What You Lose in a Chapter 7 Bankruptcy | Towson, MD

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Will I Lose My Furniture in Chapter 7 Bankruptcy in Towson, MD?

Don’t Let Misconceptions Get in the Way of Filing a Chapter 7 Bankruptcy

Are you facing overwhelming debt in Towson, MD? Feeling lost and unsure of how to move forward?  Chapter 7 bankruptcy may be an option you’ve heard about, but the legalities involved can be hard. Don’t let misconceptions cloud your judgment of choosing this type of bankruptcy.

Chapter 7 bankruptcy can be a powerful tool for financial recovery, but it is a significant legal decision. In this article, we provide a basic overview of Chapter 7 bankruptcy to help you determine if it’s the right path for your situation.

Quick Summary:

  • Chapter 7 Bankruptcy is a legal option to eliminate unsecured debt (credit cards, medical bills) for a fresh financial start.
  • Bankruptcy exemptions let you keep certain valuables (assets) during bankruptcy by preventing the court-appointed trustee from selling them to repay your debts. 
  • Most Maryland Chapter 7 bankruptcy filers can retain their property, as the state provides exemptions safeguarding essentials like furniture, clothing, vehicles, and retirement savings.
  • In Chapter 7 bankruptcy, exemptions like Maryland’s “Personal Property Exemption” shield your furniture. Each state sets a dollar limit on exempt assets. As long as your furniture’s total value falls under that limit, you can keep it, even during bankruptcy.
  • Bankruptcy exemptions protect assets from creditor seizure, while discharge eliminates certain debts. Factors to consider include exceeding exemptions, wildcard exemptions, and secured loans on financed furniture.

What is Chapter 7 Bankruptcy?

Chapter 7 bankruptcy is a legal process under the U.S. Bankruptcy Code that allows individuals to eliminate most unsecured debts. Unsecured debts are those not tied to collateral, such as credit card debt, medical bills, and personal loans.

It’s often considered a last resort for people struggling with overwhelming debt they can’t repay.

Understanding Bankruptcy Exemptions: How They Protect Your Assets

In bankruptcy proceedings, a bankruptcy exemption is a legal allowance. It lets you protect certain assets from being liquidated. Otherwise, unliquidated assets might be paid off to your creditors.

When you file for bankruptcy, a bankruptcy trustee is appointed to oversee your case. They typically gather your assets and sell them (liquidation). Then, they distribute the funds to your creditors.

Exemptions allow you to hold onto some of these assets. There are two main types of exemptions: federal and state exemptions. Some assets might be considered non-exempt.

Can I Keep My Property/Furniture in a Chapter 7 Bankruptcy?

Most filers in Maryland won’t lose any property. This is because the state offers generous exemptions that protect your car, house, and essential items.

Maryland has established laws to protect specific types of property from creditors. Common exempt properties include:

  • Household goods and furniture
  • Clothing
  • Tools of your trade (up to a certain value)
  • A portion of the equity in your home (homestead exemption)
  • Motor vehicle (up to a certain value)
  • Retirement savings accounts (with limitations)

How Do Bankruptcy Exemptions Protect My Furniture?

Bankruptcy exemptions act like a shield to protect certain assets, including furniture, from being liquidated to pay off your debts in Chapter 7 bankruptcy. Here’s how it works:

  • Exemption amount: Each state has its own set of exemptions, outlining the dollar value of various assets (like furniture) that you can exempt from the bankruptcy process. This means you get to keep them.
  • Maryland’s exemption: Maryland has a “Personal Property Exemption.” It lets you protect a set dollar amount of belongings, usually including furniture.
  • Keeping your furniture: As long as the total value of your furniture falls under the exemption amount, the bankruptcy trustee can’t take it to sell and pay your creditors.

Are There Other Important Considerations With Bankruptcy Exemptions?

It’s important to understand the difference between exemptions and dischargeable debt. Exemptions protect assets from being sold to pay creditors.

Discharge, on the other hand, eliminates your legal obligation to repay certain debts. Not all debts are dischargeable in bankruptcy.

Some important considerations for making an exemption in bankruptcy include:

Exceeding the Exemption

If you have high-value furniture exceeding the exemption amount, the bankruptcy trustee might sell it and distribute the proceeds up to the exemption limit. The remaining balance would be used to pay creditors.

Wildcard Exemption

Maryland provides a “wildcard exemption.” This lets filers protect extra property, like furniture, not covered by other exemptions.

Secured Loans

Furniture financed with a loan (like a store credit card) might not be fully protected by exemptions. The lender may have a claim on the furniture.

How Can a Bankruptcy Lawyer Help Me Protect My Assets?

A bankruptcy lawyer can help you protect your assets during Chapter 7 bankruptcy. Bankruptcy exemptions are complex and vary by state. A lawyer can explain the specific exemptions applicable in your state and how they can be used to shield your assets.

A good lawyer can also strategize to ensure you maximize the value of exemptions. This helps protect the most assets possible. This will also involve techniques like:

  • Asset valuation
  • Choosing the most beneficial exemption set (federal vs. state)

Secured loans with collateral (like furniture financed with a loan) require special handling. A bankruptcy lawyer can also help you navigate these situations and potentially save the collateral.

Get Reliable Assistance From Our Towson MD Bankruptcy Lawyers!

Maryland’s bankruptcy exemptions provide solid protection for furniture in Chapter 7 bankruptcy. Each case is different, so consider your situation carefully. The value of your furniture, other assets, and the specifics of your case will all play a role. Consulting with a bankruptcy lawyer clarifies your options. They’ll help you get the most exemptions for your belongings.

At The Grafton Firm, we understand the emotional and financial challenges you face with overwhelming debt. Our Towson MD bankruptcy lawyers can provide legal support during your Chapter 7 bankruptcy process. We’ll work with you to explore your options and determine the best action for your situation. We are here to guide you on your journey towards financial freedom.

If you’re considering bankruptcy, whether it’s Chapter 13, Chapter or even Chapter 11, we are here to assist you. Contact us today for a free consultation.  

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