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Rules committee proposes written form, not court, to learn debtor assets

Retired Court of Appeals Judge Alan M. Wilner, chairman of the Judiciary’s rules committee, asked lawmakers to amend a 2000 law requiring judicial approval of the sale of structured settlements by changing ‘that “or” to an “and,”’’ thus permitting judges to approve structured settlements if they are ‘necessary, reasonable and appropriate.’ (File photo)

Retired Court of Appeals Judge Alan M. Wilner, chairman of the Court of Appeals’ Standing Committee on Rules of Practice and Procedure. (File photo)

Creditors may soon be able to ask debtors to disclose their assets on a court form rather than require them to attend court or answer complex interrogatories, an idea that has been in the works for more than a year.

A financial disclosure form that eliminates the need for a hearing is another step that would allow people with judgments against them to avoid court appearances and potential arrest via a body attachment.

The Court of Appeals and its Standing Committee on Rules of Practice and Procedure have turned their attention to the issue in the last year. In May, the high court enacted a rule change that requires clear notice to debtors that failure to appear for a hearing on their assets could eventually result in a body attachment and arrest. The notice must also be personally served on the debtor.

The idea of offering a form in lieu of summoning the debtor to court to disclose assets was also discussed but had not been finalized at the time.

“I have been feeling enthused that the rules committee has wanted to take some really positive, concrete steps to reduce the number of people that end up with body attachments,” said Amy Hennen, a housing and consumer law attorney with the Maryland Volunteer Lawyers Service. “The fewer people that end up in debtors’ prison, the better.”

MVLS was one of the organizations pushing to eliminate or at least reduce the use of body attachments by creditors in Maryland, which can lead to debtors’ arrest and detention for failure to appear at an oral examination hearing on their assets.

“I’m cautiously optimistic,” Hennen said. “I think that if all goes well, it will reduce the number of people who wind up getting a summons for an oral exam and the negative consequences that can potentially come from that.”

The proposed rule changes to allow for the use of a form will be discussed at a rules committee hearing Friday in Annapolis.

The form, called a fact information sheet, is based on forms used by Florida and Minnesota courts, according to a committee note. Under the proposed rules, after a money judgment is entered against an individual, the clerk’s office sends notice to the creditor that they may send the form requesting information under oath.

Florida and Minnesota “use the ‘stick’ of contempt of court” to encourage completion of their forms, according to the committee note, but Maryland has opted to use the “carrot” of precluding creditors from using other methods of enforcement if the debtor fills out the form within 30 days.

The fact information sheet can ask about income, expenses, assets and liabilities, and though creditors can omit questions they cannot ask for additional information, according to the rule. The State Court Administrator will approve a standard version of the form and post it to the Maryland Judiciary website.

Retired Court of Appeals Judge Alan M. Wilner, who chairs the committee, said the panel initially addressed body attachment concerns and in the process learned about other states that allow creditors to use fact information sheets.

“What we try to do on anything that isn’t familiar to us, we look around and see what other states are doing, what federal courts are doing, and see if anything is out there that might solve a problem,” Wilner said.

Creditors’ rights attorney Ronald S. Canter first brought the Florida form to the committee’s attention, according to Wilner.

“It facilitates a better method of getting the information with limited court involvement,” said Canter, who said the use of body attachments involves more time for the creditor and the court. “This is a mechanism that can hopefully make it more expeditious for creditors to get information about judgment debtors.”

Hennen said consumer rights advocates asked for certain information to be included on the form, including a recommendation that the debtor consult with an attorney and a clear statement that filling out the form is voluntary. Wilner said that some additional changes proposed by the Public Justice Center will be discussed at the meeting on Friday but that he has not heard any opposition to them.

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