Maryland Bankruptcy Law: A Guide for Individuals in Debt

Maryland Bankruptcy Law is designed to provide relief to individuals facing overwhelming debt. Understanding the different types of bankruptcy available and the legal process involved can help you make informed decisions about your financial future.

In Maryland, individuals typically file for two types of bankruptcy: Chapter 7 and Chapter 13. Each of these options has distinct eligibility requirements, benefits, and drawbacks.

Chapter 7 Bankruptcy

Chapter 7 bankruptcy, also known as liquidation bankruptcy, is often the quickest way to eliminate unsecured debts such as credit card bills and medical expenses. In this process, a trustee is appointed to sell non-exempt assets to repay creditors. However, many individuals find they are exempt from asset liquidation due to Maryland’s generous exemptions.

To qualify for Chapter 7 bankruptcy in Maryland, you must pass the means test, which compares your average monthly income to the median income for the state. If your income is below the median, you may be eligible. If it's above, you may still qualify through additional calculations involving your expenses and debts.

Chapter 13 Bankruptcy

Chapter 13 bankruptcy, also known as reorganization bankruptcy, allows individuals to keep their assets while entering into a repayment plan to pay back their debts over three to five years. This option is ideal for those who are behind on mortgage payments and wish to prevent foreclosure.

To qualify for Chapter 13, you must have a regular income, and your debts must fall below certain limits. In Maryland, the unsecured debt must be less than $419,275, and secured debt must be less than $1,257,850 as of 2023.

The Bankruptcy Process in Maryland

The bankruptcy process in Maryland begins with filing a petition in the federal bankruptcy court. This involves submitting detailed information about your finances, including income, debts, assets, and expenses. Following the filing, an automatic stay is put into effect, halting all collection efforts by creditors.

A creditors’ meeting, also known as a 341 meeting, will be scheduled where you will meet with the trustee and creditors to discuss your financial situation. It's important to be prepared and honest during this meeting, as it plays a crucial role in your bankruptcy case.

Benefits of Filing for Bankruptcy in Maryland

Filing for bankruptcy can provide significant relief from overwhelming debt. It can help stop foreclosure proceedings, halt wage garnishments, and eliminate the stress associated with constant creditor calls. Additionally, it offers a chance to rebuild your credit and regain financial stability.

Considerations Before Filing

While bankruptcy offers many advantages, it is not the right solution for everyone. It's essential to consider the long-term impact, including the effect on your credit score and the potential loss of property. Consulting with a qualified bankruptcy attorney in Maryland can provide valuable insights tailored to your circumstances.

Furthermore, exploring alternatives to bankruptcy, such as debt counseling or debt settlement, may also be beneficial based on your situation.

Conclusion

Maryland Bankruptcy Law provides a structured way to deal with overwhelming debt, offering individuals pathways to financial relief. Understanding the nuances of Chapter 7 and Chapter 13 bankruptcy, along with the processes involved, can empower you to make the best choices for your financial future. Always seek professional legal advice to navigate this complex landscape effectively.