There are several causes that are linked to financial issues. Some common reasons include personal debt, home foreclosure, divorce, illness, or losing one’s job.
In fact, the average credit card debt in Maine is a whopping $5,078 per person. In addition, foreclosure rates are also as staggering, one out of every 2,099 ME homes is currently in foreclosure.
If you find yourself struggling with similar situations, then you are more than likely battling other personal problems that come with being in debt. The fear of losing your automobile, home or your income can drain a person mentally & physically. You have probably even considered Declaring Bankruptcy .
If you are thinking “Can I File Bankruptcy?” you are undoubtedly not alone. Close to a million people file bankruptcy each year in the US. Bankruptcy is a device established by the US Government to help struggling Americans find relief from massive debt. You may want to consider filing bankruptcy if it’s best for you.
What Is Bankruptcy?
Bankruptcy offers people the freedom to lift their financial burden while still working with lenders in a legal capacity. It is started by an individual filing a Petition with their nearest bankruptcy court. The Petition can be filed by a person or married couples jointly. When the bankruptcy is finished, the filer will ‘exit’ and will have a chance for a fresh start on their finances.
Throughout the bankruptcy process, a trustee is appointed to oversee the particulars of the matter. His or her duties differ and depend on whether the person has filed for Chapter 13 or Chapter 7 bankruptcy.
Did you know that Maine ranks #42 in the nation for bankruptcy filings. In 2017 the number of personal bankruptcies was approximately 153 out of every 100,000 residents.
What Is The Difference Between Chapter 7 And Chapter 13?
Individuals or couples in Maine, who claim bankruptcy, can choose to file under Chapter 13 or Chapter 7 of the U.S. Bankruptcy Code. Want to know the difference? Take a look at the descriptions below for more information:
In exchange for dissolving all past due debts, the trustee of the bankruptcy will liquidate the assets, such as cars, homes, and other property of value in a Chapter 7 Bankruptcy proceeding.
Debtors that were listed on the bankruptcy filing will be repaid with the proceeds collected during liquidation
A Chapter 13 Bankruptcy plan is reserved for people who have the means to pay some of their debts through a restructuring. The individual will be allowed to retain his or her valuable assets over a 3- to 5-year time frame.
In order to determine which type of bankruptcy a person will file, he or she will have to determine their ability to repay under the Bankruptcy Means Test.
What Is A Bankruptcy Means Test?
The ultimate goal of the Bankruptcy Means Test is to determine who is eligible to apply for debt forgiveness through a Chapter 7 Bankruptcy. It takes into account your:
- income and expenses
- household size and composition
- debt-to-income ratio
For those who do not qualify for a Chapter 7 filing, they will be able to file for Chapter 13, as described above.
What Are Bankruptcy Exemptions?
Specific states have certain exclusions that are enacted by congress as federal bankruptcy exemptions for filers. These exemptions will determine what you are able to retain throughout and after Chapter 7. In a Chapter 13 situation, the exemptions will determine what amount you will have to pay certain financial institutions in your repayment plan.
Unless otherwise noted, all law references are to the Maine Revised Statutes Annotated.
- Real property used as residence up to $47,500 (up to $95,000 if over 60 or disabled or if the debtor has a minor dependant who lives in the residence). Includes co-op. Sale proceeds for 6 months.
- Balance due on repossessed goods, provided total amount financed is not more than $2,000.
- Motor vehicle up to $5,000; cooking stove; furnaces and stoves for heat; food to last 6 months; fuel not to exceed 5 tons of coal, 1,000 gallons of oil, or 10 cords of wood; health aids; 1 wedding ring & 1 engagement ring; other jewelry up to $750; up to $200 per item for each of the following: household goods & furnishings, clothing, appliances, books, animals, crops, and musical instruments; lost earnings payments needed for support; feed, seed, fertilizer, tools and equipment to raise and harvest food for 1 season; wrongful death recoveries needed for support; personal injury recoveries up to $12,500. Burial plot for the debtor or a dependent of the debtor, in lieu of homestead exemption.
- Military arms, clothes, and equipment.
- Tax exempt retirement accounts (including 401(k)s, 403(b)s, profit-sharing and money purchase plans, SEP and SIMPLE IRAs, and defined benefit plans).
- IRAS and Roth IRAs to $1,171,150.
- State employees.
- ERISA-qualified benefits needed for support
- Unemployment compensation, veterans’ benefits, Social Security, and crime victims’ compensation; earned income and child tax credits; federal, state or local public assistance benefits.
- Public assistance.
- Maintenance under the Rehabilitation Act.
- Workers’ compensation.
Tools of Trade
- Books, materials, and stock up to $5,000; 1 of each type of farm implement necessary to raise and harvest crops; 1 boat not to exceed 5 tons used in commercial fishing.
Alimony and Child Support
- Alimony and child support needed for support.
- Unmatured life insurance policy (except credit insurance); & matured life insurance policy, dividends, interest, or loan value for person you depended upon up to $4,000.
- Life, annuity, accident, or endowment policy, proceeds, dividends, interest, loan, cash, or surrender value.
- Disability or health insurance proceeds, avails or benefits.
- Group life or health policy or proceeds.
- Annuity proceeds up to $450 per month.
- Fraternal benefit society benefits.
- Death benefits for police, fire or emergency medical personnel who lose their lives in the line of duty.
- $400 of any property.
- Unused homestead to $6,000, to be used for any of the following: jewelry, tools of trade, personal injury recoveries, or household goods & furnishings, clothing, appliances, books, animals, crops, and musical instruments.
Want to know if you can include Student Loans in Bankruptcy or Medical Bills in Bankruptcy? Check out our Bankruptcy FAQ’s section.
Filing Bankruptcy Alone vs. Filing With An Attorney
Current laws do not require filers to hire a lawyer to declare bankruptcy relief. Individuals are allowed to represent him or herself as a pro se debtor. You will simply contact the local bankruptcy court and obtain all forms and requirements directly through them. Filing alone is not an easy task.
Filing Bankruptcy without an Attorney
A simple Chapter 7 case that doesn’t have a lot of debtors or assets may be easy to manage on your own.
A basic bankruptcy that doesn’t require an attorney might look like:.
- Your income is below the state median;
- You have no property;
- Your debts will be considered dis-chargeable.
Working With An Attorney
Most of the time, it is usually in one’s best interest to work with a bankruptcy lawyer. A bankruptcy attorney is there to represent you and not in the interest of creditors.
An attorney is also accustomed with exemption laws. Plus, they can come up with creative strategies to keep your assets through practical repayment strategies that are fair to everyone involved.
While you may have the fight and ability to manage a Bankruptcy on your own, it tends to make things a lot easier on an already stressful situation, especially when there is so much at stake.
What Does Bankruptcy Include?
Once you file for bankruptcy in ME, the courts put in place an order called an Automatic Stay. This order will stop debt collection calls, wage garnishments, and additional claims. Keep in mind that payments regarding child support and criminal cases will still need to be made during this time.
In any event, Bankruptcy will be able to include:
- credit card debt
- protection from eviction
- avoidance of foreclosure
- utility bills
- medical expenses
Again, unless you are filing a complex Chapter 13 case, you will lose all assets associated with a Chapter 7 Bankruptcy protection. You will, however, be able to prevent any and all collections from occurring as long as they were incurred before the date of filing and discharge.
Final Thoughts And Considerations On Filing For Bankruptcy In Maine
As you can see, there a lot of information associated with successfully filing for bankruptcy and then exiting it unscathed or satisfied. Only a licensed bankruptcy attorney can guide you through this arduous process, particularly when it comes to complex cases. Be sure to hire someone you respect and trust.
Bankruptcy Courts In MaineJ.B. Brown Block
537 Congress Street
Maine Bankruptcy Court
Margaret Chase Smith Federal Building
202 Harlow Street
Maine Bankruptcy Court
Additional Maine Resources
Foreclosure Help Program
Disability SSDI Benefits