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Bankruptcy court get increasing number of cases since last fall

April 06, 2008|By ARNOLD S. PLATOU

WASHINGTON COUNTY -- The man, sporting a nice shirt and slacks, and his wife, in a white sweater, brown slacks and heels, present a picture of prosperity as they sit in Hagerstown City Hall.

"Wow! You own a lot of property!" exclaims the man in a suit facing them across a table.

Appearances are deceiving.

Indeed, the Frederick couple owns six houses and a timeshare -- and so far, their attorney tells the suit-clad U.S. Bankruptcy Court trustee, three have gone into foreclosure.

If trustee Steven H. Greenfeld yet orders it, so, too, could the rest be sold and the money given to creditors.

Even more remarkable is what Greenfeld confides hours later about the husband.

"You know what he does for a living?" Greenfeld asks. "He's a waiter" at a hamburger restaurant near Washington, D.C.

And so, it goes every other Monday in the large City Hall council chambers where the bankruptcy court has been holding meetings with debtors and creditors for years.

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Since at least last fall, the number of cases has been rising steadily as the nation's economy has eroded.

Last July, August and September -- the latest quarterly figures available -- 218,909 bankruptcy cases were filed throughout the nation. That's 28 percent more than in the same quarter a year ago.

During the same time in Maryland, bankruptcy filings rose nearly 42 percent to 3,621 compared to the year-ago period, according to the court.

And, the numbers continue rising. "The last few months, there's been a pretty steady increase," Greenfeld says.

Indeed, so much of an acceleration that two weeks ago, the court system began asking trustees to take on even more cases, according to Hagerstown attorney Roger Schlossberg, a trustee at the bankruptcy court in Greenbelt, Md.

On the Monday before last in Hagerstown, 41 families from throughout Western Maryland came to City Hall to meet with Greenfeld and any creditors -- businesses or others trying to collect on debts.

Tomorrow, a few dozen other debtors are scheduled for such meetings here.

Generally, there isn't much equity -- value not already drained by debt -- left. And, this day, creditors come for only a few of the cases.

Among them is Irvin Martin, president of a small electrical contracting company that had worked for the residential remodeling company owned by a Union Bridge, Md., man now seeking personal bankruptcy protection.

One by one, Martin lists assets seen at the remodeler's company. Among them, a red Dodge van. ... Which was sold, the debtor tells the trustee, for $3,800 that has already been spent.

Well, Martin asks, what about the generator, air compressor and other equipment?

"I did sell off those, but most of those (others) I use for my current job," the debtor replies.

And, the office desk, computer, printer and furniture?

"Unfortunately, the corporation's not in bankruptcy," court trustee Greenfeld cuts in. "So, all that he really owns in the corporation is the stock, which clearly has no value and it appears the other equipment has no value or has liens on it."

In other words, there might be nothing of worth left among his personal possessions that the creditors can divide.

"We exhausted all the mutuals, every bit of savings we had," says the debtor, who has four children. And, the family's house is said to be worth $463,000 -- but the liens against it total $478,000, Greenfeld adds.

But the man does expect a tax refund. "Don't do anything with the refund until I decide whether" it can go to creditors, Greenfeld tells him.

The meeting, lasting maybe 10 minutes, is long for those held this day.

In every case here, the debtors are filing for Chapter 7 bankruptcy. This means they have little left to protect.

In Chapter 13 cases, which are held in Greenbelt and Baltimore, the debtors still may own a house with enough equity in it that by holding off creditors for a few years, they can agree on a plan to try to catch up on the bills.

Many of the cases are rooted in credit card debt, divorce and -- increasingly -- mortgage debt.

Trustee Greenfeld, sitting at a computer, calls out each case, asking debtors how many cars, boats and properties they have and how much is owed and, at this time of year, whether a tax refund is expected.

The cases move swiftly. There seems no time for explaining how the debts got so overwhelming. So, the pieces you hear are like shreds of jagged economic fabric.

The Herald-Mail is choosing not to identify the debtors because some have children and some have spouses not involved in the bankruptcy action.

The following are some of their stories:

  • A Frederick man says he bought a town house in 2004 for $190,000 and refinanced it in 2005 to help him buy another house. He bought it for $367,000, financing 100 percent of its value. He'd intended to rent one, but it has been vacant for more than eight months.

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