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.
Bankruptcy Facts and Statistics
Employment status, health events, and spending more than what’s being owed are some of the contributing factors to the instability most Americans face financially.
When someone is financially unstable and cannot manage their debt, bankruptcy may be the best option. It can provide a path for the person to restart financially. Let’s take a look at some statistics about bankruptcy in the U.S. for 2021.
There were 413,616 bankruptcy petitions filed in federal courts. At least 399,269 of those were consumers, and 14,347 were business bankruptcy filings. The number of filings per bankruptcy chapter for that most recent reported year were as follows:
- Chapter 7: 288,327
- Chapter 11: 4,836
- Chapter 12: 276
- Chapter 13: 120,002
There are different avenues one can take when pursuing bankruptcy in Baltimore. An experienced Baltimore bankruptcy lawyer at the Baltimore legal 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 How the U.S. Bankruptcy Code Applies 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.
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 the arrears on without facing significant financial struggles. Under the federal bankruptcy laws in our country, anyone can file for Chapter 13, so long as their combined secured and unsecured debt 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 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.
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.
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:
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 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.
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 at Belsky & Horowitz, LLC can look into your situation and help you decide how best to proceed. While you are allowed to file for bankruptcy without a lawyer, doing so with proper legal guidance will make it easier to manage. Schedule a consultation to discuss your debt situation with one of our attorneys today.
What Can You Expect When You File for Bankruptcy in Baltimore?
Many of our clients inquire about the different steps involved in bankruptcy. Each of our clients will have unique details and circumstances affecting how it unfolds, which our Baltimore bankruptcy lawyers can discuss with you during your initial meeting with them.
Some of the basic steps in bankruptcy that prospective and existing clients may need to take include the following:
- Contact a Baltimore Bankruptcy Lawyer: When you’re dealing with debt and are looking at your options, an expert can go over the debt you have and help you find the best option. When you meet with us, we’ll go over the debt you have and look into how you can move forward.
- Attend Pre-Filing Bankruptcy Counseling: Before applying for this debt relief, you must take a course about bankruptcy and alternatives.
- Collect Information: Our lawyers will need certain details before assisting with clients’ prospective Maryland cases, including copies of documents highlighting their debts and overall financial situation, to gain a clearer idea of the bankruptcy chapter that is best suited for their situations.
- File Your Petition: Your Baltimore attorney will file your bankruptcy petition on your behalf. We’ll ensure all the necessary paperwork associated with it is filed correctly and on time.
- Deal With Assets: The next steps will vary because of the chapter of bankruptcy you’ve filed under. You may need to liquidate assets if you have them or enter into an agreement with the court to use your future earnings to repay creditors in exchange for you keeping your Maryland property. Talk to your bankruptcy attorney about what you can expect after you file.
- Attend Meetings or Hearings: A bankruptcy trustee will be appointed to your Maryland bankruptcy case. They will conduct a 341 hearing, where they will ask you questions regarding your finances. Creditors will be present at this meeting, and they may ask questions or raise objections. After this, clients sometimes need to attend a confirmation hearing. If there aren’t objections to your plan, the court will give its confirmation.
- Take Courses: As you go through the repayment plan, clients often need to take a financial management class, just as you needed to take a course at the beginning of the process. This provides more education about managing personal finances.
- Discharge: When you’ve completed the steps above, the court will proceed with a discharge. This clears the debt that was qualified in your bankruptcy case. It’s important to remember that some debts may not have been deemed as dischargeable per the bankruptcy code. You may still be responsible for those.
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.
Alternatives to a Maryland Bankruptcy
Depending on your situation, a Baltimore attorney or financial advisor may be able to recommend alternatives to bankruptcy, including:
This option involves combining any debts you may have. You can accomplish this by taking out a debt consolidation loan, transferring debt to a low-interest credit card, or consolidating with a home equity line. With debt consolidation, debt is easier to manage as it’s in one place.
Some credit card companies offer low transfer rates to new customers. By doing a balance transfer, you can take any bills you owe and pay them off, ultimately taking the balance due and transferring it to a low-interest card. You’ll typically pay less interest over the repayment terms by doing this. You’ll be able to establish a monthly payment, and you won’t have to worry about debt collectors.
Taking Out a Home Equity Line of Credit
When a debtor has equity in their home, a home equity line can help consolidate debt into a low-interest and potentially tax-deductible loan. It’s important to be cautious with this option, however, because lenders can have the right to repossess the property if the debtor defaults on payments.
Entering Into a Repayment Plan
If creditors are willing to work with you, you may be able to come to an agreement for a modified payment plan. This option often appeals to them because they know you are willing to pay back your debt.
Additional Maryland bankruptcy alternatives available if you are in a financial crisis may include creating a debt management plan or simply defaulting on your debts.
How Can an Experienced Baltimore Bankruptcy Lawyer 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 from our Baltimore, MD law office of Belsky & Horowitz, LLC 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 an Experienced Bankruptcy Attorney in Baltimore
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.