The law firm of Robins & Robins, P.A. handles a variety of cases for banking institutions, lenders and creditors, in state and federal court, including bankruptcy court. The objective in these cases is to recover the money that is owed to the client or, in some circumstances, to minimize the loss the client anticipates it will suffer. Pre-Litigation Collection Efforts
Sometimes a debtor can be persuaded to make payment voluntarily without resorting to the courts. In the case of banks or seasoned lenders, attempts to effect a satisfactory repayment arrangement generally have been made prior to the referral of the account to the attorney. Nevertheless, sometimes a mutually satisfactory arrangement can be negotiated after the debtor has been contacted by an attorney. And, an attorney can be instrumental in negotiating and drafting a forbearance agreement pursuant to which the creditor agrees not to take legal action provided the debtor makes payments as set forth in the agreement.
Collection Lawsuit
Reducing the claim to judgment by filing a complaint in court may be the best or only legal alternative. Under Maryland law, when a judgment is entered against a debtor in a Circuit Court, the creditor obtains a lien on all real property owned by the debtor in the county in which the court is located. If judgment is entered in the District Court, a notice of lien must be filed with the Circuit Court to obtain a lien. The judgment may also be recorded in other locations where the debtor owns property. After securing a judgment, the debtor can be examined with respect to his assets and ability to satisfy the judgment; and, post-judgment collection remedies can be exercised, including wage garnishments, seizures of property, etc. Under Maryland law, the debtor is entitled to exempt a certain amount of his property from execution on judgment, and a portion of wages are exempt from wage garnishment.
U.C.C. Security Interests
Maryland's Uniform Commercial Code allows creditors to obtain a lien against a debtor's property by a written Security Agreement and the filing of a U.C.C. Financing Statement with the Department of Assessments & Taxation. If a debtor defaults on the underlying obligation, the creditor can enforce its security interest in the debtor's property by seizing the collateral listed in the financing statement. The procedures for seizure or repossession of property, as well as the disposition or sale thereof, are governed by statute and must be handled with care by the creditor.
Real Estate Foreclosures
A foreclosure is the legal process by which a secured creditor (“mortgagee”) forces a public sale of the debtor's (“mortgagor”) real estate and applies the sale proceeds to satisfy the unpaid obligation. The creditor has a mortgage or a deed of trust which authorizes them to initiate foreclosure proceedings after the debtor has defaulted on a loan obligation. For more information on foreclosures, click here. Often the mortgage provides for additional relief in the event of default, e.g., the right to collect rents from the property or the right to appoint a receiver to take charge of the property pending the foreclosure. The firm has extensive experience in obtaining such incidental relief for the benefit of such mortgagees.
Creditors Have Rights in Bankruptcy Too!
If collection efforts are stayed by a debtor’s bankruptcy filing, it is important to remember that creditors have rights in bankruptcy too. Relief by discharge of debts in bankruptcy is designed only for the “honest debtor.” In a bankruptcy proceeding, a debtor must disclose under oath all of his assets and financial affairs, and the failure to do so can result in the denial of a discharge as well as criminal charges. In the bankruptcy proceeding, a creditor can challenge the valuation the debtor has placed on the assets, the amount of exemptions claimed, as well as the completeness of the disclosures and Schedules. For cause, the creditor can object to the discharge of the debtor generally or the dischargeability of the indebtedness to the creditor. Some debts are not discharged without the necessity of any adversary proceeding, e.g., debts arising out of a marital settlement or divorce, child support, etc. In some cases, it is necessary for the creditor to take affirmative action by objecting to dischargeability if grounds exist, e.g., debt was obtained by fraud or false pretenses, or the obligation will be discharged. In Chapter 13 or Chapter 11 reorganization cases, an attorney can assist in making sure that a plan is proposed in good faith and that it otherwise meets the requisites of a confirmable plan. If a creditor is secured by property of the bankruptcy estate by virtue of a mortgage or security interest, no action may be taken to enforce the lien without first obtaining permission of the bankruptcy court. The bankruptcy filing triggers the “automatic stay” and all actions against the debtor or his property are halted. A creditor who ignores the automatic stay of bankruptcy does so at its peril and will be subject to sanctions. |