Re: File or Not File

Meaning no disrespect to my colleagues, let me correct any misimpressions you may have about filing bankruptcy. First, as of 10/1/2004 the amount of property that a Maryland debtor can keep, was increased to $12,000 (or $24,000 for a married co-filing couple). That does not include certain other items such as tools of the trade and ERISA-qualified retirement funds. And there are special rules where a married couple own property together.

You are correct to anticipate that the new bankruptcy law (assuming it passes Congress, which seems likely at this point) will make it much more difficult for individuals to file bankruptcy. The new law will not take effect for 6 months, however.

In the meantime, you may want to carefully consider whether bankruptcy is a remedy that you should consider. Whether or not to file bankruptcy, and the effect of doing so after the case has been concluded, are complex issues. I would suggest consulting with an experienced bankruptcy attorney who can help evaluate the situation with your particular facts in mind.

If I can be of assistance, please feel free to contact me.

Re: File or Not File

You should certainly consider filing now. If you don't, and if this abomination passes the House and is enacted (which is likely), it will at a minimum dramatically increase the cost and difficulty of filing, even for those below the median income, and may make relief effectively impossible for those over the median. Of course, whether you file bankruptcy should not be a decision to be taken lightly, now or after the effective date, but you should consult with a competent bankruptcy lawyer now. As to the other question, if you default, the creditor can sue, get a judgment, and attach your assets and garnish your wages and bank accounts, and at a minimum harass you for payment.

Re: File or Not File

Practically speaking, what a judgment means is that you can be forced to pay after it is entered. First, the judgment can easily become a lien against any real property you own in the state, then the company is a secured creditor. Additionally, your wages can be garnished, your bank accounts can be attached and the funds used to pay the judgment, etc.

Don't be too hasty to rush into bankruptcy, though. You cannot protect a lot of property from your creditors in Maryland. That means that if you have more $6,000 in equity in your house, car, savings or certificates of deposit, and personal belongings (clothing, furnishings, electronics equipment), etc. the Trustee will sell those items to raise money to pay your creditors. I have seen the Trustee sell the home of a Chapter 7 debtor. That doesn't even take into account how the bankruptcy will affect your credit.

Have you tried renegotiating the debt or consolidating your debts? That should be your "plan A".