Can Bankruptcy Help You Save Your Home in Maryland?

When facing financial difficulties, homeowners in Maryland often seek solutions to keep their homes. One of the options available is bankruptcy, which can provide relief from overwhelming debt and help save your home. This article explores how bankruptcy can assist Maryland residents in retaining their property.

In Maryland, there are two main types of bankruptcy individuals can file: Chapter 7 and Chapter 13. Both have distinct processes and implications for homeowners.

Chapter 7 Bankruptcy

Chapter 7 bankruptcy, often referred to as liquidation bankruptcy, can discharge unsecured debts, such as credit cards and medical bills. While it does not directly prevent foreclosure, it can provide temporary relief. By filing for Chapter 7, homeowners can put a halt to foreclosure proceedings through an automatic stay, giving them time to assess their financial situation.

However, it is important to note that Maryland's homestead exemption allows homeowners to keep up to $25,000 of equity in their home. For couples filing jointly, this exemption increases to $50,000. If your home equity is below this threshold, you may be able to retain your property after filing for Chapter 7.

Chapter 13 Bankruptcy

Chapter 13 bankruptcy is often more beneficial for homeowners looking to save their homes. This type of bankruptcy involves restructuring debt through a repayment plan that lasts three to five years. Homeowners can catch up on overdue mortgage payments within the repayment period, preventing foreclosure and allowing them to retain their property.

One of the significant advantages of Chapter 13 is its ability to stop collection calls, wage garnishments, and repossessions. During the repayment plan, a homeowner can make affordable payments while simultaneously protecting their home from creditors.

What to Consider Before Filing

Before deciding to file for bankruptcy, homeowners should consider their entire financial picture. It is advisable to consult with a bankruptcy attorney who can provide guidance specific to your situation. They can help determine if bankruptcy is the right choice for you and explain the differences between Chapter 7 and Chapter 13 in greater detail.

Additionally, homeowners might want to explore alternatives to bankruptcy, such as loan modification, refinancing, or negotiating with creditors. These options could provide relief without the long-term impacts of bankruptcy on your credit report.

Conclusion

In summary, bankruptcy can be a viable option for Maryland homeowners struggling to keep their homes due to financial distress. Whether through Chapter 7 or Chapter 13, filing for bankruptcy may help you save your property while you work towards a more stable financial future. It is crucial to seek professional legal advice to navigate the complexities of bankruptcy and to make an informed decision tailored to your unique circumstances.