At some point in our lives, we all face uncertainty regarding our finances. Whether we’re facing debt as a result of a natural disaster, are having trouble managing credit cards, or have recently been hospitalized due to a workers’ compensation situation or a personal injury accident and are now dealing with extensive bills, there may come a time when the debt is too overwhelming to handle. You could benefit from working with a Baltimore bankruptcy lawyer if you reach that point.
Bankruptcy can give a person a fresh start financially when debt becomes overwhelming. Choosing to file bankruptcy in Baltimore is a big deal, so it’s important to understand the implications and potential outcomes of doing so. When you work with Belsky & Horowitz, LLC, we’ll guide you through your options and help you determine how best to secure your future. Our work together starts with a free initial case review, so contact us to talk about your debt situation now.
How This Form of Debt Relief Can Provide a Financial Lifeline
Making the decision to file for bankruptcy is never easy. Many people struggle with whether or not to start the process. However, it can provide much-needed relief when you are dealing with overwhelming debt.
Once you file for bankruptcy, you can get immediate relief from harassing creditor calls. Sometimes, they can bother you, your family, and even friends looking for a payment. Bankruptcy will put an end to the emails, letters, and phone calls from your creditors and their collections agencies.
In some cases, filing for bankruptcy can also prevent the risk of lawsuits, wage garnishment, foreclosures, and repossessions of your assets. Often, this extra time allows you to work out a payment plan or other agreement to keep your home or vehicle. Don’t forget that depending on the type of bankruptcy, certain assets can be exempt from liquidation. In turn, that provides you with a degree of asset protection.
While bankruptcy can hurt your credit score, being unable to make payments or uphold your credit obligations will continue to cause long-term damage until you address the issues. Once you get through the bankruptcy process, you can start rebuilding your credit, reducing your debt, and beginning a stable financial future.
There are different avenues one can take when pursuing bankruptcy in Baltimore. An experienced Baltimore bankruptcy lawyer at the Baltimore office of Belsky & Horowitz, LLC can help find the best one that suits your needs. Let’s take a closer look at how bankruptcy is handled in Maryland.
Understanding the Applicability of the U.S. Bankruptcy Code in Maryland
According to the United States Courts, bankruptcy is a form of debt relief that helps individuals who can no longer pay their debts in one of two different ways:
- Liquidation: Involves an indebted individual or entity selling off their assets to pay back the money they owe
- Reorganization: Gives the debtor time to pay back the money they owe through a court-approved repayment plan
All bankruptcy cases are handled in federal court under outlined rules in the U.S. Bankruptcy Code. In Maryland, bankruptcy courts are located within each of the 94 federal judicial districts.
The bankruptcy process is complex, so it’s often in a debtor’s best interest to work with an experienced bankruptcy lawyer. When you first meet with your attorney, they’ll help you determine which type of bankruptcy you may want to file. If you’re ready to find out which debt relief option may be appropriate for you, reach out to us now.
Types of Bankruptcy
While the general goal of bankruptcy is to clear debt, there are six different types that can be filed—all of which work for certain people or businesses in specific circumstances. Let’s start by looking at the most commonly filed types—Chapter 7 and Chapter 13.
Chapter 7 Bankruptcy
Also known as liquidation, Chapter 7 bankruptcy is the most common type of bankruptcy for individuals. When someone applies for this type of bankruptcy, a court-appointed trustee oversees the sale of the person’s assets—which can include anything that has value.
The money made from the liquidation is used to pay off the creditors. In most of these bankruptcy cases, the filer’s Baltimore, MD home and car are safe from liquidation. If a property is being sold, there may be a short sale.
In the event there is remaining unsecured debt, like from credit cards or medical bills, the amount is typically erased. It’s important to note, however, that some debts, like student loans and taxes, are generally not forgivable through bankruptcy.
Chapter 7 is only available to those who the court decides don’t make enough money to pay back their debt in any way. A means test compares debtors’ incomes to Maryland state averages. Finances are also examined to determine if there is disposable income.
Once a person has filed this type of bankruptcy, it stays on their credit report for up to ten years, and it can have a negative impact on the score. A person cannot file this type of bankruptcy more than once over a span of eight years.
Chapter 13 Bankruptcy
This type of bankruptcy reorganizes debts. In other words, when a person is approved to file Chapter 13 bankruptcy, the trustee approves a monthly payment plan that allows debtors to pay back a portion of their unsecured debt and all of their secured debt. Most repayment plans allow for repayment across a period of three to five years.
This bankruptcy option gives debtors an opportunity to keep their assets and catch up on what they’re in arrears on without facing significant financial struggles. Under the federal bankruptcy laws in our country, anyone can file for this type of debt relief provided they meet the Chapter 13 eligibility criteria, which is that filers should have combined secured and unsecured debt that is less than $2,750,000.
When you file for Chapter 13 it does stay on a credit report, although only for seven years. A person has to wait at least two years before refiling.
In addition to bankruptcies listed above, there are also the following types:
Chapter 9 Bankruptcy
As another repayment plan, Chapter 9 allows towns, cities, and school districts in Baltimore and surrounding areas to reorganize their debts and pay back what they owe.
If you, as an individual, are looking into filing bankruptcy to secure a better financial future for yourself and your family, you’ll likely either be filing Chapter 7 or Chapter 13. Let’s take a look at some of the reasons Baltimore consumers may be considering pursuing bankruptcy.
Chapter 11 Bankruptcy
Similar to Chapter 13 bankruptcy in that it gives debtors time to reorganize and pay off their debt, Chapter 11 is used by Baltimore area businesses, corporations, and individuals who have too much debt to qualify for Chapter 13.
Chapter 12 Bankruptcy
This type of bankruptcy is specifically for family farmers and fishermen. Chapter 12 establishes a repayment plan so the debtor can avoid selling all their assets or foreclosing on their property in Baltimore and neighboring areas. While it is similar to Chapter 13, it has higher debt limits and tends to be more flexible.
Chapter 15 Bankruptcy
This bankruptcy chapter focuses on international bankruptcy issues and provides foreign debtors with access to U.S. bankruptcy courts.
Common Reasons for Filing Bankruptcy in Baltimore
While some people may think pursuing this debt relief option is the result of bad budgeting or overspending, this is rarely the case. According to the American Bankruptcy Institute, the following are the top three reasons why consumers file bankruptcy:
Job Loss
Whether the job market is unstable or companies are downsizing, you likely know someone who has been terminated from their job for reasons outside their control. While unemployment benefits may be available, it’s unlikely they will cover the necessary expenses, and they do not last forever.
If a person is struggling to find a job, they could be paying for bills or groceries on credit cards. With high interest rates, credit card debt can pile up easily and become more than one person or family can handle.
Medical Problems
Medical events that leave us hospitalized can also leave us with massive medical debt. Just a few days in the hospital can leave someone with tens of thousands of dollars in bills—even with medical insurance. While many hospitals offer payment plans and charity care, there’s a chance the medical bills could affect a person’s quality of life significantly and become too much to handle.
Divorce
It’s no secret that divorce is expensive. If one partner is saddled with the majority of the debt, they may not be able to handle the payments and may need to turn to bankruptcy for help.
No matter what circumstances resulted in your need for financial help and debt relief, a Baltimore bankruptcy attorney can look into your situation and help you decide how best to proceed. While you are allowed to file for bankruptcy without the assistance of an attorney, doing so with proper legal guidance will make it easier to manage. Schedule a free consultation to discuss your debt situation with a member of our legal team at Belsky & Horowitz, LLC today.
Bankruptcy vs. Debt Settlement: Choose the Right Option
Bankruptcy provides a legal process to discharge debts, but it can have long-term implications for your credit and financial reputation. On the other hand, debt settlement involves negotiating with creditors to reduce balances, which can help you avoid the legal process of bankruptcy.
Make sure to weigh each option’s pros and cons and assess which suits your financial situation best.
If you are considering bankruptcy, choose an attorney you feel comfortable with and with a good track record in handling bankruptcy cases. During the consultation, you will want to ask them about their approach to bankruptcy cases and how they can support you throughout the process. No matter your decision, you want to feel confident in the experience as they help you throughout this complicated process.
Our Baltimore bankruptcy law firm is here to help our clients through this so they don’t have to do it alone. While bankruptcies can take time to work their way through the legal system, it’s necessary so you can work toward a more secure future financial life. However, it’s important to go over all your debt relief options, which may include bankruptcy alternatives.
How Can an Experienced Baltimore Bankruptcy Attorney Help You?
You deserve to have someone on your side who can help protect your rights and guide you through the above-referenced debt relief options. While navigating a bankruptcy can be stressful, an experienced bankruptcy attorney will be at your side.
Our Baltimore law firm has experienced bankruptcy attorneys ready to work with you and help you get back on your feet. We understand how stressful this process can be, but we’ll do everything we can to alleviate this stress. You won’t have to worry about receiving harassing phone calls or pressure from third parties once we start representing you.
Whenever you have a question, our bankruptcy lawyers are here to answer it. We will help you find the best way to move forward. There’s no obligation associated with sitting down for a meeting with one of the lawyers in our office to discuss your debt situation and legal options. Reach out to us to discuss our services that can help you today.
Connect With a Lawyer That Understands Debt Relief Options
Deciding if bankruptcy is right for you can be challenging. That’s why it’s important to consult a Baltimore bankruptcy lawyer to learn about your viable rights and options. If you decide to file for bankruptcy, we can guide you through the process and ensure your most important assets are protected.
It’s important to note that the type of bankruptcy you file affects how long your case will take to adjudicate. Depending on your options, you could have the matter resolved in months or years. Either way, if filing is the right decision for you, you’ll be on the path to a more financially secure future. Contact our Baltimore law firm of Belsky & Horowitz, LLC today to speak with a lawyer to learn more.
