There are a handful of aspects that are affiliated with financial matters. Several common reasons include personal debt, illness, divorce, home foreclosure, or losing one’s job.
In fact, the average credit card debt in Maryland is a whopping $6,267 per person. In addition, foreclosure rates are also as staggering, one out of every 1,117 MD homes is currently in foreclosure.
If you can relate to the scenarios above, then you are more than likely facing other personal problems that come with dealing with debt. The fear of losing your car, home or your money can drain a person physically. You have probably even considered Claiming Bankruptcy .
If you are thinking “Can I File Bankruptcy?” you are certainly not alone. Close to a million people file bankruptcy each year in the US. Bankruptcy is a means provided by the US Government to help struggling Americans find relief from substantial debt. You may want to check your eligibility for bankruptcy if it’s best for you.
What Is Bankruptcy?
Bankruptcy provides people with the freedom to resolve their debt while still working with lenders in a legal capacity. It is started by a person filing a Petition with their nearest bankruptcy court. The Petition can be filed by a person or married couples jointly. When the bankruptcy is over, the filer will ‘exit’ with a fresh new start.
During a bankruptcy, a trustee is appointed to oversee the particulars of the matter. His or her responsibilities differ and depend on whether the person has filed for Chapter 7 or Chapter 13 bankruptcy.
Did you know that Maryland ranks #15 in the nation for bankruptcy filings. In 2017 the number of personal bankruptcies was approximately 347 out of every 100,000 residents.
What Is The Difference Between Chapter 7 And Chapter 13?
Individuals or couples in Maryland, who claim bankruptcy, will elect to file under Chapter 7 or Chapter 13 of the U.S. Bankruptcy Code. Want to know the difference? Look below for more information
The trustee of the bankruptcy will liquidate the assets, such as cars, homes, and other property of value in a Chapter 7 Bankruptcy proceeding, In exchange for dissolving all past due debts.
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 keep his or her valuable assets over a 3- to 5-year time frame.
In order to determine which chapter a person can file, they will have to determine their ability to repay under the Bankruptcy Means Test.
What Is A Bankruptcy Means Test?
The objective of the Bankruptcy Means Test is to determine who is eligible to apply for debt forgiveness through a Chapter 7 Bankruptcy. It considers your:
- income and expenses
- household size and composition
- debt-to-income ratio
If you do not qualify for Chapter 7 bankruptcy, you will be able to file for Chapter 13, as above-described.
What Are Bankruptcy Exemptions?
The federal bankruptcy exemptions are a list of exclusions by Congress that are available to filers in specific states. 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 Code of Maryland (Md. Code Ann.).
- Property that you occupy to $23,675 (spouses cannot double this amount), including a manufactured home permanently affixed to real estate.
- Equity in property held by a married couple as tenants by the entirety might have additional protections. For instance, it can be used to pay joint debts owed by both spouses only. For additional information, you should seek legal counsel.
- Burial plot or crypt.
- Prepaid college trust funds.
- Payments due to sickness, accident, injury, or death.
- Prescribed health aids.
- Clothing, household goods, furnishings, appliances, books, and pets up to $1,000 total.
- Earned but unpaid wages are exempt as follows: in Caroline, Kent, Queen Anne’s, and Worcester counties, the greater of 75% of actual wages or 30 times the federal minimum wage (plus medical payments deducted by an employer); in all other counties, the greater of 75% or $145 per week (plus medical payments deducted by an employer).
- 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) and IRAS and Roth IRAs to $1,283,025
- State employees.
- ERISA-qualified benefits, including IRAs, Roth IRAs, and Keoghs.
- Unemployment compensation.
- Workers’ compensation.
- Crime victims’ compensation.
- Public assistance benefits.
Tools of Trade
- Tools, books, instruments, appliances, and clothing needed for work up to $5,000.
- Fraternal benefit society benefits.
- Life insurance or annuity contract proceeds, dividends, interest, loan, cash, or surrender value if the beneficiary is a dependent of the insured.
- Court-ordered child support.
- Alimony to the same extent that wages are exempt.
- Specific partnership property.
- $6,000 in cash or any property if claimed within 30 days of attachment or levy.
- Personal property other than real estate up to $5,000 total.
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 an attorney to declare bankruptcy relief. People are permitted 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. Going it alone is not for the faint of heart.
Filing Bankruptcy without an Attorney
A basic Chapter 7 filing that doesn’t have a lot of debtors or assets may be easy to manage on your own.
A basic bankruptcy that doesn’t involve 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
Generally speaking, it is usually in one’s best interest to work with a bankruptcy attorney. 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 MD, 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 Maryland
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 MarylandUnited States Courthouse
6500 Cherrywood Lane
Maryland Bankruptcy Court
Edward A. Garmatz Federal Building and United States Courthouse
101 West Lombard Street
Maryland Bankruptcy Court
Additional Maryland Resources
Foreclosure Help Program
Disability SSDI Benefits