Chapter 7, 11, and 13 Bankruptcy in Maryland - Grafton Firm, LLC

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Chapter 7, 11, and 13 Bankruptcy in Maryland

Bankruptcy laws are legal proceedings that help debtors who can no longer pay their creditors obtain debt relief by having their assets liquidated or through having a repayment plan. Bankruptcy laws also protect troubled businesses and provide for orderly distributions to business creditors through liquidation or reorganization. Filing bankruptcy is a right given by law and every bankruptcy case is handled in courts. After filing bankruptcy, you will be granted bankruptcy protection where every creditor is prevented from collecting debts from you until the debts are sorted out following the law.

Effect of Declaring Bankruptcy

Bankruptcy filings enable you to: 

  • Wipeout most, if not all, your debts for you to obtain a fresh start
  • Erases unsecured debts such as credit cards debts, medical bills, personal loans, deficiency on a car loan after possession, old tax debts, and other dischargeable debts
  • Allow you catch up on missed payments
  • Stop the foreclosure of your home
  • Stop repossession of your car or other property or compel them to return the same if taken
  • Prevent wage garnishment
  • Restore or prevent termination of utility services

However, filing for bankruptcy does not mean you will be relieved of all your financial problems. Declaration of bankruptcy does not:

  • Eliminate secured debts from secured creditors
  • Discharge non-dischargeable debt or types of debts set aside by the bankruptcy rules such as alimony, child support, student loans, criminal fines, and recent taxes

Bankruptcy Exemptions

Chapter 7, 11, and 13 Bankruptcy in MarylandYou can protect and keep your property if it is within the list stated as exempt. The common exemptions in Maryland include:

  • Homestead
  • Insurance and damages
  • Motor vehicles
  • Personal property
  • Personal injury, wrongful death, lost future earning awards
  • Retirement benefits
  • Wildcard exemptions

The exemptions are updated regularly. Consulting a bankruptcy attorney may help you on keeping up to date with the current amount and figures.

Types of Bankruptcies

There are different types of bankruptcy but the most used are Chapters 7, 11 & 13.

Chapter 7

This type of bankruptcy is also known as liquidation or “straight bankruptcy” because in this case, a bankruptcy trustee will be in charge of your non-exempt property and the trustee for bankruptcy will then liquidate your assets while the proceeds are used to pay off the creditors. To be eligible for this type, you must first take a bankruptcy credit counseling class and pass the means test. The means test is a process to determine your median income. If your income is below the Maryland median, you pass the test. If it is above, you might need to add more “disposable” income or file for a Chapter 13 bankruptcy.

Chapter 11

It is also known as a commercial bankruptcy or business reorganization. It is usually availed by businesses, corporations, partnerships, and sole proprietors that want to make a repayment plan for their debts while liquidating their assets. However, individuals may also use this chapter if they meet the requirements for the amount of secured and unsecured debts. Personal assets of stockholders are not touched in a chapter, only the investments in the company. Though a sole proprietor does not enjoy this benefit for the personal and business assets are joined as one.

Chapter 13

Is often called a reorganization plan or a plan for “wage earners” because the debts are organized, and a repayment plan is made and proposed to the creditors to pay them the past-due and current debts for 3 to 5 years based on the debtor’s family income. Bankruptcy lawyers can help you avail a chapter 13 with creating payment plans that will reorganize and make monthly payments to their creditors. The amount paid will be determined by taking into consideration the debtor’s property, median income, and expenses. Chapter 13 bankruptcy lets you keep more property, and it allows you to catch up on mortgages or bankruptcy car loans without the threat of foreclosure or repossession.

Are you planning to file for bankruptcy?

If you are considering declaring bankruptcy, talking to bankruptcy attorneys will help you a lot. While you can file bankruptcy on your own, a bankruptcy lawyer will help you with the tedious and complicated bankruptcy process as well as let you know about the types of bankruptcy available to you. If you are in need of practical advice regarding your financial situation or if you seek debt relief, our compassionate and seasoned bankruptcy lawyers at Grafton Firm can help you. With decades of experience handling such cases, our attorneys are ready to work with you in your bankruptcy case in Maryland.

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