Proof of Claim Must be Filed to Strip Junior Mortgage

by Cwampler 1. July 2014 06:03

Judge Mannes of the Maryland Bankruptcy Court has ruled that a proof of claim must be filed in order to strip a junior mortgage. Mortgages can be turned into unsecured claims in a chapter 13 case. In many cases, a bankruptcy filer can pay a small portion of a second mortgage or home equity loan in a period of less than five years and never have to make another payment. Generally creditors are responsible for filing a proof of claim or a statement that shows how much they are owed. If this proof of claim is not filed (and it often isn’t), and you have a Judge Mannes case, you run the risk of not being able to strip this claim. Make sure you have an experienced bankruptcy attorney on your side!

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Get Your Garnished Funds Back!

by Cwampler 11. June 2014 10:03

It is commonly known that bankruptcy stops garnishments. However, did you know that you can get money back that has been garnished if you file bankruptcy? A person filing bankruptcy will often get back money that his employer or a bank is holding. The bankruptcy filer can also recover funds taken in the 90 days prior to filing bankruptcy. Call our office and find out how we can help you!

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Who is Responsible for Paying Post-Petition Condominium Association Assessments?

by Cwampler 31. January 2014 08:40

If you want to file bankruptcy and no longer be responsible for a mortgage, this is often possible. However, many mortgage companies have begun refusing to foreclose because they realize that they will likely end up owning the home and they do not want the risks and responsibilities that come with home ownership. This is especially true with cases that include condominium units in less desirable neighborhoods. The problem is that when a foreclosure does not occur, a bankruptcy filer or debtor will still own the property. So, who does the Condominium Association or Homeowner’s Association look to for payment of its assessments? The homeowner, of course!

A debtor can get rid of all assessments that are incurred before filing a bankruptcy case. However, if he files a chapter 7 bankruptcy, he cannot get rid of any assessments incurred after filing (post petition assessments). In addition, he may or may not be able to get rid of these post petition assessments even if he files a chapter 13 case. Recently, Judge Mannes of the United States Bankruptcy Court, Greenbelt Division decided a case handled by Wampler & Souder, LLC, which allowed the debtor it represented to discharge or get rid of post petition assessments in a chapter 13 case. Unfortunately, this isn’t uniformly the case, as there is some remaining authority which suggests that a debtor continues to be responsible for post petition assessments even when a chapter 13 case is filed. 

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Exempting Property In Bankruptcy

by Cwampler 14. January 2014 07:56

A couple of common misperceptions of the bankruptcy process are that: 1. a person filing bankruptcy has to give up their property or that 2. a person filing bankruptcy can keep an unlimited amount of property and not have to repay debt. The reality is that you can generally keep all property which you can exempt and which is not the subject of a lien (i.e. mortgage or car loan). Additionally, you can keep more property if you pay for it in your bankruptcy plan.

Generally, Maryland exemptions are:

Your Home

You may exempt $22,625 for a home which you live in. Presently, it is unclear as to whether this exemption may be used for both a husband and wife. If you and your spouse bought a home together it is exempt from your individual, but not your joint creditors.

Wildcard

$6,000 in cash or any property may be exempt.

Property besides Houses, buildings or land

Up to $5,000 total in any property plus you may exempt up to $1,000 total in Clothing, household goods, furnishings, appliances, books or pets. Exemptions are unlimited for a burial plot, a perpetual care trust fund, and prepaid college trust funds; health aids; personal injury recoveries, 75% of net wages, 75% of net alimony, child support, Tax exempt retirement accounts (including 401(k)s, 403(b)s, profit-sharing and money purchase plans, SEP and SIMPLE IRAs, and defined benefit plans), unemployment compensation, workers' compensation, Baltimore police death benefits, crime victims' compensation, public assistance benefits, tools of trade (this can include motor vehicles) up to $5,000, fraternal benefit society benefits, certain life insurance or annuity contract proceeds, dividends, interest, loan, cash, or surrender value if beneficiary is a dependent of the insured, medical benefits deducted from wages as well as medical insurance payments, disability or health benefits.

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Bankruptcy Cannot Eliminate All Debt.

by Cwampler 31. December 2013 04:55

Filing for bankruptcy gets rid of most, but not all types of debt. A Chapter 13 bankruptcy can get rid of more types of debt than a Chapter 7 bankruptcy but neither is guaranteed to clear all debt. Debt that cannot be gotten rid of is called “non-dischargeable” debt. Below is a description of the most common non-dischargeable debt.

Non-dischargeable Debt (for both Chapter 13 and Chapter 7)

  • Most student loans.
  • Income taxes where the return was due less than three years ago, the return was filed less than two years ago, taxes were assessed less than 240 days ago, or there was fraud or willful evasion of taxes 
  • Alimony or child support
  • Loans or money obtained by fraud (one example is charging up credit card debt with no intention to repay it)
  • Intentionally misappropriating money from a trust or estate
  • Criminal Restitution or a Criminal fine
  • Death or injury caused by intoxicated operation of a vehicle, vessel or aircraft.

Non-dischargeable Debt (for Chapter 7 only)

  • Civil fines or restitution
  • Other obligations created in a divorce case that are not alimony or child support
  • HOA or condo association fees incurred after filing

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Reducing Mortgages and Car Loans during Bankruptcy

by Cwampler 4. December 2013 09:58

Filing bankruptcy eliminates unsecured debt and can even eliminate personal responsibility for secured debts (i.e car loans and mortgages) but it cannot eliminate liens. In other words, it generally doesn’t stop a lender, who you have signed an agreement with pledging your car or house as collateral (i.e. mortgages and car loans), from selling your car or house to pay its debt.

However, there are ways to eliminate these liens in bankruptcy. For example, if your home is worth less than the payoff of your first mortgage, you can “strip off” second or third mortgages in a Chapter 13 bankruptcy case. Another option that debtors have is ability to “redeem” or pay the creditor the value of your car, instead of the payoff of your car loan, in a chapter 7 case. The downside to this route is that a debtor must now borrow or come up with all the money to pay off the value of the car at once. One company, 722 Redemption, specializes in loans of this type or “redemption loans.” A similar redemption in a Chapter 13 bankruptcy case allows you to “redeem” your vehicle but only when the right circumstances exist. If you are eligible for redemption in a Chapter 13 bankruptcy case, you have up to 60 months to pay the vehicle value.

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Debt Limits for Chapter 13 Bankruptcy

by Cwampler 13. November 2013 07:21

According to section 109 of the bankruptcy code, you (or you and your spouse jointly) are generally ineligible to file a Chapter 13 Bankruptcy if your unsecured debts (i.e. credit card debt, medical bills, taxes, student loans) are more than $383,175.00 or if your secured debts (i.e. mortgages, car loans) exceed $1,149,525.00. If your debt exceeds these limits, unfortunately, the only bankruptcy that you can file, which permits repayment of debt (i.e cure of mortgage debt), is a Chapter 11 Bankruptcy.

A Chapter 11 is commonly misperceived as a bankruptcy only for businesses. However, individuals can and sometimes have to file for Chapter 11 Bankruptcy. While there can be benefits to a Chapter 11, the downside is that it is very expensive and generally much riskier than a Chapter 13. If you are above either of the afore-mentioned debt limits, it is imperative that you contact an experienced bankruptcy attorney to discuss your options.

 

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Median Income under the Means Test: Which Chapter is Right for you?

by Cwampler 5. September 2013 05:57

              If you are considering filing bankruptcy, it is highly recommended that you speak to an experienced attorney to discuss your options. Before doing so, it is helpful to know what chapter of bankruptcy is right for you and whether you qualify for it. There are multiple types of bankruptcies, each with their own specific processes and benefits, but the most common types for consumers are Chapter 7 and Chapter 13. Chapter 7 Bankruptcy is a liquidation bankruptcy. If all your property is exempt and you do not have a reason to file a Chapter 13 bankruptcy, you may want to file a Chapter 7. Many people file a Chapter 7 and get rid of all their debt.

            A Chapter 13 involves repaying some or all debt through a plan. You may have to file a Chapter 13. A bankruptcy attorney will run a “means test” to help you determine your options . If your family income falls under the median income number listed in the table below. It is much more likely that you will be able to file a Chapter 7 Bankruptcy and get rid of debt. If your income is greater than this number, you may have to file a Chapter 13 Bankruptcy. However, in certain circumstances, you may still be able to file a Chapter 7.  It is critical for you to seek advice from an experienced bankruptcy attorney so you can be informed as to all your options.

For Maryland Residents

Household Size

Median Annual Income

Median Monthly Income

1

$58,269

$4,856

2

$73,685

$6,140

3

$87,206

$7,267

4

$108,915

$9,076

5

$117,015

$9,751

6

$125,115

$10,426

7

$133,215

$11,101

8

$141,315

$11,776

Each additional

+$8,100

+$675

For Virginia Residents

Household Size

Median Annual Income

Median Monthly Income

1

$53,328

$4,444

2

$65,930

$5,494

3

$77,585

$6,465

4

$91,661

$7,638

5

$99,761

$8,313

6

$107,861

$8,988

7

$115,961

$9,663

8

$124,061

$10,338

Each additional

+$8,100

+$675  

For D.C. Residents

Household Size

Median Annual Income

Median Monthly Income

1

$50,186

$4,182

2

$81,960

$6,830

3

$81,960

$6,830

4

$81,960

$6,830

5

$90,060

$7,505

6

$98,160

$8,180

7

$106,260

$8,855

8

$114,360

$9,530

Each additional

+$8,100

+$675

 

Source: Best Case, LLC

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Property directly traceable to retirement income is exempt

by Cwampler 6. March 2013 13:58

Judge Rice of the Maryland Bankruptcy Court reinforced earlier precedent which held that retirement funds remain retirement funds and are exempt (i.e. people filing bankruptcy or “debtors” get to keep them) even if they are taken out of a 401k or an IRA or are Social Security payments. This is the case, however, only if the funds can be directly traced to the retirement account. Since the debtors were both retired and all their income consisted of retirement funds, money they had deposited in a bank account was exempt.

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Ex-Ophthalmologist cannot discharge her student loans

by Cwampler 6. March 2013 13:57

In a decision by Judge Brian Kenney of the Eastern district of Virginia, Bankruptcy Court, an ophthalmologist was told she could not eliminate her student loans through bankruptcy. However, the evidence established that the ophthalmologist was living in her car; she failed to show that she was able to find employment in a position other than being an ophthalmologist. They also ruled that she failed to attempt to repay her loans (In re Najafian).

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