Bankruptcy Information
What is Bankruptcy?
Which type of Bankruptcy is right for me?
What are the Consequences of Bankruptcy?


What is Bankruptcy?

Bankruptcy is a legal proceeding conducted in Federal Bankruptcy Court which allows a person who has more debt than he or she can pay (called a "debtor") to seek relief from those debts and collectors of those debts (called "creditors?).

Under Federal Law, you (or your spouse jointly) are entitled to file a Bankruptcy Petition to restructure and reduce or eliminate your debts and obtain a fresh financial start. Under the Bankruptcy Laws, you are entitled to file a Petition with the Court allowing you to keep your home, your car and your personal belongings from being sold without your consent.

Most personal Bankruptcies proceed under either Chapter 7 or 13 of Title 11, United States Code. Under either of these Chapters, the moment your Bankruptcy Petition is filed you are given immediate debt relief and are protected by the "automatic stay", which prohibits your creditors from attempting to collect their debt, including taking legal action, garnishment of wages, foreclosure or repossessions of property or eviction.

Bankruptcy can stop:


Law Suits

Wage Attachments

Utility Shut-offs

Which type of Bankruptcy is right for me?

If you have decided to relinquish your home, a Chapter 7 will discharge and eliminate any remaining balance that is owed to your mortgage company after the sale along with many of your other debts. If you have decided that you would like to keep your home, a Chapter 13 will enable you to do so. To determine if Bankruptcy is right for you, you should seek legal advice from a licensed professional. Our office offers an initial free consultation. During this consultation you will meet with a professional who will advise you with respect to your particular situation. If bankruptcy is not right for you we will advise you as to any other options you might have.

What are the Consequences of Bankruptcy?

Bankruptcy may appear on a person's credit report for up to ten years and may interfere with that person's ability to obtain new credit in the future. However, a person contemplating Bankruptcy most likely has a poor credit rating to start with. In these cases, Bankruptcy may actually improve his or her ability to get credit, since many of that person's former debts will have be eliminated. We will show you ways to rebuild your credit rating using proven techniques.


Types of Personal Bankruptcy
Chapter 7

Chapter 7 Bankruptcy, also known as "liquidation", involves a possible Court-administered sale of any of the debtor's property that is not exempt. In the State of Maryland, each Debtor is permitted to exempt at least twelve thousand dollars ($12,000) of property in the State of Maryland. Married couples filing jointly can exempt at least twice that amount. If you recently moved to Maryland from another state, your exemptions amounts may differ and you may be eligible to use Federal exemptions.

If you are not interested in keeping your property, a Chapter 7 would enable you to eliminate any remaining balance that is incurred after the sale of your home by your mortgage company, along with any of your bills, such as credit card debt, personal loans, medical bills, or even overdue utility bills. Under this proceeding, you pay nothing to these creditors, giving you a fresh financial start.
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Chapter 13

Chapter 13 Bankruptcy, also known as a "reorganization or "wage-earner plan", allows a person to pay off debts under an installment payment plan administered by a Court-appointed Trustee. Chapter 13 is most helpful to you if you are behind in payments on a house, a car or other property that is subject to foreclosure or repossession.

In a Chapter 13 proceeding, you submit for the Court's approval a three or five year plan and budget under which you propose to repay your creditors. Once all of these payments have been made, most of your debt will be discharged. This plan will allow you to pay off past due mortgage payments on your home at a rate you can afford. The plan also allows you to cure defaults on auto loans, taxes and to certain other debts, and can either reduce or eliminate any of your other debts, such as credit card debt, medical bills, personal loans, utility bills, etc.

As is the case with Chapter 7 Bankruptcy, your are protected by the ?automatic stay? throughout the course of your Chapter 13 case. Your creditors are prohibited from starting or continuing any collection action, and any adverse actions directed against you and your property must cease. This protection remains in effect so long as you adhere to your scheduled payment plan.

In order to qualify for Chapter 13 relief, you must have "regular income", which may be from a Salary, Commission, Rents, Pension, Alimony, Child Support, Social Security, Unemployment Compensation or Public Assistance.

Chapters 11 & 12

Chapter 11, although commonly used in connection with business reorganizations, is available in some cases to individual debtors with large amounts of debt and in special circumstances Chapter 12 is similar to Chapter 13 but is reserved for "family farmers".