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What Are Dischargeable Debts in Maryland?
Bankruptcy means that it is a legal proceeding and right afforded by the Federal Bankruptcy Law that enables an insolvent debtor who cannot pay his creditors so he can have a fresh start. A discharged debt means that you can eliminate or wipe out your liabilities. Once you file for a bankruptcy petition, even without your debts being discharged, you are given an automatic stay or bankruptcy protection which shields you from repossession, wage garnishment, foreclosure, harassing creditors, debt collectors, and other collection agencies. A Towson bankruptcy attorney can explain the legalities to you in more detail.
Dischargeable Debts in Maryland
Debts that you can wipe out depends on the types of bankruptcy you filed, whether Chapter 7 or Chapter 13 bankruptcy. If you already filed bankruptcy, attended credit counseling, and passed the means test which states whether you are within the required median income, your debts can be wiped out. Under the Bankruptcy Code, the common debts you can discharge are:
- Credit card debt
- Medical debt
- Tax debt penalties
- Student loans in case of undue hardship
- Motor vehicle accident claims
- Attorney fees
- Business debt
- Dishonored checks where no fraud is involved
- Court order judgments for civil lawsuits
- Collection agency accounts
- Lease debt
- Repossession balances
- Past dues for utility bills
- Personal liability or loans
- Unsecured debts
Non-Dischargeable Debts in Maryland
Not all types of debt can be discharged. Some debts are nonexempt and cannot be eliminated such as:
- Child support
- Debts due to personal injury
- Fraudulent tax debts
- Government fines and penalties
- Luxury purchases or cash advances within 3 months the date of a bankruptcy filing
- Spousal support
- Student loans
- Unscheduled debts or those not listed in the bankruptcy petition.
Chapter 7 vs Chapter 13 Dischargeable Debts
Some debts are not dischargeable in certain bankruptcy types. Dischargeable debt available for chapter 13 reorganization bankruptcy but not on chapter 7 liquidation bankruptcy is the following:
- Property damage done willfully and maliciously
- Tax obligations paid using credit cards are non-dischargeable in liquidating bankruptcy but available for repayment bankruptcy
- Debts from divorce can be discharged for chapter 13 even if obligations coming from domestic support are non-dischargeable
- Homeowner’s dues
- Government penalties, forfeitures, and fines even if incurred through fraud.
- Crammed-down or stripped liens if certain requirements are met such as when the debt does not have collateral or security and the property or item is worth lesser than what you owed. In those situations, chapter 13 enables you to strip off secured or unsecured debts or lessen the amount to be paid in the Chapter 13 payment plan.
- Unusual debts such as:
- Committing wrongful acts that resulted in debts against a credit union or federally insured banks.
- Debts incurred due to securities law violations.
- Debts and fees of a prisoner arising from filing a motion, appeal, or lawsuit.
Take Advantage of your Bankruptcy Petition
When you declare bankruptcy, it gives you the chance to be free of financial problems. While Bankruptcy Laws do not prohibit you from filing for bankruptcy without the need of a bankruptcy lawyer, that is very risky if you do not know how to file bankruptcy yourself. Doing so may lead to small mistakes that can result in your case being dismissed. As such, it is a wise decision to have an experienced bankruptcy attorney in Maryland to guide and help you in taking advantage of all the benefits a bankruptcy gives. If you are having debt problems and are considering bankruptcy, we at Grafton Firm are ready to aid you in your needs. To learn more about bankruptcy, you may download our free legal guides or call our Towson bankruptcy firm now for free legal consultation.