For many people in serious financial distress, bankruptcy gives them the prospect of a new start and eliminates most of their obligations. However, it is important to be aware of the bankruptcy process as well as the type of bankruptcy that best fits your case. This is where bankruptcy attorneys come in. They can give you valuable help throughout the bankruptcy process.
When you seek credit counseling from a bankruptcy attorney, you will be guided to answer these three important questions: What are the scope and limitations of filing bankruptcy? What bankruptcy chapter should you file? Where can you get help when you file bankruptcy?
What are the Scope and Limitations of Filing Bankruptcy?
Bankruptcy attorneys can provide you a good grasp of what bankruptcy can and cannot do for you and help you understand the provisions of the bankruptcy law.
Filing bankruptcy CAN do the following for you:
- Stop Collection Activities and Harassment from Creditors
After filing, an automatic stay is issued by the bankruptcy court which stops lenders from giving you phone calls, wage garnishment, or lawsuits.
- Halt Property Foreclosure, Repossession, and Eviction
These actions will remain pending until the automatic stay has been lifted. All evictions that are still in process upon filing bankruptcy will also halt.
- Eliminate Unsecured Nonpriority Credit Card Debt
An unsecured debt occurs when there was no agreement that you will return the purchased property to the lender should you fail to pay. Bankruptcies also wipe utility and medical bills owed, and personal loans.
However, bankruptcy CANNOT do the following for you:
- Avoid Foreclosure or Repossession of Properties When Facing Insolvency
Note that liens are not eliminated and remain until debts are paid. Your creditor can auction off or liquidate your properties and use the proceeds as payment for your loan.
- Remove Student Loans, Arrearages for Child Support, or Alimony
A student loan can only be eliminated if you can prove that you are insolvent and that paying would result in “undue hardship”.
- Avoid Tax Debt, Nondischargeable Debt, or Fraud-Related Debt
You are legally required to pay tax debts, fraud-related debts, and nondischargeable debts.
Bankruptcy attorneys and law firms can walk you through the particulars of the whole bankruptcy process, help you secure bankruptcy protection, and assist you to file for bankruptcy.
What Bankruptcy Chapter Should You file?
For personal bankruptcies, a bankruptcy attorney can help you choose between the two most common types that individuals file for Chapter 7 and Chapter 13. A debtor with low income usually files for Chapter 7 as it eases financial burden although he won’t be able to keep his properties with balances. On the other hand, borrowers with regular income who can pay off a portion of their loan under a debt settlement plan usually file for Chapter 13.
Here are some nuances in bankruptcy types to help you decide on which chapter fits your situation:
- Mortgage. Even if the lien remains on the property, a home mortgage is eliminated in a Chapter 7 bankruptcy. Take note that because of the lien, the lender may still foreclose the property at any time after the lifting of the automatic stay as long as you have not paid the mortgage. In comparison, you may be able to keep your property when you declare Chapter 13 bankruptcyas it allows payment reorganization.
- Bankruptcy Exemption. Under Chapter 7, debtors have to give back non-exempt properties unlike under Chapter 13 where they can keep properties depending on the negotiated payment plan.
- Secured Debt. Under Chapter 13, you may reduce the amount you have to pay for when your balance exceeds the property value.
- Nondischargeable Debts. Under Chapter 7, debts for fines and penalties as a result of lawbreaking will still hold after your bankruptcy case. In Chapter 13 bankruptcy filing, although the debt remains, it becomes reorganized under your repayment plan.
Other nuances can be explained to you by a bankruptcy attorney.
Where Can You Get Help When Filing for Bankruptcy in Maryland?
Since all bankruptcy cases are tried in federal courts and follow the rules outlined by the U.S. Bankruptcy Code, a bankruptcy lawyer can help you navigate the particulars and details of your case. As bankruptcy has legal consequences and affects your financial situation in the future, getting the help of a qualified lawyer is highly recommended.
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, LLC can help you. With over 30 years of experience handling such cases, our attorneys are ready to work with you in your bankruptcy case in Maryland.
Call us for a free consultation.