor secured by the house can seek relief from the stay to complete the foreclosure if there is danger that the security will lose value during the bankruptcy.   Since the creditor's lien is not eliminated by the bankruptcy, Chapter 7 provides temporary relief from foreclosure, but no lasting solution.

In contrast, Chapter 13 is designed to allow debtors to cure defaults in their home mortgages by paying the arrearage over as long as 3 to 5 years.

Will I have to give up all my assets?

No. The Bankruptcy Code provides that a debtor filing for bankruptcy can keep certain assets for a "fresh start" by exempting property from the estate.

The vast majority of bankruptcy cases are "no asset" cases, in which the debtors have claimed an exemption in everything they own; there are then no assets from which to pay creditors. The exemptions that are available vary from state to state: this is the only area in which bankruptcy law is not the same in all states.

Do I have to list all my debts?

Yes, you must list all of your debts on your bankruptcy schedules.

However, you can choose to reaffirm any debt or debts you choose after the filing. Or, you can voluntarily pay a creditor after you receive a discharge, without becoming legally liable to continue paying. Thus listing a creditor does not prevent you from paying creditors you wish to pay after bankruptcy.

Also, omitting a credit card company from your schedules, because you want to retain the use of the card, does not assure continued access to the card: most major credit card issuers use a national data base to determine who has filed bankruptcy, independently of the court's notice to them of bankruptcy filings. Thus, you can't assure that your creditors won't find out about your bankruptcy by not listing a debt.

Will the trustee come to my house?

In most jurisdictions, no one will come to your home to examine your personal belongings, unless there is a suspicion that you have hidden assets or undervalued what you own. That is VERY RARE and should not worry you at all.

The trustee and the judge assume that you have truthfully scheduled your assets. Anxiety about the bankruptcy process and the fear of exposure or humiliation is created in the mind of the debtor to a far greater degree than by the reality of the judicial process.

Does my spouse have to file for bankruptcy with me?

No, you may file without your spouse. The effect on your spouse and any debts you have jointly will vary depending on the marital property laws in your state.

In community property states, all of the community property, the debtor's half and the non debtor's half, becomes property of the estate. In return, the community property acquired by a debtor and his non debtor spouse after the bankruptcy is not liable for payment of community claims listed in the bankruptcy though the non debtor spouse may have liability to the extent of the non debtor's separate property.

Will bankruptcy stop wage garnishments?

Yes.   Once your case is filed, creditors are no longer entitled to garnish your wages for debts that existed at the beginning of the case.   The only exception may be for on-going child or family support ordered by a court.

The discharge of a debt will forever eliminate a creditor's right to garnish your wages on account of that debt.

Are there debts that I cannot discharge?

Yes. The scope of the discharge varies in each chapter: in Chapter 7, debts incurred by fraud, intentionally harmful actions, dishonesty, as well as priority taxes, unfiled taxes, family support, student loans and criminal fines and restitution cannot be discharged.

In Chapter 13, only family support, student loans, drunk driving judgments, and criminal restitution are non dischargeable.

Does bankruptcy affect marital property settlements?

Support and maintenance obligations to children and a former spouse have always been immune from discharge in a bankruptcy proceeding. However, prior to the 1994 Amendment to the Bankruptcy Act, the Bankruptcy Code permitted a debtor to discharge that portion of a financial separation agreement that was in the nature of a property division obligation. Throughout the years there has been extensive litigation in bankruptcy courts to determine whether an award designated as a "property settlement" actually provided a support function and, if so, was therefore non-dischargeable. If the bankruptcy court determined that the award was a property settlement, the former spouse had no greater right to payment than any other unsecured creditor of the debtor and the amount owed was discharged. Despite the tests used by the various circuits to determine whether an award was property or support, the distinctions were frequently unclear because the components of each settlement agreement were and are often interrelated and mutually dependent.

The 1994 Bankruptcy Reform Act addressed the support/property dilemma by broadening the protection for the entire settlement agreement. New Section 523(a)(15) enables the creditor spouse to prevent the discharge of the property component of the settlement by filing an adversary action in the bankruptcy court. The creditor spouse must prove by a preponderance of the evidence that the detriment to her/him if the debtor did not pay the obligation would be greater than the benefit to the debtor.

Section 523(a)(15) grants a discharge of the property settlement to a debtor who cannot support himself or his dependents or a debtor who would lose his business by paying the property obligation. Pursuant to this new provision, the court balances the benefits and the burdens to the parties, considering factors such as the amount of the debtor's exempt property, the income of both parties and the number of dependents of each. Another significant factor courts consider is whether the non-debtor spouse will be liable to creditors if the debtor spouse fails to pay debts assumed under a hold harmless agreement, thereby increasing the non-debtor spouse's burden.

In a 1996 Georgia case, Cleveland v. Cleveland, the court considered the totality of the divorced parties' circumstances and projected income. The court concluded that the debtor's income combined with that of his live-in companion left him with discretionary income sufficient to make payments towards the hold harmless settlement obligation owed to his former spouse. The court stated that the detriment to the former wife clearly outweighed the benefit of $700 of discretionary income to the husband because the wife would be forced into bankruptcy if she had to assume the new debt. However, the court will discharge a hold harmless settlement obligation to third parties if paying the debt would reduce the debtor's income below the amount necessary for the support of the debtor and the debtor's dependents.

BRINGING A NON-DISCHARGEABILlTY ACTION

The procedure for challenging the discharge of a property settlement agreement is stringent. The former spouse must bring an adversary proceeding in bankruptcy court within sixty days of the first meeting of creditors. If the former spouse does not file a motion within the time limit, the property settlement debt is automatically discharged. Although Section 523(a)(15) does not require that the challenge to dischargeability must be limited to the child or spouse of the debtor, it appears unlikely that Congress intended to permit third party creditors to bring an action against discharge pursuant to this section. The Hon. Margaret Dee McGarity, Bankruptcy Judge for the District of Wisconsin, in a recent article noted that the legislative history indicates that section 523(a)(15) should be interpreted as an extension of 573(a)(5) which protects from discharge debts to children and spouses but not to third parties.

PART OF PROPERTY SETTLEMENT DISCHARGED

Recently a few bankruptcy courts have interpreted Section 523(a)(15) to permit discharge of a portion of the property settlement if it is determined that the debtor has the RESOURCE to pay part, but not all. In a 1995 California case, In re Comisky, the issue was whether a debtor who had received the marital home pursuant to the property settlement and who was paying support in good faith was obligated to pay his former wife an amount which represented her interest in the marital home. The debtor, who was unable to make mortgage payments on the house, lost it to foreclosure, owing his former wife $18,000.

The court noted that neither party was legally or equitably at fault and that the detriment to the wife if she were not paid was equal to the benefit to the debtor if he did not have to pay. The court determined that dischargeability of the debt in this circumstance depended solely on the debtor's current and future ability to pay. The court analogized the situation to the repayment of government student loans where courts have held that if the debtor would suffer undue hardship if forced to pay ad of a student loan, but could pay part of it, the court had discretion to declare only part of the debt non-dischargeable. The Comisky court concluded that section 523(a)(15)(A) did not mandate an all or nothing remedy. The court determined that the debtor could pay part of the $25,000 owed to his former wife over a reasonable period of time, as well as the alimony payments of S772 a month,. because the debtor had the potential to earn additional income through part-time teaching. Thus the court flash toned an equitable remedy and granted a discharge from S15,000 of the property obligation.

SPOUSE'S INCOME A FACTOR

In a 1996 Connecticut case, In re Celani, the remarried wife, a debtor, owed her former husband $65,000 pursuant to the property settlement. Her husband claimed that the court should weigh the debtor's new husband's income in determining whether the benefit to her of discharging the property settlement outweighed the detriment to him. The wife argued that, because the court could not consider her new husband's income in determining whether she could pay the debt, it also should not consider his income in balancing the benefit and detriment. The court stated that the balancing test pursuant to Section 523(a)(15)(B) did not limit the inquiry to the debtor's income alone, but required an expansive review of the totality of the circumstances including the financial circumstances of new spouses. Thus, the court concluded that, although under 523(a)(15)(A) a new spouse's income cannot be considered in determining whether the debtor has the ability to pay, pursuant to 523(a)(15)(B) the extent to which a new spouse's contributions or expenses impact on the debtor should be relevant in balancing the equities. (See also Cleveland v. Cleveland).

IMMEDIATE STEPS TO PROTECT YOUR CLIENT'S PROPERTY AWARD

1.As soon as you learn that your client's former spouse has filed for bankruptcy, obtain a copy of the debtor's bankruptcy schedules to determine whether the debt to your client is listed.

2.File a Notice of Appearance with the bankruptcy court clerk. This notice will guarantee that the clerk will inform you of all developments in the debtor's case.

3.File a Notice of Intervention of Child Support Creditor.

4.File a Proof of Claim with the bankruptcy court clerk and serve the debtor, debtors counsel and the bankruptcytrustee with this Proof of Claim. Filing the Proof of Claim permits your client to appear in bankruptcy court and to object to any chapter 11 or 13 plan that may not treat him or her fairly.

5.Within 59 days of the date set for the debtor's creditor meeting, file a non-dischargeability adversary action in bankruptcy court pursuant to Section 523(a).

Is the IRS affected by my bankruptcy filing?

The IRS must cease collection actions after a bankruptcy is filed, just like all other creditors. The automatic stay protects the debtor and the debtor's property.

Whether the tax claim will survive the bankruptcy, (that is, whether it is nondischargeable) depends on many variables.

Can I keep my car?

Yes. What you must do to keep the car varies depending on whether there is non exempt equity in the car.

If there is no equity in the car, after subtracting any car loan and exemption from the car's present value,   the bankruptcy trustee will not take the car. If there is equity in the car over and above the value of the exemptions available, a debtor can usually buy any unprotected equity from the Chapter 7 trustee.

If you still owe money on the car, you can choose to reaffirm the debt to the secured lender, keep the car, and continue paying under the existing terms; or you can buy the car from the secured creditor in a single payment for its present value (redemption). In some jurisdictions, you don't even have to reaffirm the debt: you can keep the car if you continue to make the payments called for in the contract.

If you choose, you can surrender the car and be free of any obligation to pay for it.

Will I be allowed to file bankruptcy?

There are presently no income standards for filing bankruptcy. The critical question asked about those filing Chapter 7 is whether a debtor has sufficient funds after payment of his necessary future living expenses to repay his debts.

The United States Trustee or the Chapter 7 trustee can seek to have a debtor's case dismissed for "substantial abuse" if the debtor's income is sufficient to repay a significant portion of the scheduled debts. 11 U.S.C. 707(b).   The real expectation is that debtors who are challenged in this way will convert their case to Chapter 13.

The law on this subject is not well developed and the attitudes of trustees and judges about what is "abusive" varies from district to district.

This concept does not apply to Chapter 7 debtors whose debts are primarily business debts, tax debt, or to those filing Chapter 13.

How do I know which chapter to file?

Choosing which chapter of bankruptcy is best for you depends on what kind of debts you have, whether you are behind on secured debts, and whether you have the regular income necessary for Chapter 13.

There are four kinds of bankruptcy proceedings. They are referred to by the chapter of the federal Bankruptcy Code that describes them.

Chapter 7 is a straight bankruptcy or "total wipe-out" of all one's unsecured debt, to enable one to make a fresh start. One's home and car is not at risk in a Chapter 7 case, as long as the payments are being kept current. If there is excess equity in one's home or car, one may not be eligible for Chapter 7 relief and may have to consider Chapter 13 relief. One may keep up to $6,000 worth of stuff per person filing. Any excess cannot be exempted and is considered "excess equity." Certain retirement and insurance equity is protected under additional exemptions. If you are unclear as to your rights, you should consult with a bankruptcy lawyer.

Chapter 7 is available to individuals, married couples, corporations and partnerships. Individual debtors get their discharge approximately 4 months after filing the case.

If there are assets which are not exempt, the trustee takes control of those assets, sells them and pays creditors as much as the proceeds permit.

Any wages the debtor earns after the case is begun are the debtor's, beyond the reach of creditors who had claims on the date of filing.

Chapter 11 is a reorganization proceeding, typically for corporations or partnerships. Individuals, especially those whose debts exceed the limits of Chapter 13, may file Chapter 11. In Chapter 11, the debtor usually remains in possession of his assets and continues to operate any business.

The debtor proposes a plan of reorganization which, upon acceptance by a majority of the creditors, is confirmed by the court and binds both the debtor and the creditors to its terms of repayment. Plans can call for repayment out of future profits, sales of some or all of the assets, or a merger or recapitalization.

Chapter 12 is a simplified reorganization for family farmers, modeled after Chapter 13, where the debtor retains his property and pays creditors out of future income.

Chapter 13 is an individual reorganization, - like a consolidated repayment plan, for individuals with regular income and unsecured debt less than $269,250 and secured debt less than $807,750. The debtor keeps his or her property and makes regular payments to the Chapter 13 trustee out of future income to pay creditors over the life of the plan (3-5 years). The amount of the monthly payments to be made into the Chapter 13 plan depends on a variety of factors that determine the debtor's eligibility for Chapter 13 relief, such as excess income, excess equity, amount of priority claims, arrearage on secured debts, and so forth. In Maryland, the general rule is that at least 20% of one's unecured debt must be repaid through the Plan.

Chapter 13 is especially helpful to individuals who are behind in their home or car payments and wish to save them from foreclosure or repossession. Also, people who cannot cope with the minimum monthly payments due to the high interest, late charges and other fees tacked on, and need some breathing room, can modify their monthly payments through a Chapter 13 Plan and avoid all future interest and other charges, and spare themselves the constant harrassment, by reorganizing under Chapter 13.

Every case is different and a caring bankruptcy professional can evaluate what is best for you and may be able to save you thousands of dollars. Sometimes, you get what you pay for, and high volume lawyers who charge less might not spend the time necessary to enable you to maximize the potential benefits to you of filing for bankruptcy relief.
Can you afford not to do it right? Every case is different and a bankruptcy expert can help you chose the option that best fits your situation.

Can I discharge my student loans?

Student loans are no longer dischargeable in any chapter of bankruptcy unless you can prove that repaying the loan creates a hardship on you or your family.   Prior law allowed their discharge once they had been in pay status for 7 years. The law changed in the fall of 1998.

Proving hardship usually requires showing that you can't provide a minimum standard of living for yourself and your dependents if you have to repay the loan. Some courts will discharge part of the loan.

Student loans are sometimes unenforceable due to school closures, fraud, etc. Chapter 13 can provide a way to cure defaults on student loans, or to pay them off over the course of the plan.

What do I have to do to file bankruptcy?

A bankruptcy case is begun by filing a petition, schedules of assets and liabilities, and a statement of financial affairs with the bankruptcy court and paying the filing fee. You can browse downloadable versions of the official bankruptcy forms.

You will be required to attend at least one meeting of creditors (the � 341 meeting), in which the trustee and creditors who choose to come can ask you questions under oath about your financial affairs.

The process in Chapter 7 from filing to receipt of the discharge order is between 3 and 6 months, usually. During that period, the debtor generally does not have to do anything other than attend the first meeting of creditors.

Can I put my assets in someone else's name before filing?

Such transfers are not effective to put your assets beyond the reach of creditors and bankruptcy trustees. Worse, such action may lead to the denial of your discharge (11 U.S.C. 727).

A bankruptcy trustee can recover assets transferred within one year of the bankruptcy filing where the debtor did not get reasonably equivalent value for the asset, or where the transfer was made with intent to hinder creditors. The "look back" period may be even longer under the law of your state, giving the trustee that same state law look back period in which to recover assets.

If you have more assets than you can protect with the available exemptions, consider filing Chapter 13 where the debtor generally keeps all of their property and "buys back" the non exempt value from the creditors through payments to the Chapter 13 trustee out of future income.

Will I lose my retirement savings?

No, most forms of retirement savings are unaffected by a bankruptcy filing, either because they are not property of the estate or because they may be claimed exempt from the claims of creditors. The Supreme Court has held that an employee's interest in pension plans that are qualified under ERISA (the federal law on pensions) are not property of the estate: the debtor doesn't even have to exempt them in bankruptcy. If an assets is not property of the estate, the trustee can't cash it in for the benefit of creditors.

Retirement savings that are property of the estate can be claimed as exempt property to the extent the funds will be necessary to support the debtor and the debtor's dependents at retirement (under the federal exemptions) or as provided by state exemption laws.

Can I get credit after bankruptcy?

Filing bankruptcy does not prevent you from getting new credit; an entire class of lenders targets the recently bankrupt as customers! Immediately after a bankruptcy filing, you can expect credit to be more difficult to get, more expensive, and limited in amount.

Two years after a bankruptcy discharge, debtors are eligible for mortgage loans on terms just as good as those with the same financial characteristics who have not filed bankruptcy. That is, in getting a home loan, the size of your down payment and the stability of your income will be much more important than the fact you filed bankruptcy in the past. There is no "right" to credit and landlords and credit card companies are well within their rights to consider your financial history in their credit decision.   However, debtors are protected from discrimination based solely on the fact that they have filed bankruptcy by provisions of the Bankruptcy Code.

While the fact that you filed bankruptcy stays on your credit report for 10 years, it becomes less significant the further in the past the bankruptcy is. In fact, you are probably a better credit risk after bankruptcy than before.

Does a previous bankruptcy prevent me from filing?

It depends on

what chapter you want to file now

what chapter you filed before

whether you received a discharge in the earlier case

You can only get a Chapter 7 discharge if a previous Chapter 7 case was filed more than 6 years ago.

If you got a Chapter 13 discharge within 6 years, the Chapter 13 plan has to meet certain repayment requirements to permit a Chapter 7 case within 6 years.

If your previous case was dismissed before discharge, it does not count in these considerations.

You can file a Chapter 13 case after a Chapter 7 without any statutory time restrictions. Some courts, however, question the debtor's good faith, a necessary element to confirm a Chapter 13 plan, if they have recently filed Chapter 7 and received a discharge.

You can freely convert a pending case from one chapter to another. It is the same case, even though the chapter is different, so these time considerations don't apply.

How to Choose an Attorney?
Consulting with an experienced bankruptcy professional is the first step to determining what really needs to be done. Then, you will be able to make an informed decision and enjoy the benefit of being guided by someone who understands your needs and concerns. Ignorance may be bliss in certain instances, but in the case of bankruptcy, you may never know just how much the failure to act actually costs you.

A caring bankruptcy professional will not rush you into making a decision or pressure you to do something you are not comfortable with. Procrastination is your greatest enemy. Act now by scheduling a comprehensive planning meeting. Once you understand what needs to be done, you can proceed with Peace of Mind, knowing that your concerns will be addressed.

Rob Goldman Legal Solutions is dedicated to helping individuals and businesses solve life’s challenges by providing clear explanations and practical solutions at an affordable price. With over 15 years of experience, Rob Goldman has the knowledge and practical experience to guide you in this most important decision-making process. Rob Goldman is committed to providing individuals and families with Peace of Mind.

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	BALTIMORE	DUNDALK	BEL AIR
	111 S. Calvert St., Suite 2700 Baltimore, MD 21202 410-685-0285	6800 Holabird Ave. Dundalk, MD 21222 410-288-4060 (Near the Festival Shopping Center)	Emmorton Professional Bldg, Suite 301 2107 Laurel Bush Rd Bel Air, MD 21015 410-569-5650 (Near the Festival Shopping Center)