How to Qualify for Bankruptcy in Maryland

Filing for bankruptcy can be a crucial step toward financial recovery. In Maryland, like in other states, there are specific qualifications and procedures you must follow to file. Below, we’ll explore the steps required to determine if you qualify for bankruptcy in Maryland.

Types of Bankruptcy in Maryland

Before diving into the qualifications, it's essential to understand the different types of bankruptcy available in Maryland:

Chapter 7 Bankruptcy: This is often referred to as “liquidation bankruptcy.” It allows individuals to discharge most unsecured debts.
Chapter 13 Bankruptcy: This is known as “reorganization bankruptcy.” It enables individuals to create a repayment plan to pay back some or all of their debt over three to five years.

Qualifications for Chapter 7 Bankruptcy

To qualify for Chapter 7 bankruptcy in Maryland, you must meet the following criteria:

Means Test: You must pass the means test, which compares your average monthly income to the median income for a household of your size in Maryland. If your income is below the median, you typically qualify for Chapter 7. If it’s above, you might not qualify and may need to look into Chapter 13.
Credit Counseling: You must complete a credit counseling course from an approved provider within 180 days before filing for bankruptcy. A certificate of completion is required with your bankruptcy petition.
No Recent Filings: You must not have had a Chapter 7 discharge in the past eight years or a Chapter 13 discharge in the past six years.

Qualifications for Chapter 13 Bankruptcy

If you are looking to file for Chapter 13 in Maryland, you must meet different criteria:

Regular Income: You must have a regular source of income, which can include wages, self-employment income, or other sources. This income will help you fund the repayment plan.
Debt Limits: Your secured debts must be less than $1,257,850, and your unsecured debts must be less than $419,275. These figures may change over time due to inflation, so checking the current limits is crucial.
Credit Counseling: Similar to Chapter 7, you are required to undergo credit counseling from an approved agency within 180 days before filing.

Steps to Take Before Filing

Before you decide to file for bankruptcy in Maryland, consider the following steps:

Evaluate Your Financial Situation: Take stock of your debts, income, and expenses to determine if bankruptcy is the right option for you.
Seek Legal Advice: Consult with a bankruptcy attorney who can guide you through the process and help you understand your options.
Complete Required Courses: Make sure to complete the required credit counseling courses, both pre-filing and post-filing.

Conclusion

Qualifying for bankruptcy in Maryland involves understanding your financial situation, knowing the income thresholds, and completing necessary courses. Whether you choose Chapter 7 or Chapter 13, seeking professional legal advice can be invaluable in navigating the complexities of the process. Make informed decisions and take steps toward financial recovery.