There are a number of reasons an individual may need to file for bankruptcy. Some of the most common include medical expenses, divorce, loss of job, loss of business, unexpected expenses, and overspending. If you find yourself thinking about filing, you’ll need the help of a Baltimore Chapter 7 bankruptcy lawyer.
Most people who file for bankruptcy never thought they would be in such a situation; but when used correctly, bankruptcy is a tool that can help people rebuild credit and secure their family’s future. Let’s take a look at how Chapter 7 relief works in Maryland.
Chapter 7 Bankruptcy: Erasing Your Debts
Bankruptcy is a federal action governed by Title 11 of the U.S. Code. As an individual, you can file a Chapter 7 bankruptcy for liquidation or a Chapter 13 bankruptcy for reorganization. It’s more common for people to file under Chapter 7.
If you are considering filing, you’ll want to speak with a bankruptcy attorney. The sooner you consult with a law firm, the more options you may have access to. If you decide to proceed, you will file a petition with the court. In Maryland, bankruptcy courts are located in Baltimore, Greenbelt, and Salisbury.
Your petition will include supplemental materials related to your finances. Once you’ve submitted the petition, the court will send out a notice to your creditors. The court will also assign a trustee, who will take legal control of your debts and property, aside from the exempt property that you get to control and keep.
After approximately four to six weeks, you’ll attend a meeting or creditors hearing. At this hearing, the assigned trustee will look at your papers and ask you questions about your finances. Then, the trustee will try to pay your creditors as much as possible by selling your property. After a few months, most of the debt will be eliminated. It’s important to note that once you are granted a Chapter 7 discharge, you cannot file for Chapter 7 again until eight years have passed.
Chapter 7 Bankruptcy Laws in Maryland
According to the United States Bankruptcy Court, bankruptcy laws help people who are no longer able to pay their creditors get a fresh start by liquidating their assets to pay their debts. The trustee assigned to a case sells the debtors assets and the net proceeds are distributed to the owed creditors.
There are a number of state laws that could impact if you can file, how you file, and what your potential outcomes are. Maryland state laws are different from many other states, so it’s important to have an experienced legal representative by your side.
In general, filing under Chapter 7 is a shorter process than other types of bankruptcy, but there are set limitations on who qualifies. Good candidates for Chapter 7 are typically individuals or married couples who earn below Maryland’s median income based on their household size and have high amounts of unsecure debt.
Filing for Chapter 7
When you are considering your options, you’ll need to know if you are eligible to file for Chapter 7. To qualify, you have to pass a means test. A means test determines whether you have disposable income available to pay back some or all of your debt. If your family income is less than the median in Maryland, you can file a Chapter 7 case. If your family income is above the median, you may still qualify after pre-set expenses are taken into consideration. Your lawyer will go over the income charts and expense guidelines with you.
In addition to passing the means test, you’ll also be required to take two education courses. Prior to filing, you’ll take a credit counselling course. After you file, you’ll take a debt management course.
You’ll also need to know when to file. Based on your circumstances, your lawyer will advise you of what’s best for you. They will take into consideration if you’ll be incurring additional debts in the near future, if you’re due to receive an income tax refund, or if you’ll be receiving nonexempt property or money through inheritance, life insurance, or divorce within 180 days of filing.
Once you’ve taken the steps to moving forward with the legal process, you may wonder how long it will take. In most cases, a Chapter 7 filing will take approximately four to six months from start to finish. This includes the time needed to take the required counseling courses. It’s important to note, however, that every situation is different. Your lawyer will be able to give you an exact estimate based on your unique case.
While filing can be complex, your Chapter 7 bankruptcy lawyer will be at your side every step of the way. We’ll be able to guide you through the process and represent your rights.
Frequently Asked Questions
Even with a basic understanding of Chapter 7 bankruptcy and the state laws that impact filing, it’s likely you still have a number of questions related to the process and potential outcomes. Let’s take a look at some frequently asked questions regarding Chapter 7 relief in Maryland.
What is a Chapter 7 discharge?
According to the United States Courts, a discharge releases individual debtors from personal liability for most debts and prevents creditors from taking any collection against the debtor. Certain debts are eligible for removal, including medical bills, credit card debt, judgments, wage garnishments, and certain tax debt.
What debts are not dischargeable under Chapter 7?
In Maryland, certain debts are considered non-dischargeable. This means that if you file for Chapter 7, you will still be responsible for repaying the debts that remain. Non-dischargeable debts include child support, alimony, debts for personal injury or death caused by drunk driving, student loans, fines and penalties for violating the law, income tax debts, and any debts forgotten on the paperwork.
How much is the Chapter 7 filing fee and when must it be paid?
The bankruptcy court is required to charge a number of fees when someone files for Chapter 7. The amounts are decided by the state. Currently, there is a $335 case filing fee. Depending on your situation, other fees may apply. In most cases, the fees must be paid to the clerk of the court upon filing. In some instances, payment arrangements can be made in the form of installments. Fees can be waived if the debtor’s income is less than 150% of the poverty level—as defined in the bankruptcy code.
How Will a Lawyer Help You with Your Chapter 7 Case?
While you are not legally required to have a lawyer to file for bankruptcy, consulting with an experienced bankruptcy attorney will ensure you fully understand your legal options and avoid potential mistakes. The filing process is intensive, and you’ll need to ensure you have the proper documentation in place to successfully file and have your debt eliminated.
Because of the steps involved, working with a lawyer will significantly decrease the stress you experience. They’ll be able to guide you through the process and make sure everything is in line prior to making an official submission. They’ll also have a comprehensive understanding of the state laws that apply to your situation, so you won’t lose assets you don’t have to.
Baltimore Legal Representation You Can Trust
We understand how overwhelming it can feel when you’re facing filing for bankruptcy. When you work with a Baltimore Chapter 7 bankruptcy lawyer from Belsky & Horowitz, LLC, we’ll support you every step of the way and do what we can to secure your future. To learn more about your legal rights and options in Maryland, schedule a consultation with us today.