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What Are The Benefits Of Bankruptcy?
Should I Declare Bankruptcy?
Bankruptcy has been a popular option for those hoping to solve their difficult financial situation. Filing for bankruptcy could provide a clean slate, avoiding foreclosure, repossession, and wage garnishment while giving you time for rebuilding your credit and restore financial stability. While submitting a bankruptcy petition is a very simple first step, difficulties can arise and legal counsel may be necessary.
Can I File for Bankruptcy Without a Lawyer in Maryland?
In 2005, the bankruptcy law changed in a big way, making filing for bankruptcy protection much harder now. Although it isn’t legally necessary, speaking with a competent bankruptcy lawyer will help you thoroughly grasp your rights and steer clear of any dangers.
For example, failing to get credit counseling prior to filing bankruptcy or failing to timely provide required documents to the Bankruptcy Court and the Bankruptcy Trustee will result in the dismissal of your case. You could also lose your home or your other properties that you are trying to protect, which you might have been able to keep if you had gotten legal advice. There are several bankruptcy preparer companies that claim that they can prepare and file your bankruptcy petition. However, they are not authorized to provide you legal advice, and they cannot represent you if a problem arises.
Towson Bankruptcy Attorneys in Maryland
Since its inception, The Grafton Firm has worked to ensure that quality legal representation is affordable for all families. We can help if you are having financial trouble and have been afraid to call a lawyer because you thought the fees would be too high.
We charge a fixed fee for processing typical bankruptcy and debt settlements. You will know how much our help will cost before we start. And because we’re a small company, we can keep our costs to a minimum and pass those savings on to you. Call us today to get the help of a family-friendly bankruptcy law firm with decades of experience.
What Is Bankruptcy?
Bankruptcy is a legal process that happens when a person or business can’t pay back their debts. The bankruptcy process starts with a petition, which is usually filed by the debtor but sometimes by creditors. An inventory and appraisal of all the debtor’s assets will be done, and those assets can be used to settle some or all of the debt.
Bankruptcy: A Brief Overview
Bankruptcy allows a person or a company to start over by forgiving debts that can’t be paid (this is referred to as discharged) while also allowing creditors to seek some form of repayment depending on the person’s or company’s assets available for liquidation. In theory, being able to file for bankruptcy is good for the economy as a whole because it gives people and businesses a second chance to get credit and gives creditors a part of what they are owed. When the bankruptcy process is over, the debtor is no longer responsible for the debts they had before they filed for bankruptcy.
In the United States, all bankruptcy cases are taken care of by federal courts. A bankruptcy judge makes all decisions in federal bankruptcy cases, such as whether or not a debtor is qualified to file bankruptcy and whether or not they should be freed of their debts.
What are the Different Types of Bankruptcies?
In the U.S., people who file for bankruptcy do so under among several other chapters of the United States Bankruptcy Code. The cost of filing for bankruptcy depends on the type of bankruptcy, how complicated the case is, and other factors. Once you have filed for bankruptcy petition, an estate is set up and a Trustee in bankruptcy is chosen to oversee how the case is run.
Chapter 7: The Liquidation Chapter
Chapter 7 is also referred to as a “straight bankruptcy.” Usually, a chapter 7 case stays open for six months (from the time of filing to the issuance of the final decree), and a discharge is given within ninety days of the petition being filed. All debts have to be listed, whether or not you intend to continue paying them. If you maintain the property, you will be required to continue making payments on the loan debt inspite of the bankruptcy filing. Some of your debts can be reaffirmed through Chapter 7 bankruptcy, but legal counsel is essential to determining your rights and duties when reaffirming a specific debt, since some reaffirmations can have a negative impact and unpleasant consequences.
Some debts, like a student loan, a personal tax debt, and spousal or child support payments, may still be due even after you file for bankruptcy. If you lived in Maryland for two years just before filing, you may be able to exclude the value of some assets from the estate and retain them, such as clothing, furniture, jewelries, money, and so on.
In Maryland, the maximum exemptions are normally $12,000 for each individual and $24,000 for each married couple. There may be other exemptions available, and a lawyer may advise you on how to leverage your exemptions and limit your risk. Other state or federal exemptions will apply if you have not resided in Maryland for two years.
Following the filing of your case, a hearing known as a “Section 341 Meeting of Creditors” is conducted. This hearing allows the Trustee and the creditors to question you under oath and validate the facts on your schedules. After receiving a Chapter 7 discharge, a debtor cannot file for another Chapter for eight years unless it really is necessary. Although you may be allowed to re-file if your case was dismissed, the automatic stay protections are limited until extended by a court order.
Chapter 11: The Business Reorganization
Chapter 11 is often called the business reorganization chapter. Even though Chapter 11 can be filed by an individual, most of the time it is filed by a business. In a Chapter 11 bankruptcy case, the business or the individual debtor keeps possession of the assets and creates a payment plan to pay creditors over time. The debtor in possession has the authority to divide creditors into various classes, sell or rearrange some assets, and have certain protections while formulating strategies while staying in business. Under this chapter, there is no limit to the debt amount that a business or individual could have.
Chapter 13: The Wage Earners Plan
A Chapter 13, sometimes known as a “wage earners” plan, is another manner of reorganization. This chapter is often filed anyone whose home is in foreclosure, who has significant non-exempt assets, or whose income is above the median. As with Chapter 11, a reorganization plan is offered to creditors for payments ranging from three to five years.
A portion of your salary is withheld and sent to a Chapter 13 Trustee, who manages the plan and pays your creditors. A bankruptcy lawyer can assist you in maximizing your fresh start under Chapter 13 by filing petitions before the court to revalue assets, remove liens, and give you the relief you desire. The eligibility restrictions for filing a Chapter 13 bankruptcy changes on an annual basis, and you should check the Bankruptcy Code or a bankruptcy attorney for the most up-to-date information.
What Are The Benefits of Bankruptcy?
Bankruptcy is intended to help people who are unable to repay their creditors. The following are some of the benefits that bankruptcy can offer:
- When a bankruptcy petition is filed, an “automatic stay” is triggered. This will prevent creditors from initiating legal action to collect their debt and from seizing assets like vehicles and personal property. This will also stop creditors from phoning, suing, or sending letters to you.
- When someone files for bankruptcy, many bad situations like evictions, foreclosures, as well as wage garnishments and shut-offs of utilities stop.
- You may not have to pay back some of your debts that are dischargeable.
- Your credit rating may improve. After declaring bankruptcy, your debt-to-income ratio will become better, which is used to determine your creditworthiness.
- Although a bankruptcy case stays on your record for 7–10 years, many debtors start rebuilding their credit immediately after filing bankruptcy since debts are dischargeable.
- Most people who file for bankruptcy feel relieved to know they have a clean slate. While it may not appear to be a significant benefit, bankruptcies allow you to start fresh and is mentally liberating.
- If you do not have credit cards, you can learn to live within your means and avert future financial disasters.
- Debtors who file for bankruptcy will be able to access financial counseling which will provide you with the tools you need to control your debt better and live your life.
- You will be able to keep some assets and reduce your payments to smaller amounts if you file for bankruptcy.
Should I Consult a Bankruptcy Attorney?
Whether or not bankruptcy is the right answer for your money problems depends on your situation, the types of debt you have, and how many properties you need to protect. If you’re thinking about filing for bankruptcy, you should think about going through your choices with an accomplished bankruptcy attorney.
As with any court case, you can represent yourself “pro se,” but the vast majority of people who file for bankruptcy in the U.S. do it with the help of an attorney. There are several types of bankruptcies, each with its own rules, and an experienced bankruptcy lawyer can be highly beneficial.
Finding the right bankruptcy attorney is critical since filing bankruptcy is a complicated legal claim. A bankruptcy attorney will advise you on whether to file for bankruptcy and what form of bankruptcy to file. Furthermore, if you choose to file, an attorney can assist you in ensuring that your property is safeguarded, that all your dischargeable debts be dismissed, and that your creditors do not breach your rights. That way, after your bankruptcy is over, you’ll be on the right track to financial recovery.
Are You Drowning in Debt? We Can Help You!
If you live in or around Baltimore and feel like you’re sinking under the weight of your debt, you’re not alone. The Grafton Firm, with Towson bankruptcy attorneys Will Grafton and Kelly Grafton, are ready to help you regain your financial footing. Our Towson bankruptcy attorneys deliver quality legal support with care and service.
We are a small, family-owned bankruptcy law firm committed to treating all of our clientele like they are members of our own extended family rather than just another number. We are able to work with clients of all income levels since our attorney fees are reasonable.
Chapter 7, Chapter 13, and business bankruptcy, as well as tax debt negotiations and debt settlement services, are all services we can provide to those who are struggling to make ends meet due to mounting debt. We fully grasp the gravity of the circumstance you’re in. Get a free consultation on how to solve your debt from us. To arrange a free consultation, simply give us a phone call or send us an online request immediately.