Bankruptcy in Maryland

Unlike when you plan your family trip to Walt Disney World, sometimes it's hard to ask friends and family for advice when you're in financial trouble. If you're like a lot of people, you don't want others to know that you've been struggling financially. If you can get a personal referral to a Maryland bankruptcy attorney, that's great. If not, we'll show you how to find a lawyer and give you a head start on understanding bankruptcy as well as how to work with your lawyer.

How Maryland Bankruptcy Law Differs from the Laws of Other States

The difference between Maryland law and the laws of other states is centered on the property you can protect in Chapter 7 and how much you have to repay to creditors in Chapter 13 bankruptcy.

Property is protected through exemptions. If you reside and file bankruptcy in Maryland, you must use the Maryland exemptions. Federal bankruptcy exemptions are not available to Maryland residents.

  • For example, each filer can protect equity up to $21,625 in your home. This means that if you and your spouse both file, this number is amount of home equity protected is $43,250.

In addition, Maryland, like many states protects the full equity in any home that is owned by a filer and his or her spouse (who is not filing).

  • You can protect your car and other personal possessions, up to certain limits, under the Maryland exemptions, including a wild card exemption which allows you to allot the protection to the property you would most like to keep.

We realize that this sounds scary, but know that most folks get to keep most or all of their property.

Your Choices in Filing Bankruptcy in Maryland: Chapter 7 or Chapter 13

Chapter 7 is usually the way to go for bankruptcy filers, if they qualify. In Maryland, if you have a family of four and your income is below $100,928, you can file Chapter 7. If you're single and your income is below $57,445, you can file Chapter 7.

If your income is above this threshold, be sure to consult with a qualified bankruptcy attorney because the median income threshold is just one way to qualify.

Why is it good to qualify for Chapter 7? Because Chapter 7 is the "Fast Pass" (Think Space Mountain) of bankruptcies. You're in the door, take the "ride", and on to the next adventure just like that. In Chapter 7, your unsecured debts (most of them) are discharged and it's all over in 6 months.

Chapter 13 is more like waiting in the long line at the Haunted Mansion. While some of your debts are discharged, most are renegotiated and you have to pay them back. It takes 3 to 5 years. It's definitely worth the ride and you get to the same place, it just takes a lot longer and has some complication along the way.

If Birnbaum had a guide to bankruptcy, they'd say to take the fast pass, if you qualify. Otherwise, take a deep breath and enjoy the ride. It's worth the wait.

How to Find and Select a Bankruptcy Attorney

The key is to find and select an attorney who you're comfortable with and who focuses his or her practice on bankruptcy.

To start, ask friends and family for referrals. If you're not comfortable letting others know of your financial predicament, that's okay. Ask your local bar association for a referral and then check out those attorneys. Do an Internet search for "Find a Maryland Bankruptcy Attorney" and check out websites, blogs, and newsletters.

When you've narrowed down your selection, make an appointment for a no fee consultation to see if you like the attorney and whether you both would be comfortable working together.

How to Prepare to Work with a Bankruptcy Attorney

Once you've made your selection, gather your financial papers and fill out the forms the attorney provides, carefully and will full disclosure. Your investment of time and effort will pay off in dollars and peace of mind.

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