Debtor/Creditor Rights

Some creditors have collection rights that can be asserted independent of any judicial action, including setoff and statutory sanctioned self-help remedies, and the Firm advises clients on the applicability and limits to those rights. Likewise, circumstances where a debtor is feared to be on the verge of depleting an attachable asset or removing it from a creditor or court’s reach may justify a pre-judgment attachment order, to be issued by the court in an accelerated manner at the beginning of a lawsuit – instead of waiting until after a judgment has been entered.

The Firm also helps clients identify goals for the collection matter and avenues for reaching an amicable resolution early in the process – to save legal fees and stress and, ideally, to obtain a payment plan that is manageable for all parties.

Maryland is one of few states that allow for confession of judgment in commercial cases, where authorized by contract; most states prohibit it as a violation of Due Process. In confessed judgment cases, the court enters a judgment at the onset of the case without a trial, and, unless the confessed judgment is vacated, opened or modified, the merits of the case are never heard and the creditor is allowed to immediately proceed with post-judgment enforcement.

Although they have been updated in recent years, Maryland’s confessed judgment procedures are full of pitfalls and challenges, and creditors seeking to obtain a confessed judgment need an attorney who is well-versed in that nuanced area of the law. Likewise, confessed judgments are vulnerable to attack and, on a timely filed motion, can be vacated, opened or modified to allow a defendant to plead affirmative defenses to the claim and then for the case to proceed to a merit trial.

Coon & Cole regularly represents both creditors and debtors in confessed judgment actions and is well-poised to bring or attack those claims.

After the entry of judgment and passing of any requisite stay of enforcement, if a judgment debtor does not voluntarily make payment, the judgment creditor may pursue various collection remedies against the judgment debtor, including property/bank garnishments, wage garnishments, levies and charging orders.

The Firm has extensive experience in aggressively pursuing and defending post-judgment enforcement matters, as well as a host of related matters, such as complex discovery (including discovery concerning business interests, and tracking property transfers) and representation in fraudulent conveyance suits to unwind wrongful transfers of property made either with constructive fraud or with an actual intent to delay, hinder or defraud creditors.

Throughout its history, Coon & Cole has maintained a strong practice of collections in a commercial real estate context. The Firm regularly represents lenders and property owners alike in commercial foreclosure actions and is adept at navigating all aspects of foreclosure, including the filing of exceptions and redemption issues. Likewise, the Firm regularly handles commercial lease disputes, including assisting clients with collection of unpaid rent and eviction.

Federal and state laws provide certain protections to debtors from their creditors. Those “exemptions” can be provided under statutes or the common law. For example, real estate owned by a spouses as “tenants by the entireties” and spousal joint bank accounts can be exempt from execution of any creditor of only one spouse. Life insurance benefits payable to a spouse, child or dependent of a debtor are generally exempt from that person’s creditors. And all debtors are entitled to a “wildcard” exemption of $6,000.

These examples are not exhaustive. However, there are oftentimes deadlines for a debtor to elect his or her exemptions in order to take advantage of them, and a failure to timely elect an exemption may result in its waiver, allowing a creditor to attach otherwise exempt funds. Therefore, it is critical that debtors obtain competent legal advice to be made aware of all exemptions that are available to him or her and to properly elect them.

Because Coon & Cole’s team includes veteran state court, federal court and bankruptcy attorneys, it is well prepared to help its clients identify applicable exemptions and seize them. The Firm regularly assists clients in exemption planning and asset protection planning when economic times are good, and regularly litigates exemption issues in a variety of courts.

For both business and individuals with business obligations, there are many circumstances where financial issues are best resolved on an informal basis, without court intervention. Examples of informal workouts include negotiations of loan modifications, forbearance agreements, deeds in lieu of foreclosure, agreements to allow the liquidation of assets or the sale of the business as an entirety, or negotiations of personal guaranties. We regularly work with businesses and individuals to resolve issues with secured lenders, landlords, banks, and suppliers.

While bankruptcy is a federal proceeding, Maryland has adopted the Maryland Commercial Receivership Act, which provides the authority for either a receivership or assignment for the benefit of creditors. While similar to a bankruptcy proceeding, these state court equivalents can be advantageous in certain circumstances. We work with the client to determine if a receivership or assignment may provide the best outcome under the client’s particular facts.