Chapter 7 Bankruptcy: What Can You Keep? | Towson, MD

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Chapter 7 Bankruptcy: What Can You Keep?


Chapter 7 Bankruptcy: Save Your Essentials with Exemptions

Financial difficulties can happen to anyone, such as unexpected medical bills and job loss. A combination of factors can leave you feeling overwhelmed by debt. If you’re struggling to keep up with your financial obligations in Towson, MD, you may consider bankruptcy. Understanding Chapter 7 can be an important step towards regaining control. In addition, an experienced Chapter 7 bankruptcy lawyer in Towson MD can help guide you in the process without a problem.

Quick Summary:

  • Chapter 7 bankruptcy can eliminate most unsecured debts like credit card bills and medical expenses, giving you a fresh financial start.
  • An exempt asset is any item or property you have that you’re legally allowed to keep after filing a bankruptcy.
  • To be eligible for Chapter 7 bankruptcy in Maryland, your income must be below the state’s median, or your disposable income and debts will be assessed.
  • In Maryland, Chapter 7 allows you to keep essential household items, some equity in your home, tools for your profession (up to $5,000 value), and certain retirement savings.
  • If an asset isn’t exempt, negotiating with creditors and Chapter 13 bankruptcy can be alternatives.

What Can Chapter 7 Bankruptcy Do For Me?

Are you drowning in debt and struggling to stay afloat? Chapter 7 bankruptcy in Maryland may be the solution you’ve been searching for. It’s a legal process designed to eliminate most of your eligible debts, offering a clean slate and a chance to rebuild your financial future.

 

Here’s how Chapter 7 bankruptcy in Maryland can help you:

  • Debt Elimination: This is the most significant benefit. Chapter 7 discharges (wipes out) most unsecured debts, such as credit card bills, medical bills, and personal loans.
  • Stop Creditor Harassment: Once you file, creditor collection calls, lawsuits, and wage garnishments will cease.
  • Fresh Start: Chapter 7 allows you a chance to rebuild your credit without the burden of overwhelming debt.
  • Financial Breathing Room: Eliminating debt frees up your income, allowing you to focus on essential expenses and potentially save for the future.

What Debts Does Chapter 7 Eliminate in Maryland?

While Chapter 7 offers significant relief, it doesn’t eliminate all debts. Here’s a general breakdown:

  • Dischargeable Debts: Credit card debt, medical bills, personal loans, and most other unsecured debts.
  • Non-Dischargeable Debts: Child support, spousal support, student loans, certain taxes, and most secured debts (like mortgages or car loans if you want to keep the property).

What is an Exempt Asset?

In Chapter 7 bankruptcy, exempt assets are those that you are legally allowed to keep even after filing. These exemptions are designed to ensure you have the basic necessities to live and rebuild your finances.

Exemptions safeguard essential household items like furniture and clothes, allowing you to keep a roof over your head and essential possessions.

Am I Eligible for a Chapter 7 Bankruptcy?

Qualifying for Chapter 7 bankruptcy in Maryland hinges on two main factors: income and assets.

The means test compares your income to the state’s median for your household size. Ideally, your income falls below this median. Even if it doesn’t, disposable income and debts are considered.

What Can I Keep in a Chapter 7 Bankruptcy?

There are a variety of items, possessions, and assets that are exempt from Chapter 7. Here is a general breakdown of assets you can keep in a Chapter 7 bankruptcy in Maryland:

  • Essential Household Goods: This includes furniture, appliances, and clothing.
  • Equity in Your Home: Maryland allows you to exempt up to $5,000 of the equity you have in your primary residence. This helps you avoid foreclosure and allows you to keep your home.
  • Tools of the Trade: Tools you need for your profession, up to $5,000 in value, are exempt in Maryland.
  • Retirement Savings: Certain types of retirement accounts, like IRAs and 401(k)s, are protected under Maryland law.

What Should I Do if an Asset I Have Is Not Exempt?

Even if some of your assets aren’t exempt, there are still steps you can take:

Negotiate with Creditors

A Chapter 7 bankruptcy lawyer can explore the possibility of negotiating with your creditors before filing. They might be willing to accept a lump sum payment that’s lower than the total amount owed in exchange for settling the debt.

This can help minimize the value of assets the trustee needs to sell.

Chapter 13 Bankruptcy

If you have valuable non-exempt assets you’d like to keep, Chapter 13 bankruptcy might be an alternative. This chapter involves creating a court-approved repayment plan, typically lasting 3-5 years.

During the plan, you make monthly payments to a trustee who distributes the funds to your creditors. This allows you to keep your non-exempt assets while paying back a portion of your debts. A lawyer can assess your situation and determine if Chapter 13 is a better option for you.

Strategic Asset Selling

Before filing, you might consider selling non-exempt assets yourself and using the proceeds to pay down creditors. This can help reduce the amount the trustee needs to sell. This also potentially allows you to keep other assets that might be more important.

Remember, every situation is unique. A Chapter 7 bankruptcy lawyer can analyze your financial circumstances, the value of your assets, and your goals.

Get Help From Our Skilled Chapter 7 Bankruptcy Lawyer in Towson MD!

While Chapter 7 bankruptcy offers a fresh start, navigating the legalities and exemptions around what you can keep can be complex. Consulting with a Chapter 7 bankruptcy lawyer in Towson, MD ensures you maximize the protected assets and navigate the process smoothly.

At The Grafton Firm,  we understand the financial pressures individuals and families face in Towson, MD. Our dedicated Chapter 7 bankruptcy lawyer is here to guide you through the process with compassion and experience.

We offer a free consultation to discuss your situation and explore your bankruptcy options. We can also help you with Civil Litigation and Estate Planning cases. Contact us today and take the first step towards a brighter financial future.

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