Although statistics suggest that worst of the foreclosure crisis has hit its peak, there exist certain trends that show other distresses will persist for years. In the State of Maryland in 2009, one in every 54 homes were in some stage of foreclosure totaling 43,248 units. In 2008 a little less, 32,347 home were on the bloc. Although this represents a significant 33.7 % spike in totals, the rate of increase is actually slowing, according to the Daily Record Business Writer. Maryland followed the national trends with a vast majority of foreclosure sales hitting the market in 2007 and 2008.

More alarmingly, however, month-to-month increase in foreclosures, 6,370 in November to 6,768 in December, reveal a trend that these defaults reflect households where breadwinners have lost their jobs. These defaults have already jumped by one third!

These trends are alarming because the loans now in default are A paper loans, typically with fixed interest rates, being paid by responsible borrowers whom have unfortunately lost employment.

Unless employment improves soon, the housing market recovery will be short to take a very long while.

As more and more foreclosed homes hit the market, this will inevitably drive up supply, thus decreasing home values further.

If you find yourself in a foreclosure situation and have exhausted every other remedy available, do not forget that filing a Chapter 13 Bankruptcy can provide you with an opportunity to help you keep your home.

Has your home been foreclosed upon? Before taking any action or inaction, stop and read this article first! If your home has already been foreclosed upon, there may be significant legal problems coming your way. Typically, when a borrower has significantly defaulted on their mortgager loan, banks will normally foreclose on the borrower's loan and sell the borrower's property at an auction in an attempt to recoup some of the monies it is owed. That borrower is then legally responsible for the difference between the foreclosure sale price and the amount still outstanding on the mortgage loan. This difference is known as the mortgage deficiency balance. In addition to seriously damaging your credit, the foreclosing bank then generally has the legal right to pursue the borrower for this deficiency balance. In most cases today, this deficiency balance can be significant. Because of the turmoil wrought by the Great Recession, more and more lenders are exercising their legal rights and pursuing defaulting borrowers for their mortgage deficiency balances owed after foreclosure. To get their money, banks can seize wages, garnish bank accounts and place liens on other assets held by debtors.

These mortgage deficiency balance recoveries have risen 48 percent to a record $1.01 billion in the first nine months of last year compared with the year-earlier period, according to the Federal Depositor's Insurance Corp. (FDIC) that tracks the amounts recovered by banks after mortgage loans are written off. Recoveries on defaulted home-equity loans just about doubled to $392 million from the same time period, the FDIC data shows. This data does not reflect, however, money recovered by trusts that own mortgage backed securities or collection agencies that make money by buying bad debt and acquiring the rights to collect mortgage deficiency balances.

Deficiency judgments in the 15 years prior to the Great Recession were rare. Banks saddled with a very high volume of foreclosures haven't had the time or the resources to begin collection activity on the deficiency balances that have accumulated since the start of the recession. Quickly but surely, however, that trend is definitely changing and it may signal the next personal financing crisis for middle class Americans that used to own a home. The likeliest candidates to be pursued for deficiency balances are the homeowners that simply walked away from their homes because they were so under-water (owing substantially more to the bank than what their home was actually worth) that they had no hope of ever breaking even on their investment.

Many times a person can file a Bankruptcy to eliminate these deficiency balances. This avenue is often the best course for a person in this situation as the bankruptcy not only replaces the foreclosure notation on a person's credit report to one of a discharge status, but also eliminates the possibility of being sued for the deficiency balance. To learn more, contact Antonio Aquia at 410-234-0100.

Do you think you are the only one contemplating bankruptcy ? Think again! Hundreds of thousands of people are running to the Bankruptcy Court seeking refuge from collector activity, judgments, garnishments, and a slew of other collection tactics. Right now, people are suffering through financial hardship typically caused by diminished income, increased expenses, medical calamity, unemployment, and other financial setbacks that are rendering them unable to continue making their mortgage, car and credit card payments. Many times, if a person could simply eliminate their credit card debt, they could channel those payment savings towards their other high priority monthly bills. Most times, a person in this situation simply needs a breather from the monthly stresses of making the minimum payments on their unsecured credit card debt balances and be able to channel those funds towards their mortgage and/or car payments. Oddly enough, many people are religious in making their monthly minimum payments, but when the balances on those credit card debts never decrease, what is the sense of continuing to make those payments at the expense of saving that money towards your children's college expenses or paying your mortgage payment?

Many times a person can file a Chapter 7 Bankruptcy to eliminate these debts. Other times, a person may be forced to file a Chapter 13, whereby the person would be required to pay back a percentage of what is owed, but at the same time consolidating their monthly payments into one easy payment and denying the ability of their unsecured debt from accruing interest during the course of the case. Although specifically each person's case presents different facts, if you are deep in debt and see no way out, educate yourself about the bankruptcy process as it may help you get back on track and change your life for the better.

Do you think you are the only one contemplating bankruptcy ? Think again! Hundreds of thousands of people are running to the Bankruptcy Court seeking refuge from collector activity, judgments, garnishments, and a slew of other collection tactics. Right now, people are suffering through financial hardship typically caused by diminished income, increased expenses, medical calamity, unemployment, and other financial setbacks that are rendering them unable to continue making their mortgage, car and credit card payments. Many times, if a person could simply eliminate their credit card debt, they could channel those payment savings towards their other high priority monthly bills. Most times, a person in this situation simply needs a breather from the monthly stresses of making the minimum payments on their unsecured credit card debt balances and be able to channel those funds towards their mortgage and/or car payments. Oddly enough, many people are religious in making their monthly minimum payments, but when the balances on those credit card debts never decrease, what is the sense of continuing to make those payments at the expense of saving that money towards your children's college expenses or paying your mortgage payment?

Many times a person can file a Chapter 7 Bankruptcy to eliminate these debts. Other times, a person may be forced to file a Chapter 13, whereby the person would be required to pay back a percentage of what is owed, but at the same time consolidating their monthly payments into one easy payment and denying the ability of their unsecured debt from accruing interest during the course of the case. Although specifically each person's case presents different facts, if you are deep in debt and see no way out, educate yourself about the bankruptcy process as it may help you get back on track and change your life for the better.

In Curtis O. Rosemann v. Salsbury, Clements, Bekman, Marder & Adkins, LLC , the Maryland Court of Appeals reviewed a decision of the Court of Special Appeals affirming the decision of the Circuit Court of Howard County disallowing the ability of a child support judgment creditor from seizing personal injury settlement funds payable to the child support judgment debtor. According to the facts, the child support debtor became injured as a result of a bumpy airline flight for which she received $30,000 for her personal injury. The personal injury settlement funds were held in escrow at the law firm of Salsbury et al. The child support judgment creditor learned of the settlement proceeds and issued an attachment of the funds held in escrow in satisfaction of the child support arrearages owed by his ex-spouse. Upon receipt of the request for attachment, Salsbury et al., on behalf of its client issued a response to the attachment invoking Section 11-504 b(2) of the Courts and Judicial Proceedings Article claiming that the compensation for this personal injury was exempt and protected under State Law as money payable in the event of sickness, accident, injury or death.

In a 21 page opinion, the Maryland Court of Appeals ruled that the personal injury funds were in fact exempt and protected against seizure even against a child support judgment creditor. The Court took an exhaustive look at Federal law, numerous court decisions, and public policy concerns and finally determined that if the Maryland State Legislature intended an exception to the exemption statute thus allowing a child support judgment creditor to seize funds payable in the event of sickness, accident, personal injury, or death, then the Legislature could have written that exception into the exemption statute, but did not. Since the Maryland Legislature did not expressly provide for such an exception, the Court of Appeals would not become a "super-legislature" and judicially create an exception which did not appear in the original text of the statute and would not "judicially place in the statute language which is not there, in order to avoid a harsh result." The Court also stated that if the situation brought to light by this case is an oversight of the statute, then it is for the Legislature to correct and not the Court.

This is yet another example of the Maryland high court recognizing its bounds and instituting a logical reasoned restraint in interpreting Maryland State Law.

Belsky, Weinberg, & Horowitz, LLC, is proud to announce the designation of Antonio Aquia as "Super Lawyer's Rising Star". Identification as a Super Lawyer involves a rigorous four-step process: (1) Creation of the Candidate Pool Through a Statewide Survey of Lawyers; Evaluation of Candidates by the Law & Politics Research Department; Peer Evaluation by Practice Area; and a Final Selection Process according to firm demographics in the state. Only five percent of all lawyers in the state receive the Super Lawyer designation. This year Antonio Aquia was the only Consumer Bankruptcy Attorney in the State of Maryland receiving this desgnation.  After nearly ten years of hard work, dedication, and loyalty to his firm and his clients, Mr. Aquia has a developed a reputation for bringing professionalism, skillfulness, and reasoned approaches to all of his cases. He also speaks and lectures frequently to other lawyers in continuing legal education courses striving to raise the standard of performance of the Maryland Bankruptcy Bar. As a founding co-member of the Maryland State Bar Association Consumer Bankruptcy Section, Mr. Aquia has always prided himself in giving back to Bar and to the community that has given him the opportunity to do so much. Congratulations on a job well done and an award so deserved, keep up the good work!

As the New Year is upon us, it is time to take stock at the year past and see what changes we can make to ensure a brighter future. Review your last paystubs, w-2's or 1099's, and determine your income for the year and divide it by 12 months to calculate your monthly gross. Next, force yourself to look at the stack of bills you have and determine how much your monthly expenses are. Then ask the following question: Can you continue to go on for another year living pay check to pay check, robbing Peter to pay Paul, while at the same time not saving for your children's education or ever taking a vacation? Banks and credit card companies charge outrageous interest rates on money that will be paid back several times over. The big lenders want you to borrow more, want you to default, want you to be over your credit limit, and want you to pay late, because when these things happen the big bad banks make more money off of you! The real irony here is that these same banks are the ones getting bailed out by your tax dollars. Many consumers, struggling with mounting credit card debt, higher mortgage payments, and higher prices are feeling the squeeze on their wallets. This debt burden, coupled with the loss of jobs, cuts in hours, and cuts in pay have many Americans feeling the pinch.

If you are in this category, then it is time that you consider your options. Perhaps credit counseling, debt consolidation or filing bankruptcy may be the solution to your debt woes. Do something now while you still have an opportunity to save what assets and wages you still have.

If you are contemplating any of these solutions, it is always better to do it sooner rather than later, before it is too late.  Contact the attorneys at Belsky, Weinberg, & Horowitz, LLC, for a free consultation.

The Supreme Court hears oral argument today in two important consumer bankruptcy cases with potentially wide ranging impact on debtors and their counsel. At 10:00 a.m. the Court hears argument in the case of Milavetz, Gallop, & Milavetz v. United States (08-1119; 08-1225), which involves whether attorneys are "debt relief agencies" under the Bankruptcy Code and are thus restricted in what they may advise a debtor or potential debtor in bankruptcy, including the incurrence of debt in anticipation of a bankruptcy filing, such as buying a vehicle or obtaining other items of necessity by use of credit. The Bankruptcy Code places other restrictions on debt relief agents, including a required disclosure in any advertisement effectively announcing that the attorney is a debt relief agent who assists in the preparation and filing of bankruptcies. Lawyers are challenging the restrictions on First Amendment free speech grounds and maintain that the restriction precludes attorneys from offering otherwise sound legal advice to prospective clients.

At 11 a.m., the Court is to hear argument in United Student Aid Funds, Inc. v. Espinosa (No. 08-1134),another bankruptcy case dealing with the dischargeability of certain student loan obligations in a Chapter 13 case. The cases involves the issue of whether a debtor may obtain a discharge of certain student loan obligations by simply stating his or her intention to do so her Chapter 13 plan and obtaining a discharge after her plan was completed, but who did not offer evidence of "undue hardship" which is required by the Bankruptcy Code. The debtor obtained four student loans to attend technical school. In his Chapter 13 case, he listed the principal owed to the United Student Aid Funds (USAF) as being due and payable through the plan, but did not include any of the accrued interest. After not receiving the interest payments and after more than three years had passed since the Chapter 13 case was discharged, USAF commenced collection action against the debtor, who argues that the USAF is barred by the Chapter 13 discharge and the delay in objecting to the content of the plan before the Objection to Confirmation deadline.

Both cases are summarized more thoroughly at SCOTUSBLOG.COM.

Belsky, Weinberg & Horowitz is presently required to state that it is a debt relief agency assisting individuals in the filing of bankruptcies to discharge and/or reorganize their debts. We represent only debtors and offer free consultations by phone or in person. Please visit our website for additional information on the various bankruptcy issues and options available to you or contact one of our attorneys.

United States Supreme Court to Determine the Proper Method

In 2005, the Bankruptcy Code was overhauled by Congress in what is known as the Bankruptcy Abuse Prevention and Consumer Protection Act ("BAPCPA"). BAPCPA brought with it many changes, aiming to make it more difficult for people to eliminate debt entirely in a Chapter 7 case and forcing many debtors to pay back a portion of their debt in a Chapter 13 reorganization. One of the biggest changes BAPCPA brought about was the inclusion of form B22, more commonly known as the "means test". This form was intended by Congress to be used to determine how much a person can afford to pay back their creditors. Specifically, the means test form is a backwards looking document that calculates the amount of gross income a debtor has earned in the six months prior to the filing date of the case and applies Internal Revenue Service expense standards to that income to determine the amount per month a particular Chapter 13 debtor should be able to afford to pay back their creditors. This form takes into account no consideration of the debtor's current financial situation or actual ability to pay as reflected in debtor's schedule I & J budget. The B22 form calculation of the debtor's ability to pay back creditors is more commonly known as the debtor's projected disposeable income. Immediately, anyone can see that this could be a problem in several circumstances such as in the circumstance of a debtor receiving less income than what they were receiving in the preceding six months, typically due to a job change/loss, retirement, sickness, or other economic reasons. This effect could preclude many people, needing the refuge of a Chapter 13 Bankruptcy case without an option to file, due to the inability to afford the payment as calculated in the means test.

Bankruptcy and Appellate Courts all across the country are split as to which should control, the B22 form or debtor's actual budget. The Eight and Tenth Circuit Appeals Courts have both held that the debtor's actual budget controls, while the Ninth Circuit Appeals Court dictated that the B22 form controls the debtor's projected disposeable income calculation. In Utah, two judges from the same judicial district have written exactly opposite opinions, one holding that the B22 form controls the amount of the payment the debtor must pay, while the other holding that the debtor's actual income and expenses control. In Maryland, the case of In re Watson mandates that the B22 form controls unless there has been a substantial change in circumstances deemed sufficient enough to allow the debtor to then refer to their actual budget. Because of this wide split in opinions not only at the Bankruptcy Court level, but more importantly at the Circuit Court level, on November 2, 2009, the Supreme Court of the United States granted certiorari in the case of Hamilton, Chapter 13 Trustee v. Lanning.

The specific question on appeal to the Supreme Court is, "whether in calculating the debtor's 'projected disposeable income during the plan period, the bankruptcy court may consider evidence suggesting that the debtor's income or expenses during that period are likely to be different from her income or expenses during the pre-filing period." The Chapter 13 Trustee's position, that the B22 form should control, however, is in direct contradiction of the accompanying legal brief filed by the Solicitor General of the United States. The United States argues that there are circumstances when the B22 form cannot be relied upon and in those circumstances, debtor's actual budget must control.

As a debtor's counsel's law firm, we at Belsky, Weinberg, & Horowitz, LLC, are hoping that a reasoned realistic approach to this issue is implemented, thus preserving the refuge of Chapter 13 to many in this Country that so desperately need it during these tough economic times. Oral argument has not yet been scheduled. Stay tuned for further developments as they occur.

On October 17, 2005, the most sweeping bankruptcy reform legislation was passed which marks the first significant change to the bankruptcy laws in more than twenty-five (25) years. Although the new law, known as the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, brings with it sweeping changes to the process for filing bankruptcy, it also requires debtors to receive credit counseling as a prerequisite for eligibility to file. In addition, the new law also requires that debtors who have completed the bankruptcy process undergo post-bankruptcy education to ensure their future use of credit privileges comes with an understanding of the rights and responsibilities for debts incurred after their bankruptcy discharge is entered. Although the new laws bring additional burdens, such as increased time and expense, most individuals will still qualify for bankruptcy. The purpose of the new law was to steer more people into filing a "pay back" plan. Fact of the matter is, it didn't work as well as Congress thought.

The process of bankruptcy is very complicated but with the assistance of the attorneys at Belsky, Weinberg & Horowitz, LLC, it can be an easy and successful process. As part of our representation, we will meet with you in person to determine your annual income using what is known as the "means test", where we will request that you provide proof of income for the last seven months. A complicated mathematical computation will be performed by us to determine what your average income is. The means test is used to determine whether you fall above or below the median family income for counties in Maryland.

Once we have performed the means test, we will ask you a series of questions about what you owe, what you own, what you earn and what you spend each month on household expenses. You may wish to refer to our online bankruptcy intake form (www.marylandbankruptcylawyers.com) to learn more about the questions we will ask you at our initial consultation. If you wish, you may fill out the form online and submit it to us in advance of scheduling an in person meeting. This will speed up your intake and will assist us in preparing for our initial meeting.

Once we have met with you and performed the appropriate evaluation of your financial situation, we will advise you as to the best course of action to take in dealing with your debt. In many instances, bankruptcy may be the most appropriate course of action for you to take. In other instances, non-bankruptcy solutions such as consumer credit counseling and non-bankruptcy debt reorganization may be best suited for your needs. In many instances the greater the amount of debt and the longer that debt has been in existence, the more likely it will be that bankruptcy relief is best for you.

Below is an explanation of the bankruptcy process for both Chapters 7 and 13. Each circumstance presents different requirements and obligations of both the attorney and the client and the description below is based upon the experiences of the average client. Should you wish to discuss your case further, please do not hesitate to contact us. We are glad to serve you and have represented thousands of people in Maryland and the District of Columbia in consumer bankruptcies of all types.

Chapter 7 is often referred to as a "straight" or "liquidation" bankruptcy. The federal bankruptcy court appoints a "trustee" to determine whether creditors will get paid. A common mis-perception by those contemplating bankruptcy is that they will lose everything they own if they file a bankruptcy. This is, however, not necessarily true. In the state of Maryland, so long as the debtor has resided in the state for at least the last two years, the debtor is able to exempt a maximum of $12,000 of property. Maryland law allows the debtor the ability to exempt $1,000 of miscellaneous clothing and furnishings, $5,000 worth of personal property, and $6,000 of any other property the debtor owns (the "wildcard exemption"). So long as the debtor's total property value is less than the exemption amounts listed above, the Trustee will not be able to seize any of the debtor's property and the debtor will receive a discharge of their debt so long as other "New Law" requirements are met.

Prior to filing the Chapter 7 Bankruptcy Case, the debtor must provide the last seven months of income statements (i.e., pay stubs, pension statements, social security income statements, etc...), the most recently filed tax return (in some instances the last 3 years of returns are required), and also attend a counseling session with a certified debt counselor. The debtor must receive a counseling certificate from the debt counselor. This certificate is then filed with the Bankruptcy Court. If the certificate is not filed, the Court will automatically dismiss the debtor's case.

The last seven months of paystubs are required because the Court looks to see if you qualify for Chapter 7 bankruptcy by analyzing your recent income history. The attorneys at Belsky, Weinberg, & Horowitz, LLC, will sit down with you and calculate what is called your "current monthly income" ("CMI"). Once your CMI is calculated, the CMI is then annualized to see what your projected current annual income will be. The next step is to determine whether or not your "current annualized income" is greater than or less than the median income level for your household size in the county where you reside, for ex.:

$2,000 per month and has been a salaried employee

for the last year. His annualized income is, therefore,

$24,000 per year ($2,000 per month X 12 months).

According to the 2005 IRS guidelines, the median

household income for a 1 person household

in Baltimore City is currently $48,205. Because the debtor's current annualize income is less than the IRS median household income, the Debtor automatically qualifies for Chapter 7 and can proceed to filing a Chapter 7 without having to fill out the means testing form.

What happens if the debtor's annualized income is greater than the IRS median income level for debtor's household? In some situations, the debtor may be forced to propose a "Chapter 13 Plan of Reorganization" which proposes to pay back a percentage of all the debts the debtor owes over a 3-5 year period. In other situations, the debtor may still be able to file in Chapter 7 bankruptcy, but in order to do so the debtor now must take the next step and complete the means test. The means test is a long, complex, and rigorous calculation which takes into account the debtor's CMI and compares it to the IRS allowable deductions for the debtor's geographic locale. The purpose of the means test is to determine whether or not the debtor is able to pay any money back to his or her creditors in a Chapter 13 Plan. The means test itself is a four page form that is used to supply all of the debtor's current annualized income information while deducting all of the applicable IRS allowable expense deductions. Once the means testing form is complete, a proposed plan payment amount is calculated. If the proposed plan payment amount is "0" or negative, then the debtor qualifies for Chapter 7 bankruptcy. If the debtor is able to pay back some money to his or her creditors, then the means test will advise that if this debtor files a Chapter 7 bankruptcy case, a "presumption of abuse" will arise. This presumption of abuse means that the debtor must file a Chapter 13 Case and Plan, because the means test calculates that the debtor can afford to pay something back to his or her creditors. This presumption can only be refuted by exceptional circumstances. Absent exceptional circumstances, the trustee will file a motion to dismiss the debtor's case and the attorney filing a "presumption of abuse case" is subject to costs and sanctions. If a presumption of abuse arises, the debtor's only bankruptcy option will be to file in Chapter 13 Bankruptcy, which is described below. The means test and the corresponding IRS allowable deductions are very complex. With the assistance of the attorneys at Belsky, Weinberg, & Horowitz, LLC, we will be sure to help you make this bankruptcy process a smooth one.

Once the debtor has complied with the preliminary requirements outlined above, the debtor is ready to file the bankruptcy case. Our office files all cases electronically and in many instances can be filed the same day of your initial intake interview at our firm. Once the case is filed, within one week the Court will send notice of when the "Meeting of Creditors" is to be held. Although referred to as the Meeting of Creditors, in most instances creditors are not present. This hearing usually takes place about thirty (30) days after the Debtor's petition is filed. The debtor must bring with them a picture ID and a Social Security Card, W-2 or pay stubs with the debtor's Social Security number listed. For cases filed where the debtor lives in Baltimore City, Baltimore County, Anne Arundel County, Harford County, Howard County, Cecil County, and Carroll County: all Meetings of Creditors will take place at, 101 W. Lombard St., Federal Courthouse, 2^nd floor, Baltimore, MD 21201 and Confirmation Hearings are held at, 101 W. Lombard St., Federal Courthouse, 1^st or 9^th floor, Baltimore, MD 21201. For cases where the debtor lives on the Eastern Shore (Queene Anne's County and East), all meetings and hearings are held at the U.S. Post Office Building, 129 Main Street, Room 104, Salisbury, MD 21801. For cases where the debtor resides in any county not already mentioned, the Meeting of Creditors will take place at, the Office of the United States Trustee, 6305 Ivy Lane, Rooms 620-621, Greenbelt, Maryland 20770 and Confirmation Hearings are held at, the United States Bankruptcy Court, 6500 Cherrywood Lane, 3^rd floor, Greenbelt, MD 20770.

The Meeting of Creditors is simply an opportunity for the "Trustee" to question the debtor and review the debtor's paperwork. The Trustee is looking to see whether or not the debtor qualifies to be a debtor under Chapter 7 Bankruptcy and whether or not the debtor has any assets which are not exempt that can be sold and the proceeds used to pay creditors a percentage of what is owed. This meeting typically takes about ten (10) minutes to conduct. Once the meeting is concluded, if there are no outstanding issues, then the Trustee will recommend that the debtor receive a Discharge of their debt. As part of the new law, the Debtor must complete a Personal Financial Management class at the conclusion of their bankruptcy case. Once this class is completed a certificate is issued to the debtor certifying completion of the class. This certificate must then be given to the debtor's attorney so that it may be filed with the Court. If this certificate is not filed within 45 days of the Meeting of Creditors, then the debtor's bankruptcy case will be closed with no discharge being entered.

Certain debts cannot be eliminated in bankruptcy including, but not limited to: certain taxes, child support, alimony, marital property settlement obligations, criminal restitution payments, tickets, citations, fines, debts incurred through fraud or false pretenses, student loans, and consumer debts owed to a single creditor for luxury goods or services incurred by a debtor in the amount of $500 or greater within the last 90 days before the bankruptcy petition is filed. In addition, cash advances totaling more than $750 that are extensions of credit under an open end credit plan obtained by a debtor on or within 70 days before the filing of the petition in bankruptcy cannot be eliminated. Although this is not an exhaustive list, you should ask your attorney at Belsky, Weinberg, & Horowitz, LLC, how your bankruptcy will impact your ability to discharge your debts.

Chapter 13

Chapter 13 is often referred to as a "reorganization bankruptcy " or a "pay back plan bankruptcy". Debtors that choose to file this type of bankruptcy submit to the Bankruptcy Court a written "plan" that will propose to pay in full all missed payments to mortgage or car loan companies arising prior to the bankruptcy filing date. Missed payments on secured loans such as mortgage or car loans must be paid in full whereas unsecured debts such as credit card debt could be paid a minimal amount (as little as 15 percent). Unpaid attorneys' fees in connection with your bankruptcy representation can also be included in this plan. The amount of the plan payment can be calculated only after a thorough evaluation of the debtor's assets, liabilities, and income stream.

People that typically file this type of case are facing foreclosure of their home or repossession of their car. This bankruptcy stops creditors from being able to foreclose or repossess so long as the Chapter 13 case is filed before the foreclosure or repossession date.

In the State of Maryland, there is no legal means by which to regain possession of a properly foreclosed upon home after the foreclosure sale date. As in Chapter 7, the debtor still must comply with all of the pre-filing requirements such as providing the last seven months of income statements (i.e., pay stubs, pension statements, social security income statements, etc.), the most recently filed tax return (in some instances the last 3 years of returns are required), and also attend a counseling session with a certified debt counselor. The debtor must receive a counseling certificate from the debt counselor. This certificate is then filed with the Bankruptcy Court. If not, the Court will automatically dismiss the debtor's case.

In a Chapter 13 case, a Trustee is appointed to review whether the payments proposed by the debtor's Chapter 13 plan are sufficient. The Trustee will either recommend "confirmation" of the plan by the Court, or will object to confirmation due to the insufficiency of the proposed plan payment, the failure of the debtor to remain current on post-bankruptcy payments, or other reasons.

In a Chapter 13 case, the purpose of the Meeting of Creditors is essentially the same as in Chapter 7 except that the Trustee will confirm that the debtor understands the need to remain current on "plan payments" and monthly payments to secured creditors. The Trustee may seek additional information on the valuation of the debtor's real estate and the debtor's wages. The Trustee will also confirm that the debtor is aware of the date and time for the "Confirmation Hearing" to be held at the Bankruptcy Court. The Trustee may also provide written information to the debtor which explains in simple terms how the Chapter 13 process works and what the debtor must do to ensure a successful case.

In Chapter 13, unlike Chapter 7, there is an additional step that will require the debtor's attendance at a "Confirmation Hearing" where the court will either approve or disapprove of the debtor's proposed Chapter 13 Plan. In most instances, if the plan is prepared properly, it will be approved at the hearing without having to appear before a judge. After the Plan is approved, the debtor must be sure to make all Plan payments each month for the duration of the Plan, which cannot exceed 60 months.

Upon Confirmation of a Chapter 13 Plan, the debtor who abides by the terms of the Plan and who remains current on secured loans, will not have to appear in court again. Remaining current on these payments is critical to the success of the Chapter 13 case. Otherwise, the court, at the request of an aggrieved creditor, may dismiss the case or allow the creditor to take collection action despite the "automatic stay" which normally prohibits such action.

For more information, call Antonio Aquia at 410-234-0100.