Legal Question in Bankruptcy in Maryland

Three bankruptcy questions

1. There is no bankruptcy law concerning a car lease. A debtor with a car lease has options under the bankruptcy code just as with any other contract.

2. Yes, given the appropriate circumstances.

3. No, the amount of your debts makes no difference. You may file even if you are not insolvent.

Whether to file bankruptcy is a matter to be discussed with a bankruptcy attorney. Sometimes there are better alternatives and sometimes you need do nothing, at all.

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3 bankruptcy answers

What are the rules with regard to a car lease?It depends whether you want to keep the car and whether the lease can be considered to bea disguised sale with a security interest, as well as the value of the car and what you owe, what chapter you file under, and other factors.Your bankruptcy lawyer can advise.

Discharge of taxes? It depends on what kind of taxes, how old, whether you timely fileda return, whether that return was fraudulent, and whether there was a recent assessment. In general, income taxes are dischargeable provided the return was last due (iincluding extensions) at least 3 years pre-petition; thereturn was actcually filed at least 2 years pre-petition; there was no assessment within the last 240 days; and the return was not fraudulent. Some taxes (those required to bewithheld by an employer/debtor) are never dischargeable; property taxes are dischargeableafter 1 year. DON'T TRY TO CALCULATE THIS YOURSELF.

Minimum debt amount? No, but the court candismiss bankruptcies where the filing is a "substantial abuse." This generally means that if the debtor has sufficient income topay his/her debts in a relatively short time,the case may be subject to such dismissal.It is a rarely-used provision of the code because it cannot be raised by creditors or trustees, only by the U.S. Trustee (a divisionof the Justice Department) or the Judge.

Three Bankruptcy Answers

> 1 - What are the bankruptcy laws concerning a car lease?

You can *reaffirm* the lease--meaning, continue with your payments as if the bankruptcy had never occurred--or *cancel* the lease and return the car (without penalty).

> 2 - Can filing any type of bankruptcy discharge overdue taxes?

Maybe (a nice lawyerly answer). If the taxes were filed more than 3 years ago and assessed more than 240 days ago and aren't trust fund taxes, probably yes. Please note that if you file under Chapter 11, 12 or 13, you will have to pay back at least a portion of these taxes under your Plan.

> 3 - Is there a dollar amount one must fall under to be considered for bankruptcy?

For Chapter 7, no. For Chapter 11, no. For Chapter 13, you cannot have more than $250,000 in unsecured debt or $750,000 in secured debt.

I practice extensively in this area. If I can help, please feel free to call at (301) 570-8976. There is no charge unless you elect to file.