If you’re having trouble paying your bills to the point you’re completely overwhelmed with debt, you may be a candidate for bankruptcy. Prior to making any financial decisions regarding debt management, it’s important to understand your rights and options, as well as the potential consequences for what actions you decide to take. At Belsky & Horowitz, LLC, we can teach you how to file for bankruptcy in Maryland and help you decide if that’s the best way to manage your debt.
Filing for Bankruptcy in Maryland
If you’re in a situation where credit card debt, medical bills, or mortgage payments are too much to handle, a lawyer can help you decide if bankruptcy is right for you. Depending on your situation, you may file Chapter 7 or Chapter 13. Chapter 7 involves liquidating your assets and paying back your debts with those funds. Chapter 13 is when the court approves a repayment plan and you spend three to five years repaying your creditors without worrying about phone calls or losing property.
Gathering Bankruptcy Documents
Before starting the filing process, you’ll need to gather a detailed listing of all your debts. Your credit report will likely contain this information. You’ll want to have any debt collection notices and other correspondences from at least the past three months. You’ll also need the last six months of paycheck stubs and a copy of your most recent federal income tax return. That information will go to your case trustee after the case is filed, so having all the documentation ready ahead of time will make the process easier.
Understanding the Means Test in Maryland
If you’re looking to qualify for Chapter 7 bankruptcy, you’ll need to pass the means test. In Maryland, this means that your family income is less than the state’s median. If your family income is above the median, you may need to file through Chapter 13 and schedule a repayment plan.
Taking Credit Counseling
To qualify for bankruptcy, Maryland requires debtors to take credit counseling. The course is comprised of a single class. It’s approximately two hours long and can be completed online, in person, or by phone. You do not have to have completed the class prior to filing bankruptcy forms, and the certificate is valid for 180 days after completion.
Completing and Filing Bankruptcy Forms
Once you’ve determined your eligibility for bankruptcy, you can start filing the proper paperwork, submitting your information to the bankruptcy court, and explaining your financial circumstances to your case trustee. Then, you’ll need to pay your filing fee and print your bankruptcy documents. If, however, you work with a lawyer, they can file your case electronically.
Once the trustee and court receive your documents, you go to your 341 meeting. This happens approximately 20 to 40 days after you file and involves meeting with your trustee and creditors. That meeting will determine the results of filing for bankruptcy.
It’s important to note that after you file, you will need to complete a second financial management course to receive a discharge of your debts. The second course provides you with information about what you can do to create and stick to a budget and responsibly manage your finances in the future.
Protecting Assets on Maryland’s Exemption List
Filing bankruptcy doesn’t mean giving up all your property. While you may not be able to protect everything, what you can protect depends on Maryland’s exemption list. With Chapter 7, the assigned trustee will sell any nonexempt property. If you file Chapter 13, you won’t lose property, but you will have to pay the value of the property to your creditors as part of your repayment plan. Common bankruptcy exemptions in Maryland include:
- Owner-occupied real estate
- Insurance and damages
- Personal injury, wrongful death, or lost future earnings awards
- Personal property
- Public benefits, earnings, and support
- Retirement benefits
- Tax-exempt retirement accounts
To protect those exempt assets, it’s a good idea to work with an attorney who has experience handling bankruptcy cases.
Determining Your Next Steps After Bankruptcy
Whether you’ve filed a Chapter 7 or Chapter 13 bankruptcy claim, once you have received your discharge or repayment plan, there are some steps you and your lawyer can take to ensure your case is finalized, and you can begin to move forward.
First, you’ll want to make sure you collect and preserve all the paperwork from your case. The average bankruptcy petition contains 40 to 50 pages of detailed financial information. You’ll also want to retain copies of the notice of filing and discharge. Keeping track of the information is important because some lenders want to see copies of bankruptcy papers when considering someone for new credit. This is especially true for mortgage loans.
You’ll also want to keep an eye on your credit report. While it’s likely your credit took a hit when you filed for bankruptcy, you can work to rebuild your credit score over time. The higher your score, the more likely you are to receive loans when you need them. To rebuild steadily, start and follow a budget closely. A financial advisor can help you with this to ensure you are living within your means.
It’s also a good idea to think about starting an emergency fund. Putting even a small amount of money aside from each paycheck or monthly will help you in the event you have unplanned debt from medical bills or car repairs. This way, your debt won’t snowball out of control for a second time.
Contact Belsky & Horowitz, LLC in Baltimore
If you have questions about filing for bankruptcy in Maryland or you’re ready to file and are seeking legal guidance to do so, contact us today. A Baltimore bankruptcy lawyer will review your situation, explain your options, and help you choose the right type of bankruptcy for your situation.
While filing for bankruptcy is a major decision, it can ultimately help you rebuild your financial health and ensure you have the means to support your family now and in the future. Schedule a consultation with our firm today to learn more.