What to Do Before Filing Bankruptcy in Maryland

Filing for bankruptcy can be a daunting process, especially in Maryland where specific rules and regulations apply. Before making the decision to file, it’s crucial to take several preparatory steps to ensure that you are making the best choice for your financial future. Here’s what to do before filing for bankruptcy in Maryland.

1. Evaluate Your Financial Situation

Begin by assessing your overall financial health. Take a close look at your debts, assets, income, and expenses. This will give you a clear understanding of your financial condition and help you determine if bankruptcy is the right option. Make a list of all debts, including credit cards, medical bills, and loans, and categorize them by priority.

2. Consider Alternatives to Bankruptcy

Before filing for bankruptcy, explore alternatives that may be less damaging to your credit score. Options such as debt consolidation, negotiation with creditors, or a financial management plan might offer a solution without the need for bankruptcy. Contact a credit counseling service in Maryland to understand the available options.

3. Consult with a Bankruptcy Attorney

It's advisable to seek the counsel of a qualified bankruptcy attorney who is experienced in Maryland's bankruptcy laws. An attorney can guide you through the process, help you understand your rights, and determine the best type of bankruptcy to file—Chapter 7 or Chapter 13—based on your circumstances.

4. Gather Necessary Documentation

Compile all necessary documents that will be needed when you file for bankruptcy. This includes tax returns, pay stubs, bank statements, and information about your debts and assets. Having these documents ready can streamline the filing process and help your attorney prepare your case more effectively.

5. Complete Credit Counseling

Maryland law requires individuals wishing to file for bankruptcy to complete a credit counseling course from an approved agency. This course typically lasts about 60 minutes and can be done online or in person. After completing the course, you will receive a certificate that must be submitted when filing for bankruptcy.

6. Assess Property Exemptions

Familiarize yourself with Maryland's property exemptions, which can protect certain assets from being sold in bankruptcy. Understanding what you can exempt will help you make informed decisions about what property you can keep post-bankruptcy. An attorney can help clarify these exemptions and their implications for your case.

7. Create a Realistic Budget

Develop a budget that reflects your financial standing after bankruptcy—this will help you regain control of your finances. A realistic budget can also assist in identifying areas where you can cut costs, allowing you to better manage your financial responsibilities moving forward.

8. Be Prepared for Consequences

Understand that filing for bankruptcy will have a significant impact on your credit report and may affect your ability to borrow money in the future. A Chapter 7 bankruptcy remains on your credit report for ten years, while a Chapter 13 bankruptcy is recorded for seven years. Being aware of these consequences can help you make a more informed decision.

9. Stay Informed Throughout the Process

Once you have filed for bankruptcy, it is essential to stay informed about the process. Attend all required hearings and follow any guidelines provided by your attorney and the court. Open communication with your attorney and a commitment to follow through on required steps will help ensure a smoother process.

By taking these steps before filing for bankruptcy in Maryland, you can approach the situation with confidence and clarity. It’s essential to remember that bankruptcy is a tool meant to help you manage overwhelming debt, and with the right preparation and guidance, you can pave the way for a more stable financial future.