Chapter 13 Bankruptcy is an Option if Facing Foreclosure in Baltimore

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According to a July 2017 article in Market Watch, once foreclosed homes in Baltimore and around the country that were snatched up by investors are now in foreclosure again. A July study done by Market Watch discovered an increase in properties auctioned off by the government and an increase in the number of foreclosures. Institutional investors began buying delinquent property via government auctions in 2010.

The government auctions seemed like a win-win situation. Homeowners whose mortgage were bought at an extremely low rate could get a loan modification. Investors would obtain profitable assets and communities would continue to obtain tax revenues. Ultimately, neighborhoods would be revitalized. The homes auctioned off came from the Department of Housing and Urban Development. Fannie Mae was the first to auction foreclosed homes. Freddie Mac soon followed.

The auctions were intended to reduce the number of seriously delinquent government mortgages and help stabilize neighborhoods. For instance, a private equity firm has foreclosed one in about 2,000 homeowners as of July 2017. It has increased its foreclosure rate since 2013. The overall foreclosure rate in the U.S. fell 22% in the second quarter, an 11-year low.

A Baltimore homeowner interviewed for the article has lived in her home for 18 years and has had her mortgage change ownership several times. She obtained a loan modification a few years ago and was charged $1,000, but did not receive a decrease in monthly interest rate payments.

She tried again in 2017. She did receive a lower monthly bill, but received a one-time charge of $3,000. She continues to struggle to track her mortgage’s owner.

Bankruptcy is a Legal Option to Save Property from Foreclosure in Baltimore

Chapter 13 bankruptcy, also called wage earner’s bankruptcy, is only offered by the federal government to help a debtor obtain a financial fresh start. A debtor is anyone who files for bankruptcy. This bankruptcy chapter allows a debtor to pay creditors over a three to five-year period. It allows them to get caught up on their bills without facing the devastating consequences of going into debt, such as:

  • Foreclosure
  • Property auction
  • Legal judgments
  • Utility shut off
  • Wage garnishment

Chapter 13 Bankruptcy Comes with an Automatic Stay

The reason Chapter 13 bankruptcy is such a powerful tool is that it comes with an automatic stay. The automatic stay prevents a creditor from starting, continuing, or concluding any legal process of collecting its debts. If a mortgage lender files a foreclosure petition, it is automatically stopped. If a debtor’s paycheck is getting garnished for a judgment, that is immediately stopped, as well.

Get Help with Your Chapter 13 Bankruptcy from Hassan, Hassan & Tuchman, PA

Bankruptcy is a complicated process. It involves getting needed papers together like your tax returns. It also involves completing a Means Test. This is not a written test, but a way to determine if you are eligible for Chapter 13 instead of Chapter 7. Contact us to learn more about which form of bankruptcy is right for you.

Chapter 7 Bankruptcy for a Fresh Start in Baltimore

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According to the Baltimore Sun July 2017 article, after 37 years in business, Baltimore Clayworks shut down and filed for Chapter 7 bankruptcy. The filing followed a six-month saga involving an attempt to pay off its debts. Baltimore Clayworks’ board of directors decided to close the non-profit ceramic arts center helping to provide job training for adults with autism. Through Chapter 7 bankruptcy, the non-profit seeks to liquidate its assets to pay off its debts.

At the time that bankruptcy was filed, the non-profit faced more than $1 million in debt when it planned to relocate and sell the organization’s gallery and studio buildings in Mount Washington. The deal did not work out. In the summer, it planned to raise more than $50,000 to restore its cash flow, but it only generated 10% of the goal.

What is Chapter 7 Bankruptcy in Baltimore?

Chapter 7 is traditionally a personal bankruptcy for individuals trying to get out of debt. The bankruptcy option is a good one for those with unsecured credit like:

  • Credit cards
  • Payday loans
  • Store cards

Unsecured credit is any type of credit given to an individual based on a promise to pay. No collateral was needed to secure the loan or credit. Secured credit is backed by collateral like a home mortgage.

By completing a Chapter 7 bankruptcy filing, debts are eliminated. The debtor no longer owes his or her creditors.

An Automatic Stay is Part of the Baltimore Chapter 7 Relief

One thing that makes a Chapter 7 so powerful is that it comes with an automatic stay. The stay prevents the creditor from starting, continuing, or completing the legal process against you. This legal process could be garnishing wages or shutting off utilities. It will not provide relief to prevent the sale of property. Only Chapter 13 can do that.

Chapter 13 bankruptcy is called a wage earner’s bankruptcy because the debtor must pay back debts to creditors.

Preparation Prior to Filing Chapter 7 Bankruptcy

Bankruptcy rules changed in 2005. No longer were debtors allowed to choose their bankruptcy chapter. Prior to the change, it did not matter how much money the debtor had or if he or she wanted to repay or have debts eliminated.

Current bankruptcy laws involve a Means Test. This test determines whether a debtor can file Chapter 7 or Chapter 13. If, after completing the test, the debtor has money left over, it is called disposable income. He or she can then file for Chapter 13. If the debtor has no disposable income after all bills are paid, then he or she qualifies for Chapter 7.

Contact Hassan, Hassan & Tuchman, PA for Assistance with Your Chapter 7 Bankruptcy

Chapter 7 bankruptcy is worth the work of completing. It involves completing pre-bankruptcy counseling and credit counseling. After filing, you will have to attend a court hearing and complete a debtor’s education course. A skilled bankruptcy attorney can handle everything in between to help you get a fresh financial start. Contact us.

Filing Bankruptcy in Baltimore may Save You From Going Further into Debt

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Annual toll fines put Maryland residents on the road to bankruptcy, according to a February 2017 article in Maryland Reporter. The state’s Finance Committee heard testimony in February about the E-ZPass electronic toll collection system causing many Marylanders to go into bankruptcy. More specifically, poor customer service and excessive penalties are the reasons behind the troubles.

The broad enforcement powers enacted in 2013 to address the toll violations have led to MVA non-renewal of vehicle registrations, financial hardship and wage attachments. However, the head of the Maryland Transportation Authority, the department running the toll facilities, claims that only a small percentage of people were affected.

Since 2015, the state has assessed $223 million in toll fines and only collected $34 million.

The 2013 law gave MDTA the authority to block registration renewals and refer all past due accounts to the Central Collection Unit. The $50 fine must be paid within 45 days or have a 17% fee tacked onto it.

A new bill, SB139, seeks to reduce the $50 fine per violation to 25% the original toll. It also seeks to prohibit the MDTA from referring delinquent accounts to the collection agency. The article did not indicate whether the bill had passed or had a good chance of passing.

Bankruptcy in Baltimore Gives People a Fresh Financial Start

Bankruptcy is the legal ability to wipe out debts or repay debts in three to five years. It consist of two personal bankruptcy chapters: Chapter 7 and Chapter 13. Each bankruptcy chapter gives an individual, called a debtor, a financial fresh start in different ways.

Chapter 7 is for debts like the toll violations. These debts are unsecured and not backed by collateral. Traditionally, Chapter 7 bankruptcy allowed the bankruptcy trustee, or government official over the case, to sell a debtor’s assets. The proceeds of the assets went to creditors.

However, many Baltimore residents go through a straight Chapter 7 bankruptcy. They do not have enough assets to pay back creditors. Thus, the unsecured debts are wiped out without the debtor having to pay anything.

Chapter 13 bankruptcy is the second option. It is for secured and unsecured debt. A debtor can repay debts over a three-to-five-year period. The debtor sends payment, the amount set depending on finances, to the trustee. The trustee distributes the payment to creditors. The debtor is responsible for maintaining all current monthly payments to creditors.

Both Bankruptcy Options Come with an Automatic Stay in Baltimore

Both Chapter 7 and Chapter 13 have an automatic stay. The stay prevents creditors from starting or continuing any legal action against the creditor. The Chapter 13 is the only bankruptcy option to stop foreclosure. Both chapters stop wage garnishments and lawsuits.

Hassan, Hassan & Tuchman, PA are Your Baltimore Bankruptcy Attorneys

You deserve a financial fresh start. Talk to us about which financial bankruptcy you can choose. The chapter you are eligible for depends on your finances. Contact us immediately for help.

Federal Bankruptcy Saves Maryland School Bus Driver

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Unaware of a brewing legal situation with her former landlord, a Baltimore County bus driver narrowly avoided disaster by filing for bankruptcy, according to an article by The Baltimore Sun.

The bus driver in question was ordered to pay $7,100, after a court rendered a decision for her landlord. When the bus driver failed to appear in court, the judge tacked on additional penalties. Eventually, the judge ordered a body attachment, calling for authorities to detain the bus driver and bring her to court.

The bus driver maintains that she never received notice to appear in court. Moreover, the bus driver challenges the amount claimed by the landlord. She maintains that cleaning and upkeep fees were vastly overstated and that the landlord failed to credit her security deposit.

Before the court case began, the landlord claimed a debt of $4,637.76. After the court decision awarded court and attorney’s fees as well as interest, the judgment totaled $7,100.

I can be Arrested for Failing to Pay a Debt?!

As detailed by the Maryland Courts, a body attachment allows authorities to detain an individual and bring them to court. This rule only applies in three specific situations. Two of those situations involve witnesses. A third situation applies to our present question, involving anyone “who fails to comply with a court order in a civil action.”

Using the school bus driver as an example, her landlord filed a civil action for an original debt of $4,637.76. Notice to appear in court went out to the bus driver and the landlord. But the bus driver did not appear in court. The judge ruled in favor of the landlord, awarding a total of $7,100. The judge also issued a body attachment, ordering authorities to bring the bus driver to court.

That being said, the bus driver claims that after moving she never received any notices to appear in court. The bus driver also claims that the amount of debt is inflated. Overall, the bus driver declared bankruptcy and wiped the slate clean.

Circling back to our original question, yes, you can be arrested for failing to pay a debt. This rule only applies in extreme situations. Judges do not generally issue body attachment orders until a party fails to appear multiple times. This underscores the need to pay attention to any court notices or orders.

Do You Need Legal Counsel from a Seasoned Bankruptcy Attorney?

Whether you face mounting debts or a body attachment, it can be a terrifying experience. The stress can be crippling. But with the advice and counsel of a seasoned bankruptcy attorney, you can navigate toward an effective resolution.

With more than 40 years of experience serving clients, Hassan, Hassan & Tuchman can help you overcome a wide range of debt and bankruptcy issues. If you have questions about wage garnishment, foreclosure and other bankruptcy concerns, please do not hesitate. Contact us today for a free consultation at our Baltimore office. You can reach our attorneys by calling 410.669.5070 or by completing a simple online form.