Law Offices of Frank B. Cahn, P.A.

Dealing with financial problems can be stressful. An experienced attorney can provide you with useful information to help you decide on the best course of action to ease those problems. This website gives a general outline of how bankruptcy works. For further details and to address specific concerns, please call (410) 358-4338 to schedule your free 
consultation.

THE BANKRUPTCY REFORM ACT OF 2005

Changes to the U.S. Bankruptcy Code which took effect on October 17, 2005 have placed some limits on filing bankruptcy. The most important change depends upon whether a debtor earns more than the median income in the County in which
he or she resides. People who earn under this amount can usually file bankruptcy just as they would have under the old law. Those who earn more than this amount may still file bankruptcy. However, they must complete a complicated form setting out their income and expenses to determine what type of bankruptcy relief they are eligible for.

CHAPTER 7 BANKRUPTCY

Chapter 7 bankruptcy is a liquidation program. The U.S. 
Bankruptcy Court appoints a Trustee to gather all property and assets of a Debtor, sell them, and pay off the creditors to the extent funds are available. However, State and Federal laws permit debtors to keep a certain amount of assets during bankruptcy. Usually, a person filing Chapter 7 bankruptcy can keep most or all of his or her assets.

In Maryland, a debtor is generally entitled to keep at least $12,000.00 worth of his or her assets ($24,000.00 for a married couple filing jointly). The law also permits debtors to retain most pension benefits, most money due for personal injury and workers compensation claims, and up to $5,000.00 worth of assets used for a debtor's trade or profession.

Most debts are wiped out by bankruptcy, but not all. Student loans are rarely affected by bankruptcy, and income taxes which have accrued during the last three tax years are not affected at all. Bankruptcy also does not eliminate government fines or penalties, or any debt obtained through dishonest or illegal means.

A lien which a creditor has on collateral survives the bankruptcy. For example, someone who has a mortgage or car loan must continue to make payments to keep the home or car. On the other hand, if you choose to surrender a home or car to a lender, your bankruptcy protects you from being held liable for any money left owing after the lender sells those items.

Sometimes, an attorney can file a motion to remove a judgment lien against real estate. Also, there are situations where a Judge will agree to reduce the balance owed on a vehicle loan to the value of the vehicle. Make sure to discuss these issues during your free initial consultation.

A Chapter 7 bankruptcy case is initiated by filing certain paperwork with the U.S. Bankruptcy Court. At the Law Offices of Frank B. Cahn, P.A., a licensed attorney reviews all paperwork before it is sgned by you and submitted to Court.

The person fling bankruptcy and his or her attorney must appear for a hearing conducted by a Court-appointed Trustee. At least seven (7) business days prior to the hearing, the debtor must provide the Trustee with copies of paystubs for the sixty (60) day period prior to the filing of the case and tax returns for the prior year. The Trustee may request additional infromation as well. For example, those who own real estate must provide documentation of the value of their property. The Trustee will also need to see copies of statements showing the balances owed on a house or car loans so that he or she can determine whether there is any equity in those assets.

At the hearing, Trustees usually ask some general questions, such as what forced you to file bankruptcy and whether you read the paperwork filed with the Court before signing it. The 
Trustee will also ask questions to make sure you have no other resources you can use to satisfy your debts. For example, a Trustee may ask whether anyone has died from whom you 
may inherit money, whether anyone owes you money, or whether you have any insurance claims pending from which you may obtain funds.

After the hearing, the creditors have sixty (60) days in which to voice any complaints or objections about the bankruptcy. Generally, a Judge will only listen to complaints or objections if there is a claim that a debtor has done something dishonest, such as putting false information on a credit application or running up large debts shortly before filing his or her case. After the sixty (60) day period expires, the Court will issue a Discharge Order excusing the debtor from payment of all debts which may be discharged under Federal bankruptcy law.

HOW DOES BANKRUPTCY AFFECT YOUR CREDIT RATING?
Federal law gives credit reporting agencies a right to report bankruptcy on a credit report for up to ten (10) years. However, there is no law which prohibits a creditor from granting a loan to a person who has filed for bankruptcy. 
Feedback from clients who have gone through bankruptcy indicates that many are able to finance vehicles and homes. Whether any given individual will be eligible for credit after filing a bankruptcy depends mainly on his or her financial circumstances at the time the application is made.

Please note that while your bankruptcy is in progress, you may not enter into a loan agreement without Court permission.

Call (410) 358-4338 for your free consultation.

Convenient to Owings Mills, Pikesville, Randallstown, Reisterstown, Security, Towson, Windsor Mill, and Woodlawn.

FEDERAL LAW REQUIRES US TO INFORM YOU THAT WE ARE A DEBT RELIEF LAW FIRM WHICH ASSISTS PEOPLE IN FILING FOR RELIEF UNDER THE U.S. BANKRUPTCY CODE.