Many of my clients who own a condominium, or live in a neighborhood that is subject to a homeowners association, are surprised to learn that after they file bankruptcy they still have an obligation to pay fees to the condominium or homeowners association. Filing bankruptcy will discharge the condominium or homeowners association fees or dues that had accrued before the case was filed, but will not discharge the obligation that becomes due after they file. This is due to an exception in the Bankruptcy Code Section 523(a)(16) which provides that a discharge will not include fees or assessments that become due and payable after the case is filed. The debtor will continue to be liable for these fees after the filing of the bankruptcy case until the debtor no longer has any legal interest in the property.
Laura J. Margulies is a principal in the firm of Laura Margulies & Associates, LLC. Our web site is located at: www.law-margulies.com. We represent consumers in bankruptcy and litigation matters in Maryland and the District of Columbia.
Wednesday, December 15, 2010
Wednesday, November 10, 2010
ISSUES REGARDING FUNDS IN A BANK ACCOUNT PRIOR TO FILING BANKRUPTCY
Under the 1995 Strumpf decision, (Citizen Bank of Maryland v. Strumpft, 516 U.S. 16) the Supreme Court ruled that a bank may freeze any money that is in a debtor’s account at the time it learns of the debtor’s bankruptcy case, if the debtor owes the bank money. This would result in the debtor not having access to those funds. The bank may then file a motion with the bankruptcy court for permission to sefoff the funds in the account with the amount the debtor owes the bank. The Supreme Court held that this freeze did not violate the automatic stay provisions of the Bankruptcy Code, which normally prohibit creditors from taking any actions to collect its debt. As a result of this ruling, I have always advised my clients to remove any funds they have in a bank before filing the case if they owe the bank money.
Wells Fargo Bank took this one step further. It believed it had the right to freeze money in a debtor’s bank account even if the debtor does not owe it money. In re Mwangi, 432 B.R. 812 (9th Cir. B.A.P. 2010); Calvin v. Wells Fargo Bank NA, 329 B.R. 589 (2005). Its national policy provided that if the debtor had more than $5,000 in an account with Wells Fargo, it would put an administrative hold on the account once it found out about the debtor’s bankruptcy. It would then send the debtor a letter notifying him or her about the freeze. Another letter would be sent to the trustee appointed in the case notifying the trustee about the account and asking the trustee what it should do with the frozen funds. Even if the debtor had exempted the funds on his bankruptcy schedules, he would have no access to the funds until the trustee to informed Wells Fargo to release the funds. This could result in a wait of more than 30 days. The Mwangi decision will hopefully put an end to this practice. The 9th Circuit ruled that because the bank was not attempting to protect setoff rights, the “exception” to turnover of funds in a deposit account recognized by the Supreme Court in Strumpf did not apply in this case. The funds in the debtor’s accounts, even those claimed as exempt, were property of the estate and therefore the debtors had standing to pursue sanctions for bank's stay violation. Finally it held that by placing a hold on the account funds, the bank exercised control over property of the estate in violation of the automatic stay.
Now that Wells Fargo has acquired Wachovia, more people would have been subject to this freeze. Until it is clear that Wells Fargo will no longer put their account holders’ funds on hold upon learning of their bankruptcy cases, I would advise potential bankruptcy clients not to leave funds in their Wells Fargo account.
Laura J. Margulies is a principal in the firm of Laura Margulies & Associates, LLC. Our web site is located at: www.law-margulies.com. We represent consumers in bankruptcy and litigation matters in Maryland and the District of Columbia.
Wells Fargo Bank took this one step further. It believed it had the right to freeze money in a debtor’s bank account even if the debtor does not owe it money. In re Mwangi, 432 B.R. 812 (9th Cir. B.A.P. 2010); Calvin v. Wells Fargo Bank NA, 329 B.R. 589 (2005). Its national policy provided that if the debtor had more than $5,000 in an account with Wells Fargo, it would put an administrative hold on the account once it found out about the debtor’s bankruptcy. It would then send the debtor a letter notifying him or her about the freeze. Another letter would be sent to the trustee appointed in the case notifying the trustee about the account and asking the trustee what it should do with the frozen funds. Even if the debtor had exempted the funds on his bankruptcy schedules, he would have no access to the funds until the trustee to informed Wells Fargo to release the funds. This could result in a wait of more than 30 days. The Mwangi decision will hopefully put an end to this practice. The 9th Circuit ruled that because the bank was not attempting to protect setoff rights, the “exception” to turnover of funds in a deposit account recognized by the Supreme Court in Strumpf did not apply in this case. The funds in the debtor’s accounts, even those claimed as exempt, were property of the estate and therefore the debtors had standing to pursue sanctions for bank's stay violation. Finally it held that by placing a hold on the account funds, the bank exercised control over property of the estate in violation of the automatic stay.
Now that Wells Fargo has acquired Wachovia, more people would have been subject to this freeze. Until it is clear that Wells Fargo will no longer put their account holders’ funds on hold upon learning of their bankruptcy cases, I would advise potential bankruptcy clients not to leave funds in their Wells Fargo account.
Laura J. Margulies is a principal in the firm of Laura Margulies & Associates, LLC. Our web site is located at: www.law-margulies.com. We represent consumers in bankruptcy and litigation matters in Maryland and the District of Columbia.
Wednesday, September 15, 2010
Special Treatment of Utility Creditors in Bankruptcy
When a debtor files for bankruptcy, one of the outstanding debts may be past due payments owed to utility companies, such as PEPCO or Washington Gas, for electric and gas service. The past due amounts may be discharged, however, in order to continue service, the debtor may be required to pay a new security deposit.
The Bankruptcy Code Section 366 provides that the debtor must provide “adequate assurance of payment” to a utility company within 20 days of the filing of the petition or the utility company may discontinue to provide the service. However, the utility company must still comply with state regulations regarding the turn off of the service.
Generally, what constitutes “adequate assurance of payment” is the payment of an additional security deposit to the utility company by the debtor. The deposit must be reasonable and the Code permits the debtor to challenge the reasonableness of the security deposit, Section 366(b), if he or she believes the amount requested by the utility company is not reasonable. The Bankruptcy Court will then schedule a hearing on the issue and make a determination as to a reasonable amount.
If the debtor was current on his or her utility bills before the case was filed, the court may look at his or her prior pay history to see if they were paid late, or whether the debtor was relying on credit cards to make the payments, to determine if the amount requested by the utility company is reasonable.
Once the debtor pays the security deposit, the utility company must continue or restart the service (if it was terminated prior to filing). If the debtor falls behind on the payments after filing, the utility company does not need to file a motion with the bankruptcy court to terminate the service, it can be automatically terminated (assuming the company complies with the state regulations on termination). This is true for case filed under Chapter 7 and Chapter 13.
In my experience, the utility company will send my office a letter asking that my client, the debtor in a bankruptcy case, pay it a certain sum for a security deposit. I forward the letter to my client and recommend that the person pay the bill. The amount requested by these companies has always been a reasonable sum, so that I have not had to file a motion with the court asking for a reduction.
Laura J. Margulies is a principal in the firm of Laura Margulies & Associates, LLC. Our web site is located at: www.law-margulies.com. We represent consumers in bankruptcy and litigation matters in Maryland and the District of Columbia.
The Bankruptcy Code Section 366 provides that the debtor must provide “adequate assurance of payment” to a utility company within 20 days of the filing of the petition or the utility company may discontinue to provide the service. However, the utility company must still comply with state regulations regarding the turn off of the service.
Generally, what constitutes “adequate assurance of payment” is the payment of an additional security deposit to the utility company by the debtor. The deposit must be reasonable and the Code permits the debtor to challenge the reasonableness of the security deposit, Section 366(b), if he or she believes the amount requested by the utility company is not reasonable. The Bankruptcy Court will then schedule a hearing on the issue and make a determination as to a reasonable amount.
If the debtor was current on his or her utility bills before the case was filed, the court may look at his or her prior pay history to see if they were paid late, or whether the debtor was relying on credit cards to make the payments, to determine if the amount requested by the utility company is reasonable.
Once the debtor pays the security deposit, the utility company must continue or restart the service (if it was terminated prior to filing). If the debtor falls behind on the payments after filing, the utility company does not need to file a motion with the bankruptcy court to terminate the service, it can be automatically terminated (assuming the company complies with the state regulations on termination). This is true for case filed under Chapter 7 and Chapter 13.
In my experience, the utility company will send my office a letter asking that my client, the debtor in a bankruptcy case, pay it a certain sum for a security deposit. I forward the letter to my client and recommend that the person pay the bill. The amount requested by these companies has always been a reasonable sum, so that I have not had to file a motion with the court asking for a reduction.
Laura J. Margulies is a principal in the firm of Laura Margulies & Associates, LLC. Our web site is located at: www.law-margulies.com. We represent consumers in bankruptcy and litigation matters in Maryland and the District of Columbia.
Wednesday, July 7, 2010
New Maryland Exemption
Maryland has enacted a new exemption law. This law adds a homestead exemption of $20,200.00 per household. This new law is part of Maryland Courts and Judicial Proceedings Section 11-504 (f)(1)(I). The exemption applies to the homeowner and can only be claimed once in 8 years. The exemption claimed by one homeowner, cannot be claimed by joint owner of the property for another 8 years. The exemption is tied to the Bankruptcy Code Section 522(D)(1), and therefore the amount of the exemption is subject to change every 3 years. This exemption is in addition to the other $12,000 of exemptions listed in Section 11-504.
This homestead exemption is good news for homeowners in Maryland. It means that if they have $20,200 in equity, they are able to keep their house even if they file a Chapter 7 bankruptcy case. The Chapter 7 trustee will not be able to sell the house for the benefit of their creditors unless there is more than $20,2000 in equity. This law also will apply to judgment creditors of the homeowner, they will not want to foreclose on the property unless the sale price will be sufficient to pay off the current liens and credit the homeowner with $20,2000.
This law was enacted to help homeowners who have lived in the property for a substantial period of time and have built up some equity in the property. It will protect them from losing their homes due to financial circumstances beyond their control, such as unexpected medical bills.
Laura J. Margulies is a principal in the firm of Laura Margulies & Associates, LLC. Our web site is located at: www.law-margulies.com. We represent consumers in bankruptcy and litigation matters in Maryland and the District of Columbia.
This homestead exemption is good news for homeowners in Maryland. It means that if they have $20,200 in equity, they are able to keep their house even if they file a Chapter 7 bankruptcy case. The Chapter 7 trustee will not be able to sell the house for the benefit of their creditors unless there is more than $20,2000 in equity. This law also will apply to judgment creditors of the homeowner, they will not want to foreclose on the property unless the sale price will be sufficient to pay off the current liens and credit the homeowner with $20,2000.
This law was enacted to help homeowners who have lived in the property for a substantial period of time and have built up some equity in the property. It will protect them from losing their homes due to financial circumstances beyond their control, such as unexpected medical bills.
Laura J. Margulies is a principal in the firm of Laura Margulies & Associates, LLC. Our web site is located at: www.law-margulies.com. We represent consumers in bankruptcy and litigation matters in Maryland and the District of Columbia.
Sunday, May 16, 2010
How Much Will My Chapter 13 Payment Be?
One of the most common questions asked, and the most important to many who file Chapter 13 bankruptcy is, "how much will the payment be?". The answer is not as simple as it would seem. Under the Bankruptcy Code, a debtor must devote his or her projected "disposable income" over the three or five year payment plan. In order to make this determination, the Court looks to a calculation based on the debtor's household's income and expenses. First, a debtor lists all of his or her household's income, based on all income sources, including wages, investment income, pension income, rent, etc. Next, the debtor lists all of his or her reasonable expenses, including food, mortgage payments or rent, gas, electricity, insurance, and other expenses. These expenses must be reasonable and verifiable. Many expenses, such as luxury vehicles, private school, and savings contributions must be cut. Once these expenses are subtracted from the income, the remaining money is dedicated to the Chapter 13 Plan. The Court may also look to a complicated "means test" that is filed by the debtor, to determine the amount a debtor must pay.
If a debtor files Chapter 13 to pay arrears on secured debts, the full arrearage must be paid back to the lender, regardless of whether this amount would make the payment higher than what the income and expenses say the debtor can afford. There are also fees and trustee commissions that must be paid in the Chapter 13 Plan. Unsecured creditors should also get some distribution, even if it is minimal.
A good lawyer knows how the income and expenses should be stated to make sure the debtor has a Chapter 13 payment that is feasible. Many times when a person files on their own (also know as "pro se") they do not do a good accounting of expenses, which results in an excessively high plan payment. An experienced attorney knows where to look and what questions to ask to make sure legitimate expenses are not missed.
Seth W. Diamond is an attorney at Laura Margulies & Associates, LLC. in Rockville, Maryland. His firm represents individuals and companies in bankruptcy and litigation matters in Maryland and the District of Columbia. For more information about bankruptcy and the services offered by his firm, please feel free to visit the firm's website. If you would like to schedule an appointment to discuss bankruptcy with an attorney, call 301-816-1600, or click here.
If a debtor files Chapter 13 to pay arrears on secured debts, the full arrearage must be paid back to the lender, regardless of whether this amount would make the payment higher than what the income and expenses say the debtor can afford. There are also fees and trustee commissions that must be paid in the Chapter 13 Plan. Unsecured creditors should also get some distribution, even if it is minimal.
A good lawyer knows how the income and expenses should be stated to make sure the debtor has a Chapter 13 payment that is feasible. Many times when a person files on their own (also know as "pro se") they do not do a good accounting of expenses, which results in an excessively high plan payment. An experienced attorney knows where to look and what questions to ask to make sure legitimate expenses are not missed.
Seth W. Diamond is an attorney at Laura Margulies & Associates, LLC. in Rockville, Maryland. His firm represents individuals and companies in bankruptcy and litigation matters in Maryland and the District of Columbia. For more information about bankruptcy and the services offered by his firm, please feel free to visit the firm's website. If you would like to schedule an appointment to discuss bankruptcy with an attorney, call 301-816-1600, or click here.
Wednesday, April 21, 2010
New Mediation for Homeowners In Foreclosure
The Governor of Maryland just signed a new law to help homeowners facing foreclosure. The new law takes effect on July 1, 2010 and provides new procedures that mortgage lenders must follow before foreclosing on the property. Before a foreclosure case is filed in the Circuit Court where the property is located, the lender must send the homeowner an application for a loss mitigation/loan modification program. The lender must wait at least 45 days after sending the application to the homeowner before filing a foreclosure case with the court.
The lender will need to let the home owner know the results of the application at least 30 days before the foreclosure sale date. The letter to the homeowner must state the reasons for the denial of the loan modification. Once the homeowner receives this letter from the lender, he or she has 15 days to ask the court for mediation. In order to request mediation, the homeowner will need to complete a mediation request form and pay the court $50.00. Once the court receives the request for mediation, the foreclosure sale is put on hold and the parties will need to attend a mediation conference. The mediation will be conducted by an administrative law judge who will schedule the mediation within 60 days of the receiving the homeowners request.
If the mediation fails, the lender will be able to sell the property at a foreclosure auction. The lenders will have an attorney representing their interests at the mediation conference. My suggestion is that homeowners also hire an attorney to represent them at the mediation conference.
Laura J. Margulies is a principal in the firm of Laura Margulies & Associates, LLC. We represent consumers in bankruptcy and litigation matters in Maryland and the District of Columbia.
The lender will need to let the home owner know the results of the application at least 30 days before the foreclosure sale date. The letter to the homeowner must state the reasons for the denial of the loan modification. Once the homeowner receives this letter from the lender, he or she has 15 days to ask the court for mediation. In order to request mediation, the homeowner will need to complete a mediation request form and pay the court $50.00. Once the court receives the request for mediation, the foreclosure sale is put on hold and the parties will need to attend a mediation conference. The mediation will be conducted by an administrative law judge who will schedule the mediation within 60 days of the receiving the homeowners request.
If the mediation fails, the lender will be able to sell the property at a foreclosure auction. The lenders will have an attorney representing their interests at the mediation conference. My suggestion is that homeowners also hire an attorney to represent them at the mediation conference.
Laura J. Margulies is a principal in the firm of Laura Margulies & Associates, LLC. We represent consumers in bankruptcy and litigation matters in Maryland and the District of Columbia.
Tuesday, March 9, 2010
Bank Account Garnishments
Once a creditor has obtained a judgment against a debtor, its job is to collect the money due. One of the methods of collecting the money is to garnish the person’s bank account. Once the bank account is frozen, creditors have little motivation to work out any payment plans with the debtor. Many of my clients come to my office after a creditor has placed a freeze on their bank account. If they see me immediately after the notice of the garnishment, there are certain procedures I can take to possibly release the funds. However, they must come as quickly as possible, because in Maryland, after 30 days the bank will be required to turn over the money in the account to the creditor.
Certain funds in an account are exempt from attachment in Maryland. These include social security income, unemployment income, retirement benefits, payments received as a result of a personal injury, and some other types of income. In addition, Maryland allows an individual to exempt up to $6,000 in cash from a garnishment. This is not an exhaustive list of exemptions. You will need to consult with an attorney to determine whether the funds frozen in your account are exempt from garnishment. Neither the bank nor the creditor has an obligation to inquire whether the funds frozen are really exempt from garnishment. In order to claim any of these exemptions, you will need to file a motion with the court in the case filed against you by the creditor asking for these exemptions.
If the funds have already been turned over to the creditor, you may still be able to recoup some or all of the money by filing a bankruptcy case within 90 days of the garnishment. The money garnished maybe considered a preference by the bankruptcy court and the creditor may be ordered to return the funds to the debtor or the bankruptcy estate.
Unfreezing the account may only be the first step in dealing with a person’s financial situation. I suggest you call the Law Offices of Laura Margulies & Associates, LLC so that we can evaluate the state of your financial affairs.
Laura J. Margulies is a principal in the firm of Laura Margulies & Associates, LLC. We represent consumers in bankruptcy and litigation matters in Maryland and the District of Columbia.
Certain funds in an account are exempt from attachment in Maryland. These include social security income, unemployment income, retirement benefits, payments received as a result of a personal injury, and some other types of income. In addition, Maryland allows an individual to exempt up to $6,000 in cash from a garnishment. This is not an exhaustive list of exemptions. You will need to consult with an attorney to determine whether the funds frozen in your account are exempt from garnishment. Neither the bank nor the creditor has an obligation to inquire whether the funds frozen are really exempt from garnishment. In order to claim any of these exemptions, you will need to file a motion with the court in the case filed against you by the creditor asking for these exemptions.
If the funds have already been turned over to the creditor, you may still be able to recoup some or all of the money by filing a bankruptcy case within 90 days of the garnishment. The money garnished maybe considered a preference by the bankruptcy court and the creditor may be ordered to return the funds to the debtor or the bankruptcy estate.
Unfreezing the account may only be the first step in dealing with a person’s financial situation. I suggest you call the Law Offices of Laura Margulies & Associates, LLC so that we can evaluate the state of your financial affairs.
Laura J. Margulies is a principal in the firm of Laura Margulies & Associates, LLC. We represent consumers in bankruptcy and litigation matters in Maryland and the District of Columbia.
Sunday, March 7, 2010
Dischargability of Student Loans
One of the more common questions that is asked by potential clients is whether student loans are dischargable in a bankruptcy. Many people have minimal other debt, but have large student loan balances and are looking to bankruptcy as a potential solution. Unfortunately, student loans are rarely dischargable.
Prior to 1998, student loans could be discharged in a bankruptcy, so long as the student loan debt had been in active pay status for over seven years. However, the law was changed and now a Debtor must show that the student loans are a "hardship". While the term "hardship" may seem like a relatively low standard wherein the Debtor must show that the student loan is an encumbrance to paying other recurring expenses, such as food or a mortgage payment, that is simply not the case. In order to show that an actual hardship is occurring to the extent that student loans would be dischargable, the Debtor must show that the student loan debt is preventing him or her from providing a minimal living standard for the Debtor and his or her dependents. In plain English, the Debtor needs to show that he or she is unable to work or otherwise obtain any income, and that the prospect for obtaining the ability to work or otherwise generate income in the future is non-existent because of a permanent mental or physical disability. Therefore, it is nearly impossible to discharge student loan debt in a bankruptcy. This rule holds true regardless of whether the student loans are public or private.
This does not mean that bankruptcy cannot be a solution to a problem with student loan debt. For example, a Debtor with past due balances can file a Chapter 13 bankruptcy to reorganize his or her debt and provide a mechanism to catch back up. Even if a borrower is not behind on the student loan, a Chapter 13 may lower the monthly payment for the next five (5) years. This may allow the sought after "breathing room".
It should be noted that school tuition debt is dischargable in bankruptcy. Therefore, it is important to know the nature of a school related debt before making a decision as to whether bankruptcy can be a solution to student debt problems.
Seth W. Diamond is an attorney at Laura Margulies & Associates, LLC. in Rockville, Maryland. His firm represents individuals and companies in bankruptcy and litigation matters in Maryland and the District of Columbia. For more information about bankruptcy and the services offered by his firm, please feel free to visit the firm's website. If you would like to schedule an appointment to discuss bankruptcy with an attorney, call 301-816-1600, or click here.
Prior to 1998, student loans could be discharged in a bankruptcy, so long as the student loan debt had been in active pay status for over seven years. However, the law was changed and now a Debtor must show that the student loans are a "hardship". While the term "hardship" may seem like a relatively low standard wherein the Debtor must show that the student loan is an encumbrance to paying other recurring expenses, such as food or a mortgage payment, that is simply not the case. In order to show that an actual hardship is occurring to the extent that student loans would be dischargable, the Debtor must show that the student loan debt is preventing him or her from providing a minimal living standard for the Debtor and his or her dependents. In plain English, the Debtor needs to show that he or she is unable to work or otherwise obtain any income, and that the prospect for obtaining the ability to work or otherwise generate income in the future is non-existent because of a permanent mental or physical disability. Therefore, it is nearly impossible to discharge student loan debt in a bankruptcy. This rule holds true regardless of whether the student loans are public or private.
This does not mean that bankruptcy cannot be a solution to a problem with student loan debt. For example, a Debtor with past due balances can file a Chapter 13 bankruptcy to reorganize his or her debt and provide a mechanism to catch back up. Even if a borrower is not behind on the student loan, a Chapter 13 may lower the monthly payment for the next five (5) years. This may allow the sought after "breathing room".
It should be noted that school tuition debt is dischargable in bankruptcy. Therefore, it is important to know the nature of a school related debt before making a decision as to whether bankruptcy can be a solution to student debt problems.
Seth W. Diamond is an attorney at Laura Margulies & Associates, LLC. in Rockville, Maryland. His firm represents individuals and companies in bankruptcy and litigation matters in Maryland and the District of Columbia. For more information about bankruptcy and the services offered by his firm, please feel free to visit the firm's website. If you would like to schedule an appointment to discuss bankruptcy with an attorney, call 301-816-1600, or click here.
Thursday, February 11, 2010
Capitol Hill Meeting
On January 27, 2010, I spent the day in Washington, D.C. at Capitol Hill lobbying Congress on bankruptcy matters. I was one of 80 lawyers from NACBA, National Association of Consumer Bankruptcy Attorneys, lobbying that day. I met with representatives from Senator Barbara Mikulski's office, Congressman Chris Van Hollen, Congressman John Sarbanes, Congresswoman Donna Edwards and Congresswoman Eleanor Holmes Norton offices. Each person I met was very receptive and expressed an interest in the subject.
I had never been to Congress before and it was very impressive. The members of Congress I visited are located in three different buildings all connected by underground passageways. The buildings themselves are very old and have very small elevators. The Senate and House of Representative have offices that lie on opposite sides of the Capitol building. There is an underground subway that takes people between the various Congressional offices that used to be available for the public, but now can be only used by the a private individual if he or she is accompanied by a member of a Congressional staff. Because I was on my own, I walked outside from the House of Representatives offices to the Senate offices. The area around the Capitol is cut off from traffic and only approved vehicles are permitted. As a result, there is little traffic. However, there are many policemen present. Some are walking around and others are guarding the sites with heavy machine guns with their hands on the trigger.
The day before we met our representatives, several members of NACBA gave us lessons on lobbying. We were taught the protocols and given hints on how to present our issues most effectively. Although there is no specific bill pending in Congress regarding bankruptcy, there are matters that may come up that could effect our clients. For example, Congress may consider having a Mortgage Borrowers Bill of Rights. This would involve making the mortgage lenders send their borrowers statements each time they charge a fee to their account. In a Chapter 13 case, I have seen mortgage lenders charge borrowers for late fees on payments that were not late, inspection fees, appraisal fees, legal fees and other charges that could be considered "junk fees" that were not disclosed to the borrower until after they paid off their five-year Chapter 13 plan.
Laura J. Margulies is a principal in the firm of Laura Margulies & Associates, LLC. We represent consumers in bankruptcy and litigation matters in Maryland and the District of Columbia.
I had never been to Congress before and it was very impressive. The members of Congress I visited are located in three different buildings all connected by underground passageways. The buildings themselves are very old and have very small elevators. The Senate and House of Representative have offices that lie on opposite sides of the Capitol building. There is an underground subway that takes people between the various Congressional offices that used to be available for the public, but now can be only used by the a private individual if he or she is accompanied by a member of a Congressional staff. Because I was on my own, I walked outside from the House of Representatives offices to the Senate offices. The area around the Capitol is cut off from traffic and only approved vehicles are permitted. As a result, there is little traffic. However, there are many policemen present. Some are walking around and others are guarding the sites with heavy machine guns with their hands on the trigger.
The day before we met our representatives, several members of NACBA gave us lessons on lobbying. We were taught the protocols and given hints on how to present our issues most effectively. Although there is no specific bill pending in Congress regarding bankruptcy, there are matters that may come up that could effect our clients. For example, Congress may consider having a Mortgage Borrowers Bill of Rights. This would involve making the mortgage lenders send their borrowers statements each time they charge a fee to their account. In a Chapter 13 case, I have seen mortgage lenders charge borrowers for late fees on payments that were not late, inspection fees, appraisal fees, legal fees and other charges that could be considered "junk fees" that were not disclosed to the borrower until after they paid off their five-year Chapter 13 plan.
Laura J. Margulies is a principal in the firm of Laura Margulies & Associates, LLC. We represent consumers in bankruptcy and litigation matters in Maryland and the District of Columbia.
Wednesday, January 20, 2010
Be Careful In Choosing A Bankruptcy Attorney
When choosing a bankruptcy attorney, one must be very cautious and make certain that the person is licensed to practice in the federal court and has the experience to properly assist you throughout the case. The recent case of Attorney Grievance Commission of Maryland v. Robaton, (Md. 11/16/09), is a good example of what can go wrong if you hire the wrong lawyer. The first clue of Mr. Robaton’s inadequacy was when he told his client that he needed to file the bankruptcy documents himself, as Robaton was not equipped to file them electronically with the court. He did represent the client at the meeting of creditors, but failed to appear at the confirmation hearing. At the confirmation hearing, the bankruptcy judge discovered that Mr. Robaton’s federal bar membership had expired and as a result, he was not admitted to the federal court and could not represent clients in federal court. Mr. Robaton was sanctioned with an indefinite suspension from the practice of law.
There have been unscrupulous attorneys who have been retained by clients to file bankruptcy on their behalf in order to stop a foreclosure, who only file an emergency petition and never follow up with their clients to file the rest of the paperwork. They also do not appear at the meeting of creditors or other court hearings. These debtors’ cases get dismissed, and then, if they want to file again, they need to open another case, pay another filing fee and attorney fee and are subject to the limitations of the automatic stay.
Because of the economic downturn, bankruptcy filings have increased. Attorneys with little or no experience in the field are filing cases in bankruptcy court. While some of these new attorneys attend educational seminars to learn the law, there are others who are filing cases without the knowledge of all that bankruptcy entails. Some of my clients have come to my office after their case were filed by one of these attorneys because the Trustee in their case advised them that their Schedules, Statement of Financial Affairs and/or Plan were not completed properly. It usually takes me longer to undo the mistakes than complete the papers from scratch. This delays the process for the client and prolongs the case.
Laura J. Margulies is a principal in the firm of Laura Margulies & Associates, LLC. We represent consumers in bankruptcy and litigation matters in Maryland and the District of Columbia.
There have been unscrupulous attorneys who have been retained by clients to file bankruptcy on their behalf in order to stop a foreclosure, who only file an emergency petition and never follow up with their clients to file the rest of the paperwork. They also do not appear at the meeting of creditors or other court hearings. These debtors’ cases get dismissed, and then, if they want to file again, they need to open another case, pay another filing fee and attorney fee and are subject to the limitations of the automatic stay.
Because of the economic downturn, bankruptcy filings have increased. Attorneys with little or no experience in the field are filing cases in bankruptcy court. While some of these new attorneys attend educational seminars to learn the law, there are others who are filing cases without the knowledge of all that bankruptcy entails. Some of my clients have come to my office after their case were filed by one of these attorneys because the Trustee in their case advised them that their Schedules, Statement of Financial Affairs and/or Plan were not completed properly. It usually takes me longer to undo the mistakes than complete the papers from scratch. This delays the process for the client and prolongs the case.
Laura J. Margulies is a principal in the firm of Laura Margulies & Associates, LLC. We represent consumers in bankruptcy and litigation matters in Maryland and the District of Columbia.
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