Maryland Bankruptcy Law: How to Handle Credit Card Debt

Maryland bankruptcy law provides individuals with the opportunity to find relief from overwhelming financial burdens, including credit card debt. If you find yourself struggling to keep up with monthly payments, understanding your options can help you regain control of your finances.

When considering bankruptcy in Maryland, it’s important to know the two primary types of personal bankruptcy: Chapter 7 and Chapter 13. Each has its own advantages and suitability depending on your financial situation.

Chapter 7 Bankruptcy
Chapter 7 bankruptcy, also known as liquidation bankruptcy, allows individuals to discharge unsecured debts, including credit card debt, typically within a few months. In Maryland, you must pass the means test to qualify for Chapter 7, which compares your income to the state median. If your income is below the median, you may easily qualify. This option is ideal for those with limited disposable income and no significant assets to lose.

Chapter 13 Bankruptcy
In contrast, Chapter 13 bankruptcy is a reorganization plan that enables individuals with a regular income to develop a repayment plan for their debts over three to five years. This option generally suits those who wish to keep their assets and can afford to make monthly payments based on their income. Within this plan, credit card debts can also be significantly reduced or eliminated, giving individuals a chance to rebuild their credit over time.

Steps to Handle Credit Card Debt through Bankruptcy
1. Assess Your Financial Situation: Before filing for bankruptcy, analyze your income, expenses, and total debt. This will determine whether Chapter 7 or Chapter 13 is more appropriate for your case.

2. Credit Counseling: Maryland law requires individuals to complete credit counseling through an approved agency before filing for bankruptcy. This step ensures that you explore all options available to you, including debt management plans that may help avoid bankruptcy entirely.

3. File for Bankruptcy: Once you have completed credit counseling and decided on the type of bankruptcy, you will need to file a petition with the Maryland bankruptcy court. This process involves disclosing all your debts, assets, and income.

4. Attend the Meeting of Creditors: After filing, you will attend a hearing known as the 341 meeting, where creditors can ask questions about your financial situation. In most cases, creditors do not appear, and if they do, they typically have limited questions.

5. Complete Required Courses: After filing, you will need to complete a debtor education course, which is mandatory before your debts can be discharged in both Chapter 7 and Chapter 13 bankruptcy cases.

Implications of Bankruptcy on Credit:
Filing for bankruptcy will impact your credit score and remain on your credit report for up to ten years, depending on the type of bankruptcy filed. However, many individuals begin to rebuild their credit soon after discharge by making timely payments on any remaining debts and using secured credit options responsibly.

In conclusion, Maryland bankruptcy law offers viable solutions for handling credit card debt, providing relief from financial stress. Whether you opt for Chapter 7 or Chapter 13 bankruptcy, understanding your options and seeking professional legal advice can help you navigate the process successfully and move towards a more secure financial future.